School board may pay off debt, save money
Technically, the $17 million the district now owes to the Wisconsin Retirement System is a liability, not a hard debt, but all indicators are that the liability acts much like a credit-card balance.
The state allowed a minimum payment of $829,968 for 2009 but charged 7.8 percent interest on the balance, or about $1.3 million.
If the district continues to make the minimum payments and the state does not change the formula, the district would owe about $29 million in 2029.
But the school board appears to have the two-thirds majority needed to make an additional payment of $300,000 this month. That payment would save the district $23,400 in immediate interest charges and save a whopping $1.56 million before the liability is finally paid off.
Just three days ago, district CFO Keith Pennington discovered that if the district makes the additional payment by Jan. 29, the payment would be credited to 2009 and thus reduce last year’s interest add-on.
Three board members knew before the board meeting about the possibility of making the 2009 payment, but others did not. Peggy Sheridan seemed perturbed she was not told.
Sheridan said she felt uncomfortable making an on-the-spot decision about spending $300,000 from the district’s operational fund balance.
Sheridan moved, and the board voted 8-1, to delay their vote on the matter to their Jan. 26 meeting. Lori Stottler was the “no” vote.
A board policy that dictates how the fund balance may be spent allows the board to spend about $1.5 million this year, Pennington told the board.
Pennington said he suggested the $300,000 figure in order to preserve a portion of that spending power.
Board member Kevin Murray also moved to require the board to come up with a plan for paying off the liability by 2030. That motion passed 9-0.
Last year, a WRS representative told the board that if nothing changed, the district would not pay off the liability before 2042.
Murray commended the administration for “being the administration that finally wants to do something about this.”
Murray apparently was referring to the change in the administration over the past year, as Karen Schulte became the new superintendent and Pennington was appointed chief financial officer.
The previous business director did provide options for paying off the debt last March, but the board did not to act.
Murray continued to raise the issue, however, and was credited Tuesday for his persistence. Murray pointed to the savings from paying off the liability faster.
“Maybe we can start funneling some of that money back to the students and for student achievement in the future,” Murray said.
The Janesville School Board on Tuesday:
Heard about Superintendent Karen Schulte’s intention to hire a fundraiser for a new foundation that would support district needs. Schulte intends to pay the “foundation development director” with money raised, so the move would be budget-neutral.
-- Heard from CFO Keith Pennington about the Rock County Gladiators semi-pro football team’s use of Monterey Stadium last summer. Pennington said he sees no reason to deny a request from the team to use the stadium again. Gladiators representatives said they’d like to make Monterey their home field.
-- Approved a personnel committee look at increasing the ranks of art, music or phy ed teachers at elementary schools with the aim of improving student achievement.