Wednesday, February 28, 2007
District 300 Bonds – The Short-Term Rules
District 300’s board of education voted Monday night to borrow $11 million to pay interest.
It’s a lower rate than the high bench mark of 4.25% a bond expert quoted me Monday, but higher than the possible low of 3.85% he also estimated.
The $11 million is in addition to the $105 million borrowed with which District 300 can actually buy something tangible.
That’s interest that would not have to be paid, if the Carpentersville District 300 school board had been willing to let the tax rate go up in the near term.
That may make good political sense, but it doesn’t seem to make financial sense.
At least it wouldn’t in my household.
To avoid short-term pain, the taxpayers have been saddled with an extra $12 million in principal to repay, plus (if I can use the average calculated by Daily Herald reporter Jeff Gaunt) 1.63 times $11 million or almost $1.8 million more in interest.
That’s $1.8 million interest to be repaid on the extra $11 million borrowed to pay the interest to keep the tax rate lower than it otherwise would be.
Got all that.
Oh, yes, by postponing the repayment of ANY principal until 2015, there will be more people to pay it, so the share for current taxpayers will be less.
And people complain about Springfield politicians putting off making pension payments.
I hope no one on the District 300 board has every voiced that complaint.
Gaunt also notes that the typical suburban school district has to pay $1.53 per $1 borrowed.
District 300’s strategy is costing $1.63—6.5% more than the suburban average.
The headline in Elgin’s Daily Courier News today read,
But it’s almost $13 million more because of the selected repayment schedule.
Net loss to taxpayers?
Almost $10 million.
"We are working well to help our school system and help our taxpayers,” District 300 school board President Mary Fioretti is reported to have said in Gaunt’s article.
Fioretti is up for re-election the third week of April.
Because of the bizarre school election law only allows three to be elected from the same township in a unit district with multiple townships, Fioretti is effectively running against John Ryan, who opposed both referendums last year.
Both are Republican precinct committemen, Ryan elected and Fioretti appointed by McHenry County Republican Chairman Bill LeFew.
It’s a lower rate than the high bench mark of 4.25% a bond expert quoted me Monday, but higher than the possible low of 3.85% he also estimated.
The $11 million is in addition to the $105 million borrowed with which District 300 can actually buy something tangible.
That’s interest that would not have to be paid, if the Carpentersville District 300 school board had been willing to let the tax rate go up in the near term.
That may make good political sense, but it doesn’t seem to make financial sense.
At least it wouldn’t in my household.
To avoid short-term pain, the taxpayers have been saddled with an extra $12 million in principal to repay, plus (if I can use the average calculated by Daily Herald reporter Jeff Gaunt) 1.63 times $11 million or almost $1.8 million more in interest.
That’s $1.8 million interest to be repaid on the extra $11 million borrowed to pay the interest to keep the tax rate lower than it otherwise would be.
Got all that.
Oh, yes, by postponing the repayment of ANY principal until 2015, there will be more people to pay it, so the share for current taxpayers will be less.
And people complain about Springfield politicians putting off making pension payments.
I hope no one on the District 300 board has every voiced that complaint.
Gaunt also notes that the typical suburban school district has to pay $1.53 per $1 borrowed.
District 300’s strategy is costing $1.63—6.5% more than the suburban average.
The headline in Elgin’s Daily Courier News today read,District 300 saves cashYeah. The interest would have been $3 million more under the old, lower bond rating…
But it’s almost $13 million more because of the selected repayment schedule.
Net loss to taxpayers?
Almost $10 million.
"We are working well to help our school system and help our taxpayers,” District 300 school board President Mary Fioretti is reported to have said in Gaunt’s article.
Fioretti is up for re-election the third week of April. Because of the bizarre school election law only allows three to be elected from the same township in a unit district with multiple townships, Fioretti is effectively running against John Ryan, who opposed both referendums last year.
Both are Republican precinct committemen, Ryan elected and Fioretti appointed by McHenry County Republican Chairman Bill LeFew.
Labels: District 300, John Ryan, McHenry County Republican Central Committee, Premium Bonds. Mary Fioretti
