Extend Edgar debt?
It could pave the way for a no tax increase referendum
A financial consultant from Baird Associates, Milwaukee, told the Edgar Board of Education last week Wednesday it could propose a revenue cap referendum that will not raise taxes if it is willing to extend payments on school remodeling debt for between two and five years.
Lisa Voisin, who has advised the school board on selling bonds for years, told school members it could refinance its low-interest federal Qualified School Construction Bonds (QSCB) with an extended payment schedule and use the savings to address a quickly worsening budget deficit problem.
Last week, district administrator Dr. Cari Guden announced at a community meeting that the district, which is expected to run an $80,000 budget deficit this year, will face a $496,000 deficit in two years. The deficit is the result of declining student enrollment and state revenue caps.
Voisen said a loan exten- sion, while useful, would inevitably cost the district more in interest. She added, however, that paying a bit more interest with interest rates currently at two percent might not be the worst thing, especially given that the QSCBs were nearly interest free.
“It will cost you, but that seems negligible when you can go to referendum potentially without a tax impact,” Voisin said.
The consultant laid out financing options for board members. Under the current debt schedule, the district is set to pay off the QSCB loans in four years for a total of $3,548,367 in payments. These debt payments will require an average tax mil rate of $3.66 per thousand dollars of property. If the loan is extended by five years, the district could shave its debt mil rate to $1.46, a savings of $2.14. The cost of extending the loan would cost the district an additional $164,195 in interest. Total debt cost to the district would total $3,715,368.
Two and three year debt extensions feature similar, if less pronounced trade offs: lower taxes, but, in the end, more interest.
Board members seemed interested in this approach, but officially did not recommend anything. A first step is for school administration and, in turn, the school board to figure out how big a referendum should be proposed. In February, the school board floated a phased-in $650,000 recurring referendum that was voted down.
District bookkeeper Morgan Mueller told school board members that a phased-in $700,000 annual revenue boost would better meet the needs of the school district. She suggested a three year phase-in of $200,000, $250,000 and an additional $250,000.
School board president Bill Dittman, who has previously supported restructuring debt as a way to deal with the district’s financial woes, said school officials need to nail down what kind of revenue the district needs in the future.
“We need some more firm numbers,” he said.
Administrator Guden said these numbers should come out at a meeting with another Baird consultant. The district uses a Baird financial forecasting model to predict the district’s financial situation.
The administrator said she plans to give board members the Baird forecast for its December meeting and that, hopefully, the school board can use this information to authorize an April 6 referendum at its January 2021 meeting.
Guden said, too, school officials planned to meet with CESA 10 consultants about how best to market a referendum. In a community meeting, citizens said that few people knew about the February referendum.
In other school board business:
_ Administrator Guden said a mask order has been renewed by Gov. Tony Evers and will be enforced at Edgar Public Schools.
Elementary school principal Lisa Witt said teachers have discontinued teaching students at different levels across whole grades and, instead, now keep students in their own classrooms due to COVID-19 precautions.
She said many Edgar students have been quarantined due to COVID-19. “It’s had a huge impact on families,” she said.
School board president Bill Dittman said COVID-19 presents a huge challenge to Edgar Public Schools.
“We are doing well if we are open,” he said.
_ It was announced Dittman would be the district delegate to a Wisconsin
Association of School Boards annual virtual convention.
_ Principal Witt said she plans this week to start holding a virtual Family Fun Nights over the Zoom platform.
_ Board members approved Edgar High School joining a wrestling cooperative in order to form teams where there are wrestlers in all weight classes.
High school principal McCarty said COVID-19 will impact wrestling rules. Wrestlers will wear special masks, he said, and will be disinfected after matches. The sport will have up to eight meets this coming winter season, he said, but no tournaments.
McCarty said winter basketball will have some minor rule and procedure changes, including spreading out team benches and routinely disinfecting the basketball.
_ The board hired Emersen Thomas as a one-third full time elementary school paraprofessional.
Board members hired winter coaches. They include girls basketball coaches Gary Brewster, junior varsity; Chris Trawicki, eighth grade; and Andi English, seventh grade. Also hired was high school and middle school assistant coach Sawyer Massie.