Oct 7 2018

OPINION: School Board Candidate Titan Saved Piedmont Millions

We have lived in this beautiful city of Piedmont for twenty years. As working professionals, we don’t have hundreds of hours to attend long board meetings and read dense financial reports filled with complex financial calculus.  That’s how Dr. Titan found out about the expensive financing schemes that did not improve the schools but cost taxpayers unnecessarily high interest charges.  We’re grateful to Dr. Titan, a father and mathematician, for devoting his time and interest on the finances of our schools since 2013.  He helped save us $26 million once and he might save an additional $26 million dollars!  Piedmonters will be well served with Dr. Titan on the School Board.

Sincerely,
Wayne Leong and Suzanna Chan, Piedmont Residents

3 Responses to “OPINION: School Board Candidate Titan Saved Piedmont Millions”

  1. With about 4,200 households taxed in Piedmont, the $26,000,000 Hari Titan saved us averages $6,190 a household. Had Dr. Titan not analyzed and brought to our attention the very high cost of Capital Appreciation Bonds (“CABs”), the School Board would still be issuing CABs. Reviewing the 2006 Series E Bonds, which were CABs, shows that the dollars received by the School District for capital improvements would have cost taxpayers ten times that amount received in some instances.

    I am voting for Hari Titan !

  2. If Piedmonters don’t vote for a single measure or one single candidate, they owe it to themselves to clamber off their sailboats, tennis courts, horses and exercise machines to vote for Hari Titan, whose mathematical genius, foresight, and commitment to Piedmont has saved us millions of tax dollars. The Americas’Cup can wait as can Westminster

  3. With due respect, the idea that Mr. Titan saved Piedmont taxpayers $26 million is a myth, and the claim that there were “expensive financing schemes … did not improve the schools” is not founded in fact. I served on the School Board during the seismic program, but anyone can review the meeting agendas and materials to understand the facts. A good place to start is the 2014 Seismic Safety Bond Program Financial Summary, http://www.piedmont.k12.ca.us/bond/SSBP_Finance_Summary.pdf. Some relevant facts:

    First, the District and the School Board clearly understood the difference between Current Interest Bonds (CIBs) and Capital Appreciation Bonds (CABs), as well as Qualified School Construction Bonds (QSCBs) and Bond Anticipation Notes (BANs). These financing mechanisms, their pros and cons, were discussed in public meetings back to 2006. The Board carefully considered which options were feasible and prudent under the circumstances. Mr. Titan did not discover these differences or explain them to “ignorant” School Board members.

    Second, the Board authorized the sale of CABs (Series E) to allow seismic renovation work at Wildwood and Beach Schools to proceed, rather than defer such work for years until older bonds were paid off, which would have left our children in seismically unsound buildings, increased construction costs, and lost access to the “replacement school” in Emeryville. (If you want more detail, the CABs were sold to repay the BANs that were sold to allow the District to obtain QSCBs—see the SSBP Financial Summary). Pursuant to statute, anticipated tax rates to repay bonds issued under Measure E were limited to $60 per $100,000 in assessed value. The District could not have sold CIBs to fund this work as the tax rate to repay the bonds would have exceeded the limit. Selling CABs deferred the repayment, and the taxes to make repayment, until other bonds were paid down and thus complied with the limit. See, e.g., http://www.piedmont.k12.ca.us/aboutpusd/agenda.minutes/2011_12/050813packet.pdf at pp 2-3. If Mr. Titan felt that Wildwood and Beach work should have been deferred for years to save money, he did not make such an argument to the School Board at the time.

    Third, even before the CABs were sold, the Board and District anticipated re-financing them as soon as it was possible to do so. See May 8, 2013 Minutes at 3-4, http://www.piedmont.k12.ca.us/aboutpusd/agenda.minutes/2011_12/050813minutes.pdf. Saving money is commonsense. The District and Board re-financed older bonds when interest rates came down in 2009 and 2014, e.g., http://www.piedmont.k12.ca.us/aboutpusd/agenda.minutes/2014_15/10-22-14_Packet.pdf, and refinanced Series B CABs in 2015. http://www.piedmont.k12.ca.us/aboutpusd/agenda.minutes/2-11-15_Agenda.pdf. In Fall 2017, the Board and District identified options for refunding the 2013 Series E CABs and held two public meetings to obtain input. http://www.piedmont.k12.ca.us/wp-content/uploads/2017/10/2017-CAB-Refunding-Options-Summary.pdf; http://www.piedmont.k12.ca.us/wp-content/uploads/2017/11/Background-Refunding-of-Outstanding-CABs-or-NOT.pdf. The Board elected to refinance the 2013 CABs with CIBs, saving Piedmont taxpayers $26.1 million. http://www.piedmont.k12.ca.us/blog/2017/12/15/district-saves-taxpayers-more-than-26-1-million-with-bond-refinancing/. Mr. Titan, however, “encouraged the Board to wait for at least a year on CAB refinancing.” https://agendaonline.net/public/Meeting.aspx?AgencyID=1241&MeetingID=12755&AgencyTypeID=1&IsArchived=True. While no one’s crystal ball is perfect, the Board correctly chose to proceed with the refinancing in December 2017 as interest rates continue to increase.

    Fourth, the School Board, well aware that CABs keep current tax rates lower only by increasing total interest payments, has chosen CIBs over CABs when available. In 2014, when proposing a bond measure to fix Alan Harvey Theater, the Board ruled out using CABs as the CIB option was available. While Mr. Titan provided public comment opposing CABs at that time, no one on the Board was advocating CABs. See January 8, 2014 Minutes at 7-9, http://www.piedmont.k12.ca.us/aboutpusd/agenda.minutes/2012_13/1-8-14_approved_minutes.pdf.

    In short, claims about misuse of CABs in the past do not reflect the facts. This School Board election should focus on solving real challenges to maintaining Piedmont’s high quality educational system.

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