Boasberg, Bennet claims on DPS refinancing unsustainable
On Friday, August 6, Denver Public Schools Superintendent Tom Boasberg appeared on two radio shows to defend a complex financial deal refinancing DPS's pension debt that had been subject to a devastating exposé in the New York Times (Green appeared with Boasberg, and school board member Jeanne Kaplin on the David Sirota show on 760 AM, and prior to Boasberg on the Kaplis-Silverman show on 630 KHOW). On both shows Boasberg made claims that simply can't be sustained. For more breaking political news, follow us on Twitter Most egregiously, Boasberg claimed that over 100 government entities in Colorado had done similar deals in Colorado over the past decade. While this contains a kernel of truth, the claim is much closer to an outright falsehood. While the base element of the DPS deal is a type of municipal finance tool called certificates of participation (much like taking out a second mortgage or home equity line of credit), the exotic elements of the deal are the fact that DPS entered into an interest rate swap and the exotic market maker/insurance agreement with the Belgian financier Dexia. What makes the deal entirely unusual is the weekly auctions— it makes the entire deal much more volatile, and creates maybe millions in additional fees for the bankers in the transactions. Our research shows that the total deal is unique in Colorado (in fact, Boasberg and Bennet trumpeted their innovation when selling it). Certificates of Participation are as common as dirt in municipal finance in Colorado. Governments use them instead of other tools like bond issues because they avoid the voter approval element required by the TABOR provisions of the Colorado Constitution. If DPS had only used the common Certificates of Participation financing tool, as had been done by DPS in the past, there would be no Times article, and no basis for criticism.
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