The Bond County Community Unit 2 board of education approved a resolution Monday night to state its intent to issue 3 point 525 million dollars of working cash bonds.
The district’s 2008 bond issue is callable in May, so the board plan is to refinance those bonds at a lower interest rate and use the savings to provide operating cash. Superintendent Wes Olson said this plan is necessary because the State of Illinois has yet to do anything about funding education and the district’s reserves are decreasing.
Addressing the bond plan, Olson said, “This is a refinance where we’re actually going to pay off when our bonds are callable. We’re actually going to take that debt, go back out to market with that to get a lower rate, and also with that lower rate, add debt and take some money for operating expenses.
“So this is not just a restructuring of debt, because there is no state budget and we’re getting closer to the callable date of our bonds.
“We’re actually going to take money out of that re-financial structuring that we’re doing and using it for operating expenses. We’ve avoided doing that since I’ve been here. We’ve done everything we can to try to avoid issuing more debt, because ultimately this will extend the debt. It won’t increase the rate, so won’t increase the tax rate for taxpayers. It’ll keep the rates steady but it will extend the debt two years while giving us some operating cash.”
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There is a method where residents can petition to have a proposition on a ballot regarding the bonds.
The superintendent commented more about the effect of the issue on taxpayers, saying, “The rate goes up slightly on the assumption that there’s going to be a slight increase in the EAV annually. What we’re doing is issuing more debt and structuring it so that the overall rate for taxpayers…there’s not a great increase from year to year.
“So by doing this debt issuance it’s not going to increase the bond interest tax levy next year. That rate’s going to stay the same. We’re going to issue at about that same rate. I mean, there’s a few things that fluctuate on that, but for the most part it’s pretty constant. In other words it’s not a great rise from year to year.
“However, by doing that and structuring that debt, you see where then these new series bonds are added to the back end of that repayment. This district has gone from having five million dollars in reserves to having very little in reserves. I mean in effect now we’re living paycheck-to-paycheck. And with the looming possibility that the state isn’t going to make a payment on August 10th to us because they, again, haven’t signed a bill into law that would appropriate…even though there’s a been a state budget, there’s not a bill that gives an evidence-based funding model yet for schools. It kind of felt like it was time to pull the ripcord on this.”
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The working cash bonds could be issued in late 2017.
The district has used $1 million from its line of credit with Bradford National Bank to cope with its summer cash flow problem. Olson said that will be repaid when real estate tax money is received.