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| School may levy to pay cost of retiree benefits |
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| Wednesday, 03 December 2008 | |
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Cliff Buchan News Editor Officials in ISD 831 are exploring the use of a new state law that now allows the district to levy local property taxes to cover the cost of post-employment benefits due to retired employees. The school board will continue its review at its regular meeting tonight (Thursday). DeeDee Kahring, a vice president with Springsted, Inc. will present the plan to the full school board. She was in Forest Lake on Monday, Nov. 24 to outline the plan during a work session. Only three of the six board members who agreed to meet that night showed up. For some time, cities and counties have been allowed to levy property taxes to cover the expense of benefits that governmental entities pay retirees through contractual agreements. As of July 1, 2008, school districts, thanks to action by the state legislature, were granted the same levy authority. The levy authority is one of the few instances where school officials do not have to go to the voters for levy approval. Larry Martini, the director of business services for the district, said the plan is a way for the district to save general fund dollars. Right now, he said, all post employment benefits are paid from the general fund. By adopting the bond program, he said the district would save some $400,000 to $500,000 a year in general fund dollars that could be put to other uses or help offset budget shortfalls. The funds equal roughly 10 teaching positions, Martini said. More study The school board is expected to have its first formal review of the plan tonight. Kahring gave board President Bill Bresin and members Dan Kieger and David Gay a brief overview during the November 24 gathering that did not generate a board quorum. Under the plan, the district will have the option of selling general obligation taxable “Other Post Employment Benefit” bonds. The bonds could come in two forms — one a $6.69 million pre-funded issue that would cover projected costs through 2030 and a second issue of $1.63 million pay-as-you-go plan to cover obligations. “From a financial perspective, I would recommend pre-funding,” Martini said in an interview. If approved by the school board in early 2009, either of the bond programs would be part of the district levy in 2009 for property taxes to be collected in 2010. Once collected, the tax dollars would go into a district trust and metered out, according to the district’s cost obligations on an annual basis. There is a tax hit to property owners in the district. Under the $6.69 million bond issue, a home with estimated market value of $250,000 would pay additional property taxes of $29 a year over the 20-year bond. For the $1.63 million bond proposal, a home with estimated market value of $250,000 would pay additional property taxes of $7 a year over the 20-year bond. Kahring said her firm has already worked with a number of school districts in moving to OPEB bond sales. Springsted is now forming a $22 million bond program for Rochester. Springsted has developed OPEB bond programs for a number of districts that include: Alexandria at $7.9 million, Elk River at $3.3 million, Mounds View at $26.2 million and Staples-Motley at $1 million. Social Bookmarking ...       |
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