May 7, 2014
Superintendent Robert Runcie
Broward County Board of Education
600 SE 1st Street
Ft. Lauderdale, FL 33301

RE: Truth in lending vs Truth in education – Some comments and question on the proposed $800,000,000 bond issue to be presented to the voters of Broward County.

Mr. Runcie,

$800,000,000 is an enormous amount of money.

Let us assume that it will be spent wisely on the myriad construction projects that the Broward county board of Education has earmarked. Let us assume that the process will proceed minus the mendacity of past Board members and employees. Let us further assume that Broward County will not be indenturing itself for 3 decades for what should have been current expense items.

[I moved here in 1996. I went to the Board of Education to get some budget numbers. I was shocked, shocked when I realized that the 2 people I spoke to did not know the difference between a capital budget and an expense budget. I used a refrigerator as an example. The big thing [refrigerator] that you plug in is a capital item. The things [milk, eggs] that you put in are expense items. They looked at each other with a wild surmise. Honest.]

Here’s where the truth in lending part kicks in.

Alas, the tooth fairy will not be making anymore stops in Broward County.

You do not borrow $800,000,000 for 30 years for free. If you have a mortgage you know what I mean.

Let us assume that $800,000,000 lent to the Broward County Board of Education and guaranteed by the citizens of Broward County will cost us – the borrowers – 5% a year.

My math skills, never having been FCATed, may have diminished so please check my calculations.

The carry cost of $800,000,000 @ 5% is $40,000,000 a year. Every year.

The interest alone will be $1,200,000,000. That’s one billion, two hundred million dollars.




And, at the end of the 30 years, the original amount of $800,000,000 has to be repaid.

[The question of whether or not the interest being tax free is fair is for a different time. Since both rich kids and poor kids go to the school the question of why the poor kids’ families are subsidizing their wealthier classmates is vexing.]

That’s $2,000,000,000 or, put differently, two billion dollars.

That’s a Hell of a lot more than $800,000,000.

Federal law commands that anytime anyone borrows money the full cost of the loan musty be disclosed.

You are asking the citizens of Broward County to authorize the borrowing of $800,000,000 without disclosing the full cost of the loan.

Here’s a revolutionary suggestion.

Why not tell them how much the loan will really cost?

Used car companies have to. Aluminum siding companies have to. Mortgage lenders, even predatory ones, have to.

Don’t you think the Broward County Board of Education should do likewise?

I await your reply.





Kevin Smith