Highland News Leader

Audit shows drop in debt for Highland School District

The Highland School District had $21.785 million in outstanding debt at the end of the 2014 fiscal year, which ended on June 30, according the district’s recently completed audit.

“It is certainly good to see the debt continue to drop,” Highland School District Business Manager Tim Bair said.

Bair projected the district’s deficit will decrease by another $2.8 million during the current fiscal year, ending on June 30, 2016.

“Most of our debt reduction is simply due to our annual payment,” he said. “However, we did refinance bonds again this year at pretty significant savings to taxpayers, about $300,000.”

Bair said the district will continue to refinance bonds “as long as it’s beneficial.”

While the district continues to pay down its loans, it still has a lot of borrowing power left. The audit showed the district’s overall bonded debt limit (commonly referred to as debt ceiling) was $49,716,717.

It may need it if the state continues down its wayward fiscal path.

Kevin Teppen, who presented the audit to the School Board on Monday on behalf of the firm C.J. Schlosser, said the state has “not been kind” to school districts in recent years.

“And I don’t know when they will be kind,” he said.

He cited Highland’s Education Fund as an example. The Education Fund began the year with a negative $1,077,851 balance, according to the audit.

In 2014-2015, expenditures exceeded the revenues by $368,114 , which would have given the fund balance negative $1,445,965. However, the district moved other money around in order to bring balance in the Education Fund $6,523.

“The board approved up to $2 million to be abated from the Working Cash Fund, because we didn’t know for sure how much would be needed to create a positive Education Fund balance,” Superintendent Mike Sutton said Tuesday.

The district uses the Education Fund to pay for teachers’ salaries and textbooks.

On the bright side, the district projects a 1.1 percent increase in property taxes this year.

“This will be the first time in four years the district has seen property taxes increase,” Bair said.

General state aid is also expected to be prorated at 92 percent this year. In recent years, the state has prorated general state aid at 89 percent.

“We really need the state to fully fund general state aid at 100 percent,” Sutton said on Tuesday. “Our costs continue to increase and our revenue continues to decline.”

Sutton said the district has to continue to work toward balancing its budget.

“We have made great strides the last few years, but it seems each time we take a step forward, something happens at the state level to take us backwards two steps,” he said.

The district stands to lose an additional $500,000 in general state aid for next year, based on six-day enrollment numbers this year, which showed a decline of 120 students.

The audit noted the district had $55,778,829 in fixed assets as of June 30, 2015. About 92 percent of those assets ($51,407,665) were the district’s buildings.

Highland School District Outstanding Debt

▪ $545,000 in General Obligation School Obligation Bonds (Series 1998) with an annual interest rate of 6.65 percent. A portion of these bonds, issued on Aug. 1, 1998, were later refunded by the Series 2008 bonds issued by the district. The district applies $545,000 to its outstanding price annually.

▪ $5,435,000 in General Obligation Refunding Bonds (Series 2005A) with interest rates at 4 to 5 percent. The district, on March 22, 2005, issued these bonds. The district applies $1,065,000 to $1.98 million to its outstanding principle annually.

▪ $4,715,000 in General Obligation School Bonds (Series 2015) with an annual interest rate of 3 to 4 percent. The district, on Apri1 15, issued these bonds. The district applies $50,000 to $550,000 to its outstanding principal annually.

▪ $395,000 in General Obligation School Bonds (Series 2006) with an annual interest rate of 4 to 4.125 percent. The district, on Feb. 23, 2006 issued these bonds. The district applies $380,000 to $580,000 to its outstanding principal annually.

▪ $525,000 in General Obligation School Bonds (Series 2007) with an annual interest rate of 4.8 to 4.95 percent. The district, on May 3, 2007, issued these bonds. The district applies $255,000 to $270,000 to its outstanding principal annually.

▪ $1,135,000 in General Obligation Refunding Bonds (Series 2008) with an annual interest rate of 4.1 percent. The district on Sept. 8, 2008, issued these bonds. The district applies $15,000 to $595,000 to its outstanding principal annually.

▪ $2,275,000 in General Obligation Refunding Bonds (Series 2012) with an annual interest rate of 2.75 to 3 percent. The district on March 6, 2012, issued these bonds. The district applies $285,000 to $1,990,000 to its outstanding principal annually.

▪ $1,710,000 in General Obligation Working Cash Bonds (Series 2013A) with an annual interest rate of .75 to 3.25 percent. The district, on June 28, 2013, issued these bonds. The district applies $125,000 to $600,000 to its outstanding principal annually.

▪ $5,050,000 in General Obligation Refunding Bonds (Series 2013B) with an annual interest rate of 3 to 4 percent. The district, on June 28, 2013, issued these bonds. The district applies $220,000 to $2,250,000 to its outstanding principal annually.

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