District wants input to make the best decisionAt its July 13 meeting, the Red Wing School Board discussed a method of bonding to cover the cost of other post-retirement benefits or OPEB.
By: Stan Slessor, Red Wing, The Republican Eagle
At its July 13 meeting, the Red Wing School Board discussed a method of bonding to cover the cost of other post-retirement benefits or OPEB.
These benefits are primarily health insurance benefits available to retired teachers and administrators. This is a contractual benefit for most of the current staff in those positions.
Through negotiations, the benefit no longer exists for faculty and administrators hired in the district after July 1, 2008.
Districts that have ended this benefit for new employees are eligible to bond to pay the cost of this contractual obligation.
The advantage of bonding is that the cost would no longer be paid through the district’s general fund.
With state aid frozen for two years and great uncertainty over the state’s ability to fund education after the freeze, our district is examining ways to stretch our general fund to support current and future educational programming.
The recently passed referendum was designed to add $500,000 to the general fund to reduce class size and boost student achievement. The potential benefits of the referendum, now threatened through limited state funding, can still be realized through OPEB bonding.
Without bonding, the district needs to cut at least $500,000 from its 2010-11 budget and hold that cut over the next four years. This would leave the district with a negative $500,000 balance at the end of the 2013-14 school year.
OPEB bond proceeds are placed in an irrevocable trust that can be used only to phase out the cost of post-retirement benefits.
Approximately $750,000 per year is saved in the general fund for educational programming.
The bond payments can be coordinated with the retirement of the Colvill debt in 2010 and the debt on the high school, which retires in 2014.
This coordination keeps school property taxes at their present level. It does extend the retirement of the district debt for five years. Current low interest rates make bonding more favorable.
The ability to bond through board action ends by law on Oct.1. To meet this deadline, a resolution to sell bonds would need to be acted upon by the board at its Aug. 17 meeting.
We need public input as we decide whether to bond. Please give us your thoughts or questions by responding to this article on the Red Wing School District’s Web site — www.redwing.k12.mn.us — or contacting me or our School Board members.
Stan Slessor is Red Wing School District superintendent.