School board gets clarification on One-Day Bond approved last fall
By Clay Schuldt
Special for the Argus
The Caledonia School Board spent considerable time discussing the One-Day Bond approved by the district last November during a special election with Betsy Knoche from Ehlers, Inc. during the March 19 board meeting.
Last month the board was informed by Ehlers that to see the advantages of the bond sale, the district must commit to the process and vote to approve future bonds. This would require the One-Day Bond to be voted on and approved annually several years before the district would see significant benefits.
At the February meeting the board learned if the school district continued to approve a bond of approximately $400,000 every year, sometime down the line the school district would be able to lower the state debt on capital loan as well as use the authority collected for capital projects.
The board was concerned about this turn of events as they expected to show district voters immediate results from the bond. Knoche returned for the March 19 meeting to further explain the situation to the public.
Chuck Schulte, who attended the March 19 board meeting, asked for further clarification on what was voted on last November.
“I thought I was voting on a One-Day Bond that was going to give the district $495,000 for capital improvements,” said Schulte. “I am confused what I voted on.”
Knoche explained that in a capital loan a district receives loan money from the state, but the district must also put forth effort.
“Back when you got that capital loan about $9 million actually came from the residents,” Knoche said. “It’s called your required debt service levy. That is what the district has to pay off every year.”
In addition the state makes the district levy more than the required debt payment. As a result, a large amount of extra funds are put in a debt service account.
Under normal circumstances, a district is not allowed to transfer money out of the debt service account for anything other than servicing the debt. The One-Day Bond that was approved by voters, allows the district to legally transfer those funds into a capital fund. Currently the Caledonia district has $488,105 in a capital funds account which could be used to make improvements at the school.
Knoche recommended that the board hold another election this year to approve another One-Day Bond to continue the process. Since a school board election is coming up in November 2012, the board already intended to hold an election, meaning the One-Day Bond vote could easily be added to the ballot.
Knoche intends to bring to the board two separate figures for how long it would take the school to pay off its loan debt if it discontinued approval of One-Day Bonds and if it continued to approve the One-Day Bonds.
Board member John Klug asked if the bonding process affects the tax rate. Knoche assured the board that the tax rate will not be affected saying, “You are locked into that maximum levy rate until the loan is paid off.”