Dist. 203 vows not to take more than voters OK'd

Naperville Unit District 203 codified a promise to taxpayers Monday not to exceed the $43 million in proceeds from bond sales voters approved in a recent referendum.

That assurance is part of the new debt policy the school board approved.

"Voters said we authorized $43 million, that's the net proceeds we should realize," said Dave Zager, assistant superintendent for finance.

The bonds will help fund about $115 million in facility projects around the district and cost the average taxpayer about $82 a year for the next 20 years.

The promise that proceeds will not exceed the amount on the ballot applies only to issuing debt such as bonds and is entirely unrelated to the type of referendum the district held in 2002, in which it collected millions more than it told voters to expect. That earlier referendum was based on a tax rate increase, not issuing debt.

Before Monday, the district already had a debt policy in place, but it was fairly broad, according to Zager. The revised version is the result of work from the district's new finance committee.

"What this does is give more specific guidelines on three types of debt we could possibly incur ... and by providing those, it gives us something to rely on whenever we get our credit rating," he said.

The new policy also stipulates that the district maintain a reserve of 10 percent of its operating budget, which Zager said credit rating agencies will look favorably upon.

"This allows property tax bills to be issued up to a month late and the district would still have the resources or cash flow (to pay bills) without borrowing or going ... to short-term debt," Zager said.

The roughly $20 million needed for the reserve will come from the district's projected budget surplus.

Other provisions in the new policy include:

• Repayment of debt through level debt payments, which can help pay off debt more quickly.

• Avoiding capital appreciation bonds, which delay principal payment.

• Short-term debt to purchase equipment will not exceed the useful life of the equipment.

• Long-term debt will only be used to finance capital expenditures.

Board members applauded the new policy.

"There was a lot of work that went into it and I think this is fairly comprehensive and offers us some good insights," board President Suzyn Price said.

The school board also authorized the district to sell the first $10 million in bonds after it receives competitive bids. Selling just $10 million of the bonds this year will help the district get a better interest rate, according to Zager. The additional $33 million will likely be sold in early 2009.