D122 Takes Up 2-Part Financial Plan; Bond Restructure and Working Cash Bonds
The New Lenox school board was presented with a two-part plan to save taxpayers money and manage the budget crunch.
The New Lenox School District 122 Board of Education is working on a two-part plan that calls for restructuring bonds sold in 2011 and selling working cash bonds.
Since bond rates are currently at historic lows, NLSD 122 is looking to heed the advice of financial market experts. Baird & Warner, Inc. proposed restructuring $126 million in bonds sold initially in 2011. In an interview, District Business Manager Harold Huang said without implementing a restructure plan, the interest rate on the existing 20-year bond sale is anticipated to jump from about 65 cents per $100 equalized assessed valuation to around $1.50 from 2018-2027.
Now is the time to take steps to avert a burden that's too heavy for taxpayers to bear, he said. The district is planning in March or early April to implement the restructure.
The 2012 tax levy costs the average owner of a home valued at $230,000 about $2,500 a year in taxes to keep the district's 12 schools operating. Over the next few years, the tax rate will rise slowly, reaching about 99 cents in 2018.
"Yes," he said, the restructure "stretches the bond out for another 10 years," but it reduces the hike in the tax rate by about 56 cents. The tax rate will still rise from 65 cents to about 99 cents. The savings on a home valued at $225,000 is $1,260; for a $270,000 home, the savings is $1,512 and for a $300,000 home, the reduction in taxes is $1,680.
Working cash bond sale
The second part of the plan is to seek a resolution to sell $5.6 million in working cash bonds. This is a 20-year obligation that heads-off the possibility of seeking tax anticipation bonds to fill in funding gaps due largely to the decline in state funding. Since the money is slated for the working cash fund, it can be pulled for use in other funds. It's likely the bulk will be used to help with the upkeep of the more aged buildings in the district, he said.
Ultimately, the district's principal indebtedness will go from $126 million to $131.6 million. The interest from the bond restructure is expected to cost $34.6 million and the cost of selling working cash bonds is $8.5 million. The total cost of repackaging the bonds and selling a fresh one is $43.1 million.
Huang said he's optimistic at the overall economic outlook in the district. Business is consistently attracted to the community and home construction is on the rise. The economy is improving. Barring any unforeseen or drastic changes from the federal government, the district is functioning well financially.
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