By LeAnn R. Ralph
ELK MOUND — The Elk Mound Board of Education is planning to refinance debt from the $9.325 million referendum in 2009 to keep the tax levy consistent until 2022.
Brian Brewer, the Elk Mound school district’s financial consultant with Robert W. Baird & Company, outlined the plan for refinancing at the Elk Mound school board’s September 15 meeting.
The school district used the money that voters approved in the referendum for remodeling projects at all three schools, including new classrooms in the elementary school and a new cafeteria in the high school.
Interest rates in the bond markets are still very favorable for Elk Mound to refinance the debt, Brewer said.
The lack of supply of new bonds in the market means there are fewer bonds for buyers to choose from, which drives the interest rates lower, he explained.
All together, refinancing will save district taxpayers about $35,000 and will keep the debt service payment at around $870,000 until 2022, according to information Brewer provided to the school board.
Under the existing debt structure, the debt service would increase to $1.1 million in 2016 and would increase to $1.2 million in 2017, 2018 and 2019 before dropping down to about $500,000 in 2020, where it would remain until 2026.
The Elk Mound school district used two Build America Bonds and one Qualified School Construction bond to finance the building project.
Under the Qualified School Construction bond program, the Elk Mound district receives 100 percent reimbursement on the interest.
Under the Build America bond program, the Elk Mound district receives 35 percent reimbursement on the interest.
The Qualified School Construction bonds and the Build America bond programs were part of the American Reinvestment and Recovery Act of 2009.
Refinancing the debt service will extend the repayment period by four years, but refinancing will help maintain a consistent tax levy for debt service, Brewer said.
The savings in the first five years will outweigh the loss in the last four years, he said.
According to information Brewer provided to the school board, after the refinancing is accomplished, the Elk Mound district will save $21,000 the first year of in 2016 and will then save $299,000, $344,000, $338,000 and $335,000. In the next three years, however, the school district will lose about $385,000 each year, with a loss of about $150,000 in 2023. The chart shows that the school district will not lose any money in the last years after refinancing ending in 2026.
The savings all together will be about $35,000.
When the federal government approved sequestration of the budget last year resulting in automatic reductions in all federal budgets, that means the subsidy Elk Mound will receive for the interest on the bonds also will be cut, Brewer said.
The school district’s interest subsidy payments will be reduced by 7.2 percent this year and the reduction is expected to continue through 2024 because of the Budget Control Act signed into law in December of last year, Brewer said.
Without sequestration, the interest subsidy for Elk Mound would have been nearly $25,000 this year, but with the automatic reduction, the interest subsidy amount dropped to $20,571, he said.
The earliest that the interest rates for refinancing could be locked in would be November, Brewer said.
The Elk Mound Board of Education could approve a resolution in October setting up the parameters for the refinancing and then delegate the authority to sign the final certificate, he said.
The Elk Mound Board of Education typically designates the school board president and the clerk to sign documents.
The closing date for the refinancing would have to be within 90 days of April 1, so that means closing would have to be after January 1, Brewer said.
Elk Mound school board members agreed that Brewer should prepare a resolution for refinancing the debt.
The Elk Mound Board of Education is expected to take action on the resolution at the October 27 meeting.
In other business, the Elk Mound Board of Education:
• Presented a Notable Educational Contribution Award to Cheng Lor, a 2008 graduate of Elk Mound High School who has been announcing school sports events.
• Learned that last year, Elk Mound paid about $5,000 in fees for participation in sports tournament events at other schools and that the Elk Mound Booster Club had been paying the fees. School board members agreed that the school district should pay for $2,500 of the fees and ask the booster club to pay the other $2,500.
In closed session, the Elk Mound Board of Education:
• Approved hiring Emily Bourget as a high school special education aide.
• Approved hiring Kimberly Wildenberg as a high school food service cook.
• Approved hiring Kelly Hunt as a high school food service cook.
• Approved hiring Joni Frederick as an elementary food service cook.
• Approved hiring Maureen Kraft as an elementary food service dishwasher.
• Approved hiring Duane Clemmens as a crossing guard.