Cloquet school board members burst into applause during Monday’s meeting after learning the school district will be saving almost double what was predicted for refinancing two different bonds.
“We ended up a lot better off than we thought,” said District Business Manager Candace Nelis.
Nelis said bids came in Monday morning for the refinancing of the district’s Alternative Facility bonds and taxable OPEB (Other Post Employment Benefits) bonds, retirement benefits promised in previous contracts that the district bonded for in 2009. Although advance estimates were for $500,000 in savings, bids came in with an even lower interest rate, meaning the district will actually save $942,000 over the life of the bonds.
The extra money will be used to help offset higher-than-expected property taxes for property owners in the district after finance company Springsted Inc. miscalculated the tax impact of the building bond referendum passed by voters in February 2015. The company overestimated the amount of tax relief the state would provide, leaving property owners on the hook for approximately $500,000 a year for the next six years, or about $3 million more than calculated.
“We’re making about a third of it back, does that sound good?” Nelis said to the board.
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There were more cheers and laughter from the board. “That sounds better than the other way,” said board member Jim Crowley.
Due to the miscalculation, district taxpayers saw their voter-approved levies come in at 20 to 40 percent higher than the estimate provided by Springsted before the district’s building bond referendum. Now taxpayers are looking at some tax-relief.
“Approximately, that means a $150,000 home could save around $23 a year on this tax,” Nelis said, explaining that the decrease will show up on the “other levies” tax line, not the “voter approved” line, however.
As part of the settlement with Springsted, the financial company waived its usual fee for conducting the sale. The school received 1.4 percent interest for the Alternative Facilities bond and 2.5 percent interest from the OPEB bonds, that will pay $942,000 back over the course of the life of the 10-year bonds. The results were verified by another financial adviser, Nelis noted.
Board members voted unanimously to accept the bids Monday night.
Also Tuesday, Superintendent Ken Scarbrough suggested the board consider allowing himself and one other board member to approve any school construction change orders below $100,000 without waiting for full board approval to save time.
“This is more for (approving) modifications that are minor, without a need to bring to the board,” Scarbrough said, giving as an example additional fencing for wetlands that cost $2,000. He explained the change orders would be approved only for ongoing construction, and for small modifications that wouldn’t need a call for a vote. Then it wouldn’t slow down the process.
Crowley voiced concern about this new process.
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“That opens the door to not having any control over the costs,” he said.
School Board Chair Duane Buytaert argued that it could allow for some flexibility. “It’s not an add-on to the overall cost, it’s more like an option,” Buytaert said.
The board decided to save the topic for another night, and discuss things further during its next work session.
School board members also voted Monday to allow Scarbrough to negotiate a slightly reduced sale price for the existing Cloquet Middle School. The original offer was $100,000 but prospective buyer Sherman Associates asked for a $99,000 price instead because that would help with grant applications, which give a higher priority to sales below $100,000.
Also at Monday’s board meeting:
Community Education Director Ruth Reeves declared a 10-cent an hour fee increase has been implemented for Kid’s Corner, Li’l Lumberjacks and Li’l Thunder Learning Centers. The increase is part of a two-year plan to help keep up with program costs.
Reeves also mentioned The Beach opens Monday, June 6.
School finishes on June 3 this year.
