Looking to take advantage of historically low interest rates, Brookfield-LaGrange Park School District 95 will likely issue $6.74 million in working cash bonds next year.
The bonds would replace existing debt that is scheduled to paid off in 2023, so taxpayers likely would not see an increase in the tax rate if new bonds are issued. If the school allows the debt to retire without issuing new debt, tax bills would decrease slightly.
School district officials hope the new debt, which can be authorized without a referendum unless 10 percent of voters in the district sign a petition demanding one, can provide a cash cushion to allow the district to fund anticipated operating deficits projected to begin in 2025.
“This will leave the district financially sound until 2030 or beyond,” District 95 Superintendent Mark Kuzniewski said at the Oct. 14 meeting of the District 95 Board of Education.
At that meeting, financial advisor Elizabeth Hennessy of Raymond James presented a detailed report and analysis to the board about the possible bond issue.
Kuzniewski noted that the district has been adding staff and having more working cash on hand would allow the district to maintain its staffing levels after federal pandemic relief money runs out in a couple years.
The new working cash bonds would mature in 10 years. Hennessey presented two options: issuing $6.74 million in working cash bonds next year or issuing $7.5 million in bonds in 2023.
School board members will further discuss the matter at its Nov. 11 meeting, but it appears more likely that they will decide to issue the bonds next year to take advantage of the current low interest rate environment.
Hennessy projected that bonds issued next year would carry an interest rate of 2.45 percent. If the district waits until 2023 to issue the bonds, Hennessey projected that the interest costs would rise to 2.94 percent.
District 95 currently has an AA credit rating and officials of the district, including a school board member, would have to meet with ratings agencies before the bonds could be issued.
If the school board decides to issue the bonds next year, it wouldn’t vote to approve the resolution stating an intent to issue the bonds until next March. It would then have to hold a public hearing in April.
If 10 percent or more of registered voters in the district sign a petition calling for a referendum, a process known as a backdoor referendum, the decision on whether to issue the bonds would be determined in a referendum that would likely take place at the June 2022 primary election.
If there are not sufficient signatures to force a referendum, the school board would vote in May to determine the exact amount of a bond issue, and then sell the bonds would in May or June.