Let’s say you were a TV dad from the 1980’s or 1990’s — let’s say you were
Bill Cosby that guy from Growing Pains (Alan Thicke). Your college aged daughter wanted to buy a TV for her dorm room and she came to you asking for your advice on how to buy it.
What would you say?
A) Put it on your credit card
B) Pay for it in installments with no interest
C) Wait until you had enough money to buy it outright
If you were TV Dad, you would probably recommend C then B and then as a last resort A. Why? You should generally be able to pay for something upfront. If that’s not possible, you would want to pay for something in installments, if you could avoid interest payments. The last thing you would want to do is go into debt for it.
Now that the School Board has drawn the line in the sand around rebuilding our schools, and said the question isn’t what we are going to do but how we are going to pay for it, it’s time to consider how we want to pay for our School District $65 million plan. So, let’s examine the options provided by the School Board (for primary home owners):
A) Pay $123 per year for the next 20 years
B) Pay $550 per year for the next 3 years
C) Pay $335 per year for the next 5 years
Which do you prefer?
At first blush you’d probably pick A, just like the college student would choose to put the TV on a credit card. The payments are smaller but the problem is that they are much longer and you are paying interest. With the School District plan, if you choose option A, you’ll be paying $2500 over 20 years. If you choose options B or C, you’ll pay about $1675 in total. So, you’d save $825 by choosing to vote down the bond and pay for our schools over the next few years.
That said, I received an email from a reader that said “a hit of $500 would be felt pretty hard by my household; especially with two kids in college.” Fair enough. That may be reason to choose options C or A. However, if you choose to option C, that will save you $800. The reader may say, “but I can’t afford option C, either.” Again, fair enough. So, I would recommend that you choose option A. The reader may then say, “I can’t afford that either.” That’s where the School District’s argument of the bond vote being purely a vote on how to pay for rebuilding schools breaks down. What if you can’t or don’t want to pay for it? I really do believe the bond vote is a referendum on many things related to the school plan, and not just how to pay for it, but that argument is for another day.
So the question is how do you want to pay for it? I believe the School Board thinks most people will take what appears to be the cheapest way out but is really the more expensive path. When I look at it, 20 years is a long time to pay for anything you won’t eventually own.
Yet, I keep coming back to the TV question. If the bond issue was a TV, would you put it on your credit card? Would you pay in installments? Would you wait until you had the money in the bank? We see the School Board is opting for the credit card option… I’m not sure that is really in the best interests of our community. That said, if we absolutely must have these school updates, and we can’t afford to pay for them, then I guess we might as well charge…charge…charge it!