CL Grade School District Borrows $9.2 Million Without Referendum

From Cary Grade School Board President Scott Coffey:

FYI, D-47 just issued $9.2 million of new debt certificates on 6/26/18.

The bonds will be paid off over the course of the next 15 years (2/1/33).

No Taxation without Referendum

Note: There is no statutory authority for the levy of a separate tax in addition to other district taxes or the levy of a special tax unlimited as to rate or amount to pay the principal and interest due on the certificates.

In other words, the district must pay the annual debt service out of their existing operating funds.

The vast majority of the debt service payments are back-end loaded into the last 7 years (2026-2033).


CL Grade School District Borrows $9.2 Million Without Referendum — 7 Comments

  1. No respectable bond house will issue bonds that are not formally authorized per statute.

  2. There is no reason to think what D47 did is illegal.

    I just really object to being put in debt without referendum approval.

  3. I pulled up a copy of the official statement on EMMA.

    There is no separate dedicated tax levy to repay these bonds.

    They are simply payable out of the operating revenues of the district.

    Therefore this bond issue should not increase the total tax rate available to the district.

    I’m not saying they couldn’t have cut taxes if they had not issued debt, but I am saying it didn’t raise any additional taxes such as a Debt Service levy on top of the operating Levy.

    Also, the bonds were issued in June.

  4. For those that may be interested, here is some additional information:

    The disclosure documents on this bond issuance indicates that D-47 anticipates issuing another $10.5 million in debt certificates in calendar year 2019 to finance capital projects.

    The district’s June 2018 Treasurer’s Report apparently shows the district has $110.7 million in Cash and Investments on its books.

    Of the $110.7 million, more than half of that balance is on deposit spread out over almost 100 banks.

    None of the stated yields for any investment balance is greater than the coupon rate (3.25% to 5%) indicated for any maturity date on the newly issued $9.2 million in debt certificates.

    The current year Budget shows Debt Service expense of $7.186 million with the Debt Service levy only providing $3.775 million in revenue to cover that expense.

    The remaining $3.4 million must come from other operating revenue/funds.

  5. Scott, is your interpretation of the funds needed to repay the series 2018 bonds the same as mine?

  6. Yes.

    They have issued Debt Certificates in the past (2010), which they currently are making debt service payments on and won’t be paid off until 2025.

    The funds necessary to make the debt service payments on Debt Certificates must come from other revenue sources or (if they are running a deficit) from existing fund balance.

  7. To these school board idiots, taxpayers are like sheep: There to be fleeced!

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