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updated: 2/27/2014 6:05 PM

Geneva school district looks for formal plan for debt payment

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By the end of March, the Geneva school board expects to decide on a plan for dealing with the district's debt, likely with a primary goal of flattening debt payments.

One of the tools being considered is to stretch out the debt payments several years beyond the current 2026 ending date.

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Board President Mark Grosso said he asked the finance committee in the fall to come up with a multiyear plan to address the debt, including reducing interest paid. The committee will finalize its recommendation March 10, and the board might vote on the recommendation March 10 or March 24, according to Grosso.

"It would be a combination of everything would be my guess," Grosso said. "Everything" could mean abatements using education fund reserves, saving up money to make extra principal payments, and defeasing bonds. In defeasement, the district could collateralize some of the existing debt, removing the debt from the balance sheet.

According to its annual financial statement for the fiscal year ending June 30, 2013, the district owes $151 million in principal.

With interest, the district will be paying $293.9 million under the current amortization schedule. The last payment would be made in 2026.

The district has several options.

• Stop trying to keep the debt levy flat. The district has used any surplus in its education fund above $15 million to abate part of the annual debt service tax levy, to hold it to about $15 million each of the last three years. If it stops doing that, debt-service taxes would go up to $20.2 million in levy year 2014 (collectible 2015) to a high of $24.928 million in levy year 2019.

• Continue the abatements. The district estimates there will continue to be surpluses in the education fund if the district levies operating property taxes at the highest levels it can per the state's property tax cap law.

• Defease bonds, starting in January 2017.

• Restructure some bonds to lower payments, extending them up to four years. That would increase the amount of interest to be paid.

None of the district's debt is callable until January 2017.

At a Feb. 10 finance committee meeting, Geneva TaxFACTS co-founder Bob McQuillan suggested that some of the debt be extended, even if it means the district's taxpayers pay more in the long run.

"Push it out as far as we possibly can. There is no way we (taxpayers) can come up with another $10 million (a year)," McQuillan said. Extending the debt would put some of the cost onto future residents, and give current residents something of a break, he said.

In early 2013, the board approved abatements for the 2013 levy. On March 10, Donna Oberg will present a resolution for $5.93 million in abatements, to be split between the 2014 and 2015 levies.

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