California’s Scary New Way to Raise Public Money

In a rare act of fiscal responsibility, the California Assembly voted 73-0 earlier this month to place stricter limits on a high-yield, long-term bond that was used primarily by desperate local school districts.

This being California, however, even as lawmakers were reining in the use of “capital-appreciation bonds” -- which became notorious when one San Diego-area district revealed that it was making a $1 billion interest payment on a $105 million debt -- the state Senate advanced an ill-defined new “bond” plan to provide schools with a fresh source of cash.