Maple school district hopes to cut interest costThe School District of Maple is seeking voter support to refinance about $2.3 million in debt from the Northwestern High School construction project.
By: Maria Lockwood, Superior Telegram
The School District of Maple is seeking voter support to refinance about $2.3 million in debt from the Northwestern High School construction project.
The move would end up costing the district less to pay off the debt because of low interest rates. It would also free up nearly $400,000 in the school’s operations budget at a time when district revenue is flat.
There is one drawback — it would increase taxes by 50 cents per thousand dollars of valuation.
The referendum asks voters to authorize the district to issue “general obligation bonds in an amount not to exceed $2,165,000 for the public purpose of refinancing existing State Trust Fund Loans of the District, including interest on them.”
The $2.3 million in State Trust Fund Loans were taken out near the end of the construction project for site work at the high school, according to district Director of Finance Paul Staffrude. They carry a 4.5 percent interest rate and are scheduled to be paid off in April 2019.
The proposed general obligation bonds carry the lowest rates of any debt the district can use — current interest rates on municipal tax-free bonds are 0.5 percent to 2 percent, Staffrude said.
Refinancing would drop the remaining principal and interest from $2,709,889 to $2,234,248, according to the district. But it requires taxpayer approval to issue the bonds, Staffrude said.
Any costs for closing the old debt and opening the new would be covered by the premium being offered by the issuer of the bonds, he said.
If the referendum is approved, the debt shifts from the district’s General Fund 10 into Fund 39, which is for long-term debt. That frees up the current annual loan payment of $387,000 to go to other operating expenses.
“It does give us some budget relief,” Staffrude said, at a time when revenue is flat and costs for buses, technology improvements and other items are increasing. The district’s annual operating budget is $14.1 million.
This is not a referendum to exceed the current revenue limit for operating costs, and does not incur new debt principal. It is a one-time refinancing into a lower cost debt structure to take advantage of low interest rates.
The bond issuance isn’t an increase in the revenue limit for operations, so it will not increase the Fund 10 tax levy.
District voters can expect to receive more information on the referendum in their mailboxes. The district began sending fact sheets about the referendum in the mail Thursday.
For more information, call 715-363-2431.