Posted: 8/23/05
School board debates capital loan program
By David Heiller
Argus News Editor
The ISD #299 School Board heard an hour-long financial update from financial advisor Kristin Hanson of Ehlers and associates at its August 15 meeting.
Hanson first presented bids on $900,000 General Obligation Aid Anticipation Certificates of Indebtedness for the district. The lowest bid, which the board unanimously approved, was 3.1525 percent from Wells Fargo Brokerage Service, Minneapolis.
The money is intended to be used for cash flow during the school year. About half of it will be invested at a higher interest rate of about four percent, school business manager Amy Schmidt said.
Any money that is earned will go into the operating fund to offset the cost of issuance and interest, Hanson said.
Superintendent Mike Moriarty said a cash flow projection was done to determine how much the district could borrow. The $900,000 amount was the maximum that ISD #299 could borrow. Last year the district borrowed $2.1 million at 1.85 percent.
Hanson also went over the districtís maximum effort loan program, which is one of just 21 such programs in Minnesota. The $14 million loan was used to help finance the new middle/high school. The additional $9 million was bonded.
The state legislature lowered the interest rate on the adjusted net tax capacity for the maximum effort loan program in 2005 from 32 percent to 28 percent. Hanson said that change was not as significant for Caledonia as she had hoped.
Board member Mike Novak said several times that the board could have saved $5 million had it refinanced the capital building loan in 2003. He also criticized Ehlers and Associates for being a proponent of this, a point that Hanson disagreed with. ìWe are information providers,î she responded.
Chuck Schulte said that the board did not refinance the capital loan because it would have meant a steep increase in taxes initially. He said that people who voted for the new school were shown information with a lower tax impact. ìThe issue became what kind of payment can we afford,î he said.
The district had a chance to save $5 million, Novak persisted.
ìThat was not what we told the voters,î Schulte said.
Naomi Fruechte agreed with Schulte. She equated it to buying a car that you really need, and having to make payments over a longer period of time. It ends up costing more, she said, but sometimes you have to do that.
Schulte added that with the price of steel today, he doubted that the district could build a new school now.
He also noted that the length of time in which the school will be paid for has been cut in half from 50 to 25 years due to the taxable market value of land, which has more than doubled in the past 10 years.
The adjusted net tax capacity in District #299 has risen from $2,481,964 in 1994 to $4,325,282 in 2004. It rose 17.3 percent from 2003 to 2004.
The principal amount on the loan will be $16,320,000 as of October 1, 2005. The capital loan will be paid off in about 2026, although that date will vary with the tax capacity value. The higher the percentage of growth, the higher the maximum effort levy.
The bonds will be paid off in 2020.
Other business
ï Administrative reports: The three principals updated the board on getting ready for school. Ninth grade and new student orientation is on August 23. Orientation for new teachers is August 25. The first day of school is September 1. Honor on-line orientation will be on August 25 at Southeast Minnesota Technical College in Winona for the 15 students who signed up to take classes through the college.
ï ECFE/School Readiness: Mary Lou Busta gave the board a report on these program, which she coordinates. School Readiness is available to all children ages 3-1/2 to 5, with a focus on readiness for entry into school. Busta said she appreciated being in the elementary school and close to the kindergarten and special education rooms. ìItís really helpful to us,î she said.
ï School-aged care: Community education director Nancy Runningen reported that 17 children had signed up for the new school age care program at an open house on August 11. ìWe anticipate growing throughout the year,î she said. It is intended for students in grades K-5. The programís supervisor, Emily Loger, also introduced herself to the board.
ï Cement pads a problem: Moriarty said that the cement pads by doors on the west side of the high school building are heaving. He has contacted the contractor, who will dig one up to see if they were put in according to specifications. The heaving has to be fixed because it makes the doors difficult to open, Moriarty said. The problem could be a contractor or design issue, he added.
ï Walking/running path: Moriarty said a new walking/running path around the edge of the high school property is almost done. It is nearly a mile in length, and is intended for the public and for athletes so they donít have to run on the streets and sidewalks of Caledonia. The path was made by Roverud Construction. The cost was $4,593.50, with $1,500 paid by a private donation, so the net cost to the district was $3,093.50. It has four inches of crushed limestone and is eight feet wide.
ï Concession stand, dugouts: Mary Frank said that the building permit has been received for the concession stand/restroom facility. Project coordinator Dave Nelson has been talking to contractors, and they might break ground in a couple weeks, she added.
Moriarty said the high school building trades class will try to complete the baseball dugouts which are partially built. The class will be offered fall and spring quarters.
ï Meeting length, goals: The meeting ended with the board discussing the length of meetings. Mike Novak, who asked that this be put on the agenda, said he was concerned that meetings had been lasting too long. He suggested that the action items be put on the agenda earlier and that administrative reports come after that. Moriarty said he would do that. Last weekís meeting lasted just under three hours. Mary Frank said that a lot of extra items and issues have been on agenda in recent months, which has caused the meetings to go longer than normal.
Board members also looked at a list of goals that they had come up with at a retreat in 2003. They plan to set up another retreat this winter to update the goals and see how well they have met the previous ones.
The Caledonia School Board approved several hirings and resignations on August 15.
Resignations included James Olson and Vern Yolton, part-time middle/high school janitors; Greta Mierau, part-time middle/high school teacher; and Sara Fruechte, junior high volleyball coach.
Six new people were hired:
ï Tim Hoch, assistant boys soccer coach, at $2,053;
ï Cori Ronnenberg, junior high volleyball coach, at $1,633;
ï Ruth Ann St. Mary, part-time middle/high school cook, at $8.67 per hour;
ï Emily Loger, School Age Care program supervisor at $10.35 per hour;
ï Ashley Proulx, junior high volleyball coach, at $1,483; and
ï Tom Voshart, part-time custodian, at $8.18 per hour.
The board also approved Laura Eglinton as a long-term substitute for Becky Newgaard, at $163.33 per day.
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