State allows three suburban school districts to take out low-interest loans

Three suburban school districts are among 29 districts statewide authorized to borrow money through low- to no-interest bonds for construction and maintenance projects.

The Illinois State Board of Education on Wednesday approved granting more than $495 million in bonding authority to these districts through the Qualified School Construction Bond program - created under the American Recovery and Reinvestment Act of 2009.

With such bonds, the federal government reimburses school districts for the interest they pay on the loans.

The program allows districts to fund rehabilitation or repairs of existing schools, construction of new schools, purchase of equipment for repairs or construction or land for a new school.

Statewide, 193 school districts sought to borrow nearly $2.4 billion for school repairs, renovations and construction. Of those applications, West Aurora Unit School District 129, East Aurora School District 131 and Round Lake Area School District 116 were approved for the loans.

Priority was given to school districts with shovel-ready projects with the ability to borrow money. The state also considered how much of a district is low-income; how much local money a district has available to draw on, per-pupil; the age of its buildings; and the square-foot-per-student capacity of the buildings, compared to the national average.

East Aurora and Round Lake can borrow the entire amount they sought - $50 million and $900,000, respectively - while West Aurora can borrow roughly $26 million of its $50 million request.

Officials with West Aurora District 129 have estimated they could save $750,000 in interest for every $1 million borrowed for repayment over 20 years. They expect to save $19.5 million in interest for the $26 million they plan to borrow.

School districts that applied for the program were limited to a maximum request of $50 million each. Authorized districts must issue bonds within 18 months, otherwise the authority reverts back to the state. Bond proceeds also must be spent within three years after issuance.

"No state dollars are being spent, and local taxpayers will not have to help foot the bill for high-interest costs," State Superintendent of Education Tony Smith said.