Should the Geneva school district continue with its new policy of using education fund reserves to pay part of its debt?
And should it consider refunding or refinancing some of that debt, to try to keep the annual debt payment relatively flat?
Options for all were outlined Monday night in what has become an annual report from representative from William Blair and Associates. The firm advises the school board on bond issues.
The district owes $141 million in principal and $165.6 million in interest on the money it has borrowed.
Interest rates on some of the debt are as high as 9 percent, and much of the debt ($100.6 million total principal and interest) is noncallable, meaning the district canít simply refinance it at a lower interest rate. It could, however, refund about $60.6 million of the debt, by extending payments out three more years. It would have to buy back the bonds, then issue new bonds for a longer term; it would also have to put money in an escrow account, of which some would have to be repaid to the original bondholders.
Doing so would help to keep the tax levy for debt service from rising dramatically.
The levy for debt service is expected to climb from $17.3 million in the 2012 property tax levy (collected in 2013) to $24.92 million in the 2019 levy (collected in 2020). This is built on the assumption that the districtís equalized assessed valuation stops declining and starts growing at a rate of 4 percent annually, and that the district is able to increase its levy by the rate of inflation and include new property in the equation.
The school board decided in February to keep the reserve in the education fund at $15 million, and to use anything above that to pay debt. It anticipates having more than $3 million to do so once the books are closed on fiscal year 2012, which ended June 30.
The projections presented Monday for continuing such abatements do not include any increases in salary or certified staff. The district is negotiating a new contract with teachers and other certified workers.
The boardís finance committee will consider the proposals at a meeting yet to be scheduled, but likely to be held before its regular November meeting, according to Donna Oberg, assistant superintendent for business services.
The presentation is available on the districtís website, www.geneva304.org/d304_finances/index.asp.Copyright © 2013 Paddock Publications, Inc. All rights reserved.