SD 228 considers bond sale
By Mike Nolan email@example.com November 5, 2013 7:08PM
Updated: December 7, 2013 6:07AM
Bremen High School District 228 may sell up to $34.5 million in bonds to offset expected budget deficits in coming years.
Decisions about how much in bonds will be sold and when won’t be made by the school board for a few more weeks, according to Tom O’Malley, District 228’s assistant superintendent for finance.
Less state funding, lower property values in the district and a cap limiting how much the district can raise its tax levy (the amount it expects to bring in via the property tax) are contributing to operating revenue shortfalls, prompting the need for the bond issue, O’Malley said.
He said District 228 has been financially prudent and not spending beyond its means. The district consists of Bremen, Hillcrest, Oak Forest and Tinley Park high schools.
“We’re doing a very good job controlling costs,” he said.
Along with the bond issue, the district plans to refinance $6.5 million in outstanding bond debt to take advantage of lower interest rates, saving at least $300,000, O’Malley said.
He said if the full $34.5 million in bonds were to be sold, it would enable District 228 to maintain positive operating fund balances for five years, and the district would expect to pay off the bonds within 41/2 to 5 years.
O’Malley said an 11 percent drop over the past two school years in funding from the state — a decline expected to increase to 15 percent next year — has reduced district revenue, along with a steep drop in the assessed values of homes and businesses in the district.
Any increase in the district’s property tax levy is tied to changes in the Consumer Price Index, the federal government’s main measure of inflation. O’Malley said any increase in next year’s levy would be capped at 1.7 percent more than the current levy.
Because of the reduced revenue, District 228 is projecting annual operating deficits in the neighborhood of $6 million over the next couple of school years, he said.
The district can assess a separate levy to pay the principal and interest on bonds. O’Malley said the total dollar amount levied for paying debt, about $9.5 million a year, would remain unchanged because of the refinancing and paying off some existing bond debt this school year.