D122 Bonds To Improve Schools, Pay Back Debt
District seeks roof improvements, restructuring of outstanding debt. Administrator says future cuts and changes imminent to balance budget.
Ridgeland School District 122 board members last Thursday approved the sale of two sets of bonds for the purpose of capital improvement projects, plugging the expected budget deficit and restructuring debt obligations.
About half of the approximately $5.2 working cash bonds will go towards refurbishing the roofs Harnew and Lieb elementary schools and purchasing playground equipment at Columbus Manor Elementary, among other technology and security updates throughout the district.
The sale of another $3 million in general obligation bonds to refund the district’s outstanding debt over the next four years that stemmed from a poorly structured bond issue before the 2007 housing crisis, said Eric Trimberger, assistant superintendent for finance and business operations.
“The way the bond payments were structured, it was assumed that property taxes would increase 12-percent every triennial,” he said.
In laymen's terms, the district assumed home values would climb four-percent a year. We all know now they didn’t. They plunged.
“Effectively, what we’re doing should result in no additional tax increase,” said board president Dan Sodaro, noting that tax bill bottom-lines depend heavily on the county. “When the assessor gets involved, things change, but we’re not actually involved with that.”
Trimberger said the bonds should yield a 3-percent interest rate, but it depends, of course, on market factors.
“When we feel it’s the best time to sell the bonds we will do so,” he said.
The working cash and refunding bonds were approved unanimously on Thursday at the Board of Education meeting at Columbus Manor with a 5-percent and 7-percent ceiling, respectively. Board member Christine Glader-Wendt was absent.
The district has until March 1 to sell the working cash bonds and until April 1 to sell the refunding bonds, though it’s likely they’ll be sold together, Trimberger said.
Also approved on Thursday was the establishment of an escrow account, where the bond funds can earn interest.
As Patch reported last month, the school’s deficit is projected to be about $700,000 next year. That figure could increase to between $1.6 million and $1.7 million the next two to three years and $2.3 million in five years.
As a result, the district's roughly $9.8 million fund balance is expected to dwindle to about $1.9 million by the 2015-2016 fiscal year. It was only balanced this current fiscal year because of federal stimulus money included in the Education Jobs Fund Bill and others.
“We’re still going to see the deficits, but the bonds will help plug some of the hole,” Trimberger said. “We have cash reserves on hand, and we’ll have to look at more budget cuts.”
Parents, teachers and staff last month tossed around ideas for closing the budget gap. Foremost among them were shortening summer break and putting a referendum on the 2013 ballot that could raise $5 million.
On Thursday, the assistant superintendent said cuts in programs, forgoing new computers and textbooks and reducing class sizes are likely. Moreover, teacher union contracts end next year and will need to be renegotiated.
“There’s so many unknowns,” Trimberger said.