|School looks to refinance bonds, go for mill levy override election|
|Written by Brenda Johnson Brandt|
With mill levy relief of about two mills in a potential bond refinance, Holyoke School District Re-1J Board of Education prepares for a mill levy override question on the Nov. 4 ballot.
Two representatives from the banking firm George K. Baum explained details of the refinancing opportunity at a work session prior to the Aug. 19 school board meeting.
Michael Persichitte noted that the district has about $1 million remaining on outstanding bonds from the 1998 junior high addition bond election.
He pointed out that the IRS allows advance refunding only once, and that occurred in 2005. So the proposal is for current refunding. He noted investors are looking for safe investments, and Holyoke School District qualifies as such.
Refinancing the bonds will amount to a savings of about $37,000 a year in payments which extend through 2021. It will allow the board to lower the bond levy assessed on the public by two mills. The current year’s 4.250 bond redemption fund mill levy would look to reduce to 2.250 mills next year.
Looking to have a board resolution for refinancing passed at the Sept. 2 meeting, Persichitte said the info could be with rating agencies shortly thereafter. So bond sales could probably close by the end of September or early October.
The board looks to approve a parameters resolution on Sept. 2 to allow George K. Baum to sell bonds, provided that the interest rate is no greater than a certain amount and that total savings will not fall below a certain amount. If for some reason the market would change drastically before the bonds would go on the market, there is a safeguard for the district and the refinance would be halted.
Asked why someone would not want to refinance bonds, Persichitte said if a district was going to pay off the bonds, they could wait another year and do that. Superintendent Bret Miles noted that with $1 million remaining on Holyoke’s outstanding bonds, the district doesn’t have enough cash to pay off the bonds early, so refinancing makes sense.
In other cases, Persichitte said boards are simply against debt, so they don’t refinance.
Miles said that George K. Baum has been a great partner in recent years, even when the district hasn’t been doing a project or a bond.
Mill levy override question to be placed on ballot
Also on the topic of finances at last week’s meeting, the school board directed Miles to have a ballot resolution prepared to ask the community to support a mill levy override of 2.5 mills for five years. The ballot question will be on the board’s Sept. 2 meeting agenda for approval.
A successful 2010 mill levy override election approved 7.5 mills. Within that approval, 4.5 mills will continue for 10 years. However, another three mills was just approved for five years in 2010. That three mills goes away in 2016, and the board’s mill levy override question will be asking for a new 2.5 mills, starting Jan. 1, 2016.
The overall impact on taxpayers with the five-year mill levy override election and the two-mill drop in the bond redemption fund mill levy will be a mill levy drop of 2.5 mills.
Miles explained that the general fund mill levy is frozen in state statute, and Holyoke’s 27 mills is at the floor for mill levies. If the proposed 2.5 mill override is approved by voters, the school district’s mill levy would drop from 38.75 to 36.25 mills.
Community member Rick Miles asked for clarification on the mill levy override question and was assured that the 2010 question is not being changed. It is a new mill levy override question that will go on the 2014 ballot.
As the board prepares for the mill levy override election, they noted it gives them an opportunity to ask voters to continue to support the school while seeing an overall tax decrease.
Board member Dennis Herman noted that they realize the ag economy was much better in 2010 when the mill levy override was approved. They’re working hard to make the proposed mill levy override palatable.
Michelle Van Overbeke added that the district was able to keep up with the worsening climate in school finance because of the 2010 mill levy override.
Holyoke Enterprise August 28, 2014