Wednesday, September 10, 2008

School investment story just keeps getting uglier

Now the bond rating for the Waukesha School District has been hurt:

Jason Demerath, interim business manager, said the district will pay about 1 percentage point more in interest on a $26 million short-term bond issue because of a recent decision by Moody’s Investors Service to downgrade its outlook to negative from stable. That translates to $260,000.

In addition, the district is paying $60,000 more in fees related to disclosures about its investment and a change in both financial adviser and bound counsel for the deal, Demerath said. The transaction is scheduled to be voted on tonight by the Waukesha School Board.

Demerath attributed the extra costs to the district’s 2006 investment in controversial financial instruments known as collateralized debt obligations, which have plummeted in value over the last year and could lead to legal action.

That's real money off the bottom line for the school district. I wonder if any of the current school board members will have the courage to resign tonight after this fiasco.