Differing Opinions on School District Debt
School Board Member Wants Bonds Rebudgeted
DULUTH, Minn. – Duluth’s Public School District will pay $45 million out of its general fund over the next 15 years.
The district took on the debt in the form of bonds which went to a variety of projects including construction of the new Duluth East and renovations at Denfeld High School.
The city currently pays roughly $23 million a year on the bonds, including about $3 million from the general fund, at 4% interest. School board member Art Johnston says it’s time to renegotiate.
“If we refinance, we’d only be paying $16 million per year instead of $23 million, that’s a $7 million difference,” said Johnston. “$7 million, that’s 70 teachers we could be adding. That’s just next year.”
According to Duluth Public Schools Chief Financial Officer Doug Hasler, the district refunded bonds in 2015 and 2016, saving the district about $8.6 million.
Hasler says if refunding all the bonds Were an option, he’d be all for it. But Hasler says refunding would cost the district more over 20 years, adding about $75 million in property taxes over the same period.
“We are absolutely in favor of doing re-fundings where they make sense and save us money, we’ve done those,” said Hasler. “We did that the last two years and we will continue to be vigilant in the future. But it’s a process where you can’t do them, just because you want to do them, you can only do them when the interest rate environment is right.”
Johnston has a re-funding resolution he’s presenting at next week’s school board meeting, when the board will finalize next year’s budget.
Johnston says re-funding to 2 or 3 % is possible, Hasler says not with the length of the bonds the school holds.