Galligan also put up placards showcasing the names of several candidates he considers fiscally responsible. He's urging his neighbors to support them in next month's contested school board elections in
He put up the signs last week, adding the "gambling" warning on Sunday after reading my
Under the interest rate swap agreements approved by elected school boards last year, the districts pledged to pay Canadian-owned,
If market interest rates rose, RBC would have to pay the schools the difference. That would compensate the schools for the cost of higher interest rates.
But instead of rising, interest rates fell. So under the terms of the swaps, the school districts at the moment owe the bank money (at least
That's unless interest rates reverse and go up significantly -- defying cheap-money supporter
Without a big turnaround, the swaps, arranged through financial advisers from
RBC and school business managers have defended the swaps, as a way to prevent out-of-control cost increases, in case rates had risen.
"I have an article from December when (the
Seven school board members endorsed the plan. The way Carsley sees it,
The swaps cost might be considered a kind of insurance against a risk that didn't materialize.
"The hope is, you saved over the life of the bond enough to cover any settlement fee" to the bank. And rates could still reverse again -- indeed, 10-year
Galligan said he checked my column against statements by school officials and found that I had actually described the losses conservatively: there could be millions more.
He's worried that property taxpayers who fund schools could end up with unanticipated additional financial costs.
"School taxes are killing us," said Galligan. With a school tax rate of
He said the area suffers a lack of taxpaying industries. As in other
Losses related to interest rate swaps have happened before. Swaps were legalized for
That prompted former Pennsylvania Auditor General
Galligan is skeptical of both the financial hedges and some of the construction they are supposed to help pay for. We'll know after next month's vote how many of his
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