Residents of Naperville School District 203 may pay more on the tax bill this year, but will save money in the long run.
After much discussion, the Board of Education on Monday night affirmed Superintendent Dan Bridges’ latest recommendation to repurchase school building bonds and save district money in the long term, a plan that has the support of local businesses.
For four of the last five years, the School Board chose to give taxpayers a break by abating the debt service tax levy designated to pay off general obligation bonds the district purchased in 2008 and 2009. By levying the estimated $3.1 million the district would collect, the average taxpayer with a $375,000 home will pay roughly $95 for the debt service.
In 2008, voters gave the Board of Education the ability to issue general obligation bonds in the amount of $10 million in 2008 and $33 million in 2009. The bonds are repaid annually through a debt service tax levy, which in 2013 is $3.1 million, or from cash reserves on years the district abated taxes.
District 203 is at a point of paying off the debt where the bonds have interest-only payments. Cauffman said from now until the bonds are retired, the required interest payments on these bonds exceed $5 million. By repurchasing the bonds, the district can save money on the interest payments.
Board President Jackie Romberg said by extending the levy, the district can make a permanent abatement. “We can do something different to save taxpayers money,” Romberg said.
The plan has received support from the community. Not only did the district citizens financial advisory group recommend extending the debt service levy as long as the district commits the money to the bond repurchase program, the plan got the endorsement of the Naperville Area Chamber of Commerce.
Bridges and District 203 Chief Financial Officer Brad Cauffmann spoke to the Chamber recently and the Chamber responded with a letter to the School Board and administration.
“We view the goals of reducing interest payments through a bond repurchase agreement laudable and prudent financial management. Every dollar that can be saved in interest payments is another dollar that can be invested in our students or returned to the taxpayers through a larger abatement,” wrote Nicki Anderson, Chamber president and CEO, in the letter on behalf of the Chamber.
“While our community has weathered the economic doldrums of the past few years ahead of neighboring communities, the outlook for many businesses, families and taxpayers is uneasy. The school district remains the largest proportionate share of property tax bills and there is no relief in sight from Springfield. This effort to trim planned costs through efficiencies and management is one way to help reduce the burdens on our local businesses and residential community,” the letter went on to say.
Romberg said getting recommendations from the community is important in decision-making. She said she couldn’t recall a time since she was appointed to the school board in 2007 where the district received a letter from the Chamber of Commerce, so that is significant.
The decision to extend the levy did not have the full support of the board.
Board member Donna Wandke, who was the lone dissenter, expressed concerns that the district might not be able to repurchase the bonds this year and did not feel comfortable supporting the push.
Cauffmann said he has identified all but one of the current bond holders. How long it takes for the district to repurchase the bond is dependent on the economy and the bond market, he said.