The Geneva School District 304 School Board voted unanimously Monday night to abate $5.9 million to taxpayers in an effort to keep bills more consistent.
It's a move the district has used in recent years – it levies a set amount one year, then takes excess funds and tells the county clerk to apply it to residents' future tax bills.
It's meant to "flatten" tax bills for Genevans, who are paying on $300 million in debt the district owes for building schools that taxpayers okayed in a 2007 referendum. In the last fiscal year, District 304 made a debt payment of roughly $18 million on outstanding loans and bonds. That number will jump to $24 million by 2017.
With abatement, the hope is that residents won't see a sudden jump that corresponds with the sudden increase in debt payments, board members said.
On Monday, board member Mike McCormick, who in the past has questioned whether the strategy was "smoke and mirrors," said the abatement should help taxpayers.
"Our job doesn't end here," McCormick said. "We have to be predatory hawks" about line items in the budget. "It does taxpayers no good if we hold an increase in the debt service fund, but let the other funds float up."
The board and administrators have acknowledged that the district is grappling with more than expected debt because they counted on continued economic growth and that new housing and businesses would create a larger pool of taxpayers to shoulder the bonds and loans.
The board still has to determine.this spring whether it will extend its debt for more years to lower future payments, how much it plans to set aside to pay down principal, or whether it will attempt a refinancing of the debt.
In a memo to board members, Superintendent Kent Mutchler said the best option may be to abate excess funds to taxpayers for the next two years, then use any surplus in the following years to pay down principal at the bond's "call" date.
Currently, the strategy has been to abate any amount that exists once the district has $15 million in its working cash fund, but members have said that it may be time to lower the amount it keeps in that fund so that the district can pay down more debtl.
"I strongly believe in doing something that pays down our principal," said board member Mary Stith.
She noted that many of the options the board is considering for debt restructuring are predicated on the district levying taxpayers the full amount is allowed by law, something it hasn't done in the last two years in an effort to keep taxes lower.Copyright © 2014, The Baltimore Sun