Although the Cloquet School Board rejected a $6.6 million general obligation bond sale at its last regular meeting, they will consider a new deal to sell $3.9 million in the same bonds during a special meeting at 7 p.m. on Nov. 17.
"We are bringing this smaller and shorter OPEB (other post-employment benefits) bonding proposal for review, as school board members had indicated they would be willing to look at this issue again," said Cloquet Schools Superintendent Ken Scarbrough at last Monday's meeting.
The proposal would reduce the bonding amount by almost $3 million and would allow the district to enter into a negotiated sale process which would authorize the superintendent or business manager to approve the sale of the bonds if the interest cost is right around the 6 percent mark.
The $3.9 million would be paid back through taxes levied on school district residents over 14 years, as opposed to the original 20-year proposal.
The tax impact under this plan would amount to about $32 per year for a home worth $150,000 and would increase to about $45 per year for the second year and beyond, Scarbrough said.
ADVERTISEMENT
The $3.9 million, plus $575,000 from a different school district trust account, would be deposited into a specific trust to pay $430,000 per year to OPEB, an amount that currently comes from the school district's general fund.
That $430,000 would then remain in the general fund and could be used to pay for other general operations which have not yet been specified. Uses discussed previously include defraying budget reductions or bringing more programming to students, Scarbrough said.
The option to sell bonds in this manner without an election was put in place by the Minnesota Legislature earlier this year to help cover unfunded liabilities for non-pension retiree benefits (mostly health care insurance, life insurance and/or dental insurance) incurred by cities and school districts across the state.
Since the unfunded liability now must be reported on financial statements as a negative balance, it looks less favorable on audit reports and could lead to higher interest rates on future bonds for building projects.
School Board members unanimously approved setting the special meeting on Nov. 17 to vote on the proposal. If approved, the sale would have to take place on or before Dec. 15 to be valid.
