Eh, they'll default, and they'll replace those school districts with new ones... the lawyers will have a hell of a time repossessing anything of value, since I think the buildings would still belong to the state. Not the school district. (I could be wrong on this.)
Or their city/state governments will just pass laws telling the lenders to go to hell.
Or the school districts will get bailed out.
Those are the three options. Really if anything i'd say the people who lent to them were taking the big risk.
They'll probably go with the first option too, because I don't think you can legally tie the state or county to something the school board decided. If it wasn't California i'd say the state would probably use it to union bust, but it is, so that probably won't happen. They MAY force the teachers to be rehired and take a paycut. Though even then the teacher union probably won't go for it. So it'll probably just be all the same, but different name. Different school board.
