Seattle's Plan to Slash School Interest Rates
Local school officials draft legislation to move from high-interest debt toward a more stable, bond-funded model.
The conference to which the Seattle board of education has invited the boards of Tacoma and Spokane, to be held at Tacoma next Thursday, will consider some proposed amendments to the present school law. A bill drafted by D. A. Spencer, of the Seattle board, will be submitted. At present, there is no legal method by which money can be obtained for current expenses in advance of the collection of taxes at less than 10 per cent interest. When school warrants are presented to the county treasurer and not paid for want of funds, that officer certifies to that fact, and it then bears 10 per cent interest till paid. I propose to add a clause providing that whenever the treasurer shall have declined to pay warrants for want of funds to an amount exceeding $5,000, he shall certify the fact to the board of education. The board may then cause a 'funding warrant' to be issued to run for a time estimated by the treasurer, to be sold at not less than par value at an interest rate not to exceed 8 per cent.
“This custom compels the school district to pay 10 per cent on school funds, though a leading banker told me that if school warrants were properly funded they could be sold for par, bearing but 6 per cent interest.”
This reflects the ongoing evolution of municipal finance in Seattle. The struggle to move away from predatory short-term debt to long-term, low-interest bond structures is a precursor to modern public infrastructure funding battles.
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