MONROE - The Monroe School District will refinance almost $20 million in debt as part of an overall effort to lessen what could have been a perfect storm of budgeting bad news.
Under the current state budget proposal, the state will change the per-student revenue cap from $275 to $200. In addition, the state is expected to decrease the amount of aid it gives back to local districts by more than 3 percent. The situation has school districts across the state scrambling to make up the difference.
And a looming balloon payment for existing debt next year threatened a trifecta of budgeting woes for the Monroe district.
By refinancing the debt, the district can avoid a large payment next year. This year, the district's debt service was $2.6 million. It was slated to be almost $3.4 million next year, and then drop to $1.9 the following year. In subsequent years, the amount would have dropped slightly each year, eventually hitting $1.4 million in 2018-19.
Under the refinancing structure, the district will pay additional costs, but will receive a better interest rate, said Ron Olson, business manager for the district. But the biggest benefit, he said, is that the debt will be spread more evenly over the next six years. Instead of the large balloon payment, the district will pay $2.1 million each year, then resume its normal schedule after that.
Refinancing the debt will have a large impact on what district taxpayers end up seeing on their tax bills. Olson said the worst case scenario was a total levy of $13,642,450 for next school year - an 18.5 percent increase over this year's levy of $11,510,902. That number is unacceptable, Olson said.
The anticipated levy will increase an estimated 7.5 percent to $12,379,341 with the debt refinancing, he said. That number is "still more than we'd like to see," he said, and the district will spend the summer trying to whittle that down so the total levy is no more than $12,000,000 - an increase of 4.2 percent.
"We're shooting to get it down," he said.
Despite the unknowns in Madison, Olson said there's some bright spots for the district. Fund 10, the general category for much of the district's expenses, is budgeted at a .64 percent decrease from this year. And, the district is projecting it will levy less than half the amount it is allowed to under its most recent referendum. The district is allowed to levy an additional $2.3 million; it is budgeting to levy $1.2 million. Over two years, that will amount to $1.8 million it didn't levy that it could have, Olson said.
Olson said it's too early to estimate a mill rate. All budget numbers are preliminary and subject to change as lawmakers finalize the state budget. The total equalized valuation for the district is also not known.
Regardless of the outcome, Monroe won't be not the only district struggling with trying to hold back levy amounts. Schools across the Badger Conference are reporting preliminary budget increases between 5 and 15 percent.
Under the current state budget proposal, the state will change the per-student revenue cap from $275 to $200. In addition, the state is expected to decrease the amount of aid it gives back to local districts by more than 3 percent. The situation has school districts across the state scrambling to make up the difference.
And a looming balloon payment for existing debt next year threatened a trifecta of budgeting woes for the Monroe district.
By refinancing the debt, the district can avoid a large payment next year. This year, the district's debt service was $2.6 million. It was slated to be almost $3.4 million next year, and then drop to $1.9 the following year. In subsequent years, the amount would have dropped slightly each year, eventually hitting $1.4 million in 2018-19.
Under the refinancing structure, the district will pay additional costs, but will receive a better interest rate, said Ron Olson, business manager for the district. But the biggest benefit, he said, is that the debt will be spread more evenly over the next six years. Instead of the large balloon payment, the district will pay $2.1 million each year, then resume its normal schedule after that.
Refinancing the debt will have a large impact on what district taxpayers end up seeing on their tax bills. Olson said the worst case scenario was a total levy of $13,642,450 for next school year - an 18.5 percent increase over this year's levy of $11,510,902. That number is unacceptable, Olson said.
The anticipated levy will increase an estimated 7.5 percent to $12,379,341 with the debt refinancing, he said. That number is "still more than we'd like to see," he said, and the district will spend the summer trying to whittle that down so the total levy is no more than $12,000,000 - an increase of 4.2 percent.
"We're shooting to get it down," he said.
Despite the unknowns in Madison, Olson said there's some bright spots for the district. Fund 10, the general category for much of the district's expenses, is budgeted at a .64 percent decrease from this year. And, the district is projecting it will levy less than half the amount it is allowed to under its most recent referendum. The district is allowed to levy an additional $2.3 million; it is budgeting to levy $1.2 million. Over two years, that will amount to $1.8 million it didn't levy that it could have, Olson said.
Olson said it's too early to estimate a mill rate. All budget numbers are preliminary and subject to change as lawmakers finalize the state budget. The total equalized valuation for the district is also not known.
Regardless of the outcome, Monroe won't be not the only district struggling with trying to hold back levy amounts. Schools across the Badger Conference are reporting preliminary budget increases between 5 and 15 percent.