LINN — Linn R-2 board members agreed with Superintendent Bob James’ recommendation at last week’s meeting that the district should pay down its debt to comply with Department …
LINN — Linn R-2 board members agreed with Superintendent Bob James’ recommendation at last week’s meeting that the district should pay down its debt to comply with Department of Elementary and Secondary Education (DESE) requirements instead of running a no-increase bond issue.
“I think that would take care of legitimate needs,” he said, alluding to resurfacing the track, repairing the high school HVAC system, and a few other things. “We can also do that with our fund balance.”
James estimates the district will have a fund balance of just over 30% even after tackling some of the more significant issues. He explained that DESE wants the district to have a 20% fund balance, while auditors recommend adding 5% to that total.
Linn R-2 has a fund balance of about 58%, but that will drop to the low to mid-30s after operational expenses are paid.
James added that five percent of the annual operating budget — between $360,000 and $380,000 — would be more than enough to pay for track resurfacing and other projects.
He noted the district has a healthy Fund 3 balance of $1,873,577.80 as of Tuesday, and James said payments throughout the year will be made using that balance.
“Our collections will not be complete until everyone makes their payment(s), so that will grow commensurate with our collection rate,” he added.
Linn R-2’s debt-service levy generates approximately $800k in debt service each year. Linn’s debt service payments are just short of $600,000.
“Our community has put us in a great position,” said James, explaining the purpose of Fund 3 is to retire debt, and that is the only allowed expenditure aside from third-party debt management. “We currently have more than enough money going into Fund 3 to make our payments.
“That is not the only option we have for those funds,” James added. “We could also choose to pay down our debt-service balance from the last bond. That would also bring us into compliance.”
Alternatively, the district could run a smaller bond right away to take care of immediate needs. Still, James believes that in a year, the district would be in a better position to run a focused, long-term plan that the community would support.
“So, the question is do we spend the balance of the bond right now or use that to pay down our debt service?” James asked.
Board President Dr. Shawn Strong said much would depend on how community members feel. “Our ultimate goal is to get students out of the basement,” he said. “What is our best opportunity to make that happen? Is that a no-increase bond now to show we can get some things done and then ask for something bigger later? Or do we pay down this debt, be super-thrifty right now, and come up in the next year that might include some of those other things? I think we can all agree that what was acceptable 50 years ago with students in the middle school is much different than what’s acceptable today.”
Dr. Strong added that it’s not as much about the short term as it is about asking for something bigger in a year or two.
Board member Mark Baker said he believes it’s essential to have a clear goal when asking the community to support a bond issue. “I think it would be better if we could lay out a long-range plan,” he added. “I kind of like that route but either way, it seems we all agree there are a few items we need to tackle in the future, so maybe we should fine-tune it a little more before we ask.”
Board member Naomi Klouzek agreed. “As long as we can fix the track and the other emergency things,” she said. “We can’t put off the track anymore, but I don’t see anyone voting to increase their taxes right now. I’m all for waiting for a bigger bond issue once we get our ducks in a row.”
Dr. Strong clarified that a smaller bond would be a no-increase levy.
“I wouldn’t want to do that if we could get something larger down the road,” Klouzek replied. “If we have the money to fix the track and do the emergency things now and not do the no-tax bond, that would be better.”
“The reality is if you vote for a no-tax increase (bond), a year or two later, everybody feels like they just voted for a bond, and their tax increased whether or not it did,” Dr. Strong interjected.
Baker added that a small bond issue would also tie up some of the district’s bonding capacity. “I think if you go for an ask, either way, I don’t think a lot of people differentiate a no-tax bond,” he said.
Board VP Hannah Swann noted that if the district uses existing funds to pay down debt, the same issue will arise again until the school has a long-term plan.
“If we have funds to take care of our immediate issues, I don’t see any issue with waiting; maybe interest rates will be lower,” she added.
Dr. Strong said the banking industry believes interest rates will come down as quickly as they went up.
Board member Jamie Bish wants to determine needs as that aligns with previous discussions.
James said he would research current costs to resurface the track. He also wants to take a look at long-term needs and consider a bond issue in the future. He will solicit a request for qualifications (RFQ) to have an architectural firm develop a 10-year plan to handle debt service.
In open forum, former board member Larry Hunt asked how track repairs were proceeding, especially the field-event areas, since they were reconfigured to accommodate the football field.
Facilities Director Cliff Wilson noted that most repairs are finished. He is waiting for the ground to dry to finish leveling and inserting sand.
“The only thing keeping us from moving forward has been sloppy weather,” said James, noting, however, that everything is draining fairly well.
In other business, board members in closed session voted unanimously to extend James’ contract through the 2024-25 school year.
• There will be no election in April as incumbents Dr. Strong, Klouzek, and Lori Greer were the only people to file, which matches the number of seats opening.
Remaining business will be presented next week.
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