Clarkston schools could save more than $700,000 with a ‘refund? of a portion of taxes levied for a 1997 bond issue.
The formal resolution is expected at the board of education’s March 22 meeting, but trustees on March 8 seemed favorable to the move.
Bruce Beamer, executive director for business and financial services, said ‘callable bonds? for 2005 through 2016 may actually cost the district more because of low interest rates. The district’s financial consultants have recommended the move.
‘These are the lowest bond rates we’ve had in a long time,? Beamer said, explaining the plan to either refinance the remaining bonds or ‘pull the plug and not sell them.?
The move would not affect the most recent bond issue, but all bond debt is in one fund and the length of total debt could be reduced if the 1997 bonds are ‘refunded.? A similar was action was taken with 1993 bonds.
‘We will gradually reduce taxes years down the road on our debt,? Beamer said.
Of more immediate financial impact were March 8 board votes to amend the current year’s budget and establish a special fund to pay for new building additions beginning in fall 2005.
For the current fiscal year, projected spending is now $65.75 million, up from the last amended budget figure of $65.43 million. Projected income, meanwhile, is increased as well, but not as much. Beamer projects revenue of $65.61 million up from $65.48 million.
The majority of the income increase, Beamer said, comes from special grants, and spending was adjusted proportionally. The revenue side of the budget had to be adjusted even higher, however, because of adjustments in the state per pupil allocation, he said.
The revised budget does not include figures from this past winter’s cut in state aid, nor the refund in special education dollars from Oakland Schools, which Beamer previously said would essentially balance each other out.
Projected fund equity at the end of the school year will be about $10.3 million, Beamer said, down from an originally projected $11.3 million.
All the numbers notwithstanding, Beamer said, ‘Overall, we’re in a very good position.?
The establishment of the ‘new building operating costs fund? came from an earlier board decision to earmark some fund equity to ensure adequate funds to operate new and expanded buildings paid for by 2003 bond dollars.
Using an estimate of $5.25 per square foot, the district established a goal of reserving $1,427,260 by fall 2005. The board vote set a transfer of $700,000 from the current budget, with the remainder to come from the 2004-2005 fiscal year.
The money may not be used for textbooks or staff, Beamer said, only for physical plant expenses. He also warned of the need to include such expenses in the regular budget.
‘Our concern was the impact of all those operating costs hitting the general fund at one time,? Beamer said. ‘This will eliminate that impact for one year, but not for the long term. This is not a long-range fix.?