Brown Deer seeks refinancing

May 28, 2014

Brown Deer — Brown Deer residents will be asked in August to approve a school referendum, but unlike other referendums, this won't cost the taxpayers any money.

The Brown Deer School Board on Tuesday decided to put a referendum on the Aug. 12 ballot asking voters to issue $4 million in general obligation bonds to refinance three existing loans. The referendum would allow the district to refinance and restructure its debt in a way that would save the district between $300,000 and $500,000, said Emily Koczela, the district's business manager.

One of the district's debts has 12 years remaining, and the interest varies per year between 5.2 percent and 5.7 percent. Koczela believes current interest rates are much more competitive, based on the low rates she received on borrowing from the 2011 referendum.

The other two debts are State Trust Fund loans. One of these loans totals $750,000, and the other is paid down to $480,000.

Koczela said it would make more sense to switch the State Trust Fund loans from the non-referendum debt service fund to the referendum-approved debt service fund. Those loans currently reside in a fund that must be paid off with the general tax levy, which is within the state revenue cap. By moving the loans to a new fund, the district would be able to pay it off with non-levy funds, which frees up money that can be used in classrooms.

By moving the State Trust Fund loans to a new fund, the district would also have the potential to pay off those loans ahead of their scheduled dates.

Koczela said she received a positive response when she presented the referendum plan to the Village Board, parent-teacher organizations and other community groups. She said most referendum fears are assuaged when people hear that no taxpayer money will be spent, and that the loans being refinanced are not from the borrowings in the 2011 referendum.

The most common reaction Koczela said she has heard from community members is: "Why do the voters need to vote on this?" Most refinancing strategies do not require a referendum, but Koczela said state laws require this plan to go to the ballot.

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