Court verdict stymies school bond sale plans

• RF School District

RF School District

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The Dane County Court ruling Friday, Sept. 14 that threw out Gov. Scott Walker’s 2011 law that repealed most collective bargaining for public employees, including teachers, had a spill-over effect on $7.6-million worth of bonds the River Falls School District tried to sell Monday, Sept. 17.

Four bids came in, and they carried higher-than-expected interest rates. The lowest bid was 2.72%; the highest was over 3%.

By historical measures, those remain bargain-basement borrowing rates. However, school district Finance Director Chad Smurawa was estimating a 2.15% interest rate on this latest bond sale.

As a result the school board Monday night unanimously rejected the bonding bids. Smurawa said a new bond package will be reissued later this year.

The bonds were the second and last set to be bid following the passing of one school referendum question from November 2011.

About $12 million worth of bonds were sold earlier at a 2.55% interest rate.

Referendum construction projects affect all the local schools, to some degree or other, and also the school bus garage.

Work begun in June, has ended, but will resume next June after the 2012-13 school year.

Smurawa said the delayed bond sale won’t hinder the construction projects.

The board’s Monday night action was made on the recommendation of school district administrators and by the district’s bonding consultant, Ehlers and Associates.

Smurawa said Friday’s court decision on Wisconsin’s law “put a chill in the air” for bond investors “who don’t like risks.”

In addition, he was told there’s a national glut of municipalities refinancing in hopes of capitalizing on super-low interest rates. Bond buyers are pickier, and the court ruling and appeals to follow made Wisconsin bonds seem riskier.

Smurawa said the bond market outlook is still promising, especially with the Federal Reserve’s stated goal of driving down interest rates.

“The indicators show that we’ll get a very good rate if we wait a little while,” he said.

Smurawa said interest rates, even with this week’s upward blip, are still more favorable than in 2011 when the referendum’s finances was pitched to local voters.

Overall referendum costs to taxpayers will still be much less than originally thought and should be paid off in 15 years instead of 18.

Also Monday night, a small turnout of district residents passed by voice vote the new school district tax levy of $18,276,776.

This is an advisory vote until later October when the school board approves the levy after receiving official state-aid figures and other data.

The new school tax levy represents a 2.1% increase over the current levy. For a $200,000 house that had little change in value, an owner would pay close to an extra $50 a year in school taxes.

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