An Introduction to the Bond Controversy

April 5, 2010

The cart is in front of the horse.... The "cart" is a resolution passed by the District 15 board on March 10, 2010, to issue up to $27,000,000 in bonds. The "horse" that you would normally want in front of the "cart" includes board member consensus on how much money is needed and for what purpose.

But the board hasn't yet decided how much money it needs nor agreed on spending priorities. This will be on the agenda... but only after the 30-day deadline for the public to accept the $27,000,000 bond issue.

Also included in the $27,000,000 is $10,000,000 for a Working Cash Fund that would act as an "internal bank" for District 15. This is an inefficient use of taxpayer money. To learn more about this see District 15 Cash Management.

Another aspect of the new bonds is a "refunding" of bonds issued in 2001. However, these bonds are not "callable" so this action will cost the district about $2,000,000. To understand this you can think about a home mortgage, which normally can be refinanced at any time without having to pay all the interest that is spread out over the life of the loan. Non-callable bonds don't allow this. All interest due in the future has to be paid at the time of refunding. The administration hasn't provided any analysis showing how this could be cost effective.

There's also an open question about how committed the board is to avoiding deficit spending. The District 15 administration posted $27M Bond Authorization Q&A statements mentioning deficits. But there are lots of holes in the answers they provided (see board member Sue Quinn's counterpoint response to the Q&A).

There is nothing to prevent any part of the $27,000,000 from being transferred to the educational fund to offset what would otherwise be deficit spending. Most board members have not responded to multiple requests for comment about deficit spending.

To add insult to injury the March 10th vote also started a 30-day clock that gives the public one of two choices. Either (1) accept that the board has made a good decision to issue bonds in a financially sound way that balances the needs of students, teaching staff and taxpayers -OR- (2) sign petitions to put the bond question on the November ballot.

Board Member Comments on Deficits

Question: In the short term, bonds can be used to fund deficit spending. What is your commitment to avoiding deficit spending?

• Gerald Chapman: Did not directly respond. Instead referred to the Bond Authorization Q&A mentioned above.

• Mark Bloom: Did not respond.

• Peggy Babcock: Did not respond.

• Richard Bokor: Did not respond.

• James Ekeberg: Did not respond.

• Timothy Millar: "I am not in favor of deficit spending unless it is a temporary condition and not indicative of a broken business model."

• Sue Quinn: "In March the Administration shared about $4M in cuts with the Board (this information was not released to the public, but the board was privy to it). The cuts were administrative and did not affect kids in the classroom. I support those cuts, as well as a continued focus by the administration to find cost cutting areas to help us trim the deficit spending."