Cloquet school board sets date for sale of bondsCloquet School Board members moved ahead Monday night with setting a date for the sale of general obligation bonds to help finance the district’s post employment benefits.
By: Wendy Johnson, Pine Journal
Cloquet School Board members moved ahead Monday night with setting a date for the sale of general obligation bonds to help finance the district’s post employment benefits.
Some $6.6 million in general obligation bonds will be sold on Oct. 27 through Springsted, the school district’s bond consultant, with bids to be received at noon on that day and approval slated for that night’s regularly scheduled meeting of the Cloquet School Board. The amount of the bonds represents a reduction from the originally proposed amount of $7,240,000, after deciding to hold off for a year before expending any of the funds from the sale of the bonds and maximizing the $575,000 in the district’s existing trust intended for payment of post-employee benefits.
The cost of the bonds will be paid back through taxes levied on the residents of the school district, with the first levy set for the 2009 tax period.
According to Deedee Karring of Springsted, who was present at Monday night’s board meeting, the interest on the 20-year bonds is anticipated to be in the range of 5.4 percent, based on the district’s current credit rating.
The tax impact of the bonds is expected to be approximately $57 a year for a home owner whose home is valued at $150,000, and $76 a year for a home valued at $200,000.
For commercial and business owners, that translates into some $350 a year for buildings valued at $500,000 and an estimated $728 a year for buildings valued at $1 million.
The funds garnered through the sale of the bonds will go into an irrevocable “other post-employment benefits (OPEB)” trust and pay the school district’s OPEB liability in the sum of approximately $430,000 a year over a period of 32 years.
The move comes in response to 2006 findings by the Minnesota State Auditor showing that 343 local government entities, including 215 school districts, including Cloquet, had unfunded liabilities for non-pension retiree benefits.
In a related matter, board members also approved the sale of bonds in the amount of $7,765,000 in alternative facility bonds and $1,485,000 in capital facility bonds for building improvements and energy upgrades.
According to Kim Josephson, district chief financial officer, the cost of the bonds will be offset by a reduction in the district’s health and safety levy, making it essentially cost-neutral to tax payers.
Sandra Crowley was the sole board member to vote in opposition to the bond sale.
And finally, the board certified a preliminary maximum levy increase of approximately 10 percent, which will be presented for final certification in December following the district’s Truth in Taxation hearings.