Schools' credit rating comes with a price, critics say
Board cites taxpayer payoffs, others say students are impacted
Douglas County School Board President John Carson defended the district’s financial reserves during the board’s Feb. 5 meeting, saying the fund ensures a credit rating that saves taxpayers money.
“We as a board have set a 4 percent reserve,” he said. “Some people think that’s too high. I think in the economy and budget we’re in, with fluctuations in revenue, it’s the prudent thing to do. Not only prudent for the long-term planning and welfare of our district, but it obviously pays huge financial dividends back to the school district and taxpayers of Douglas County.”
The comments stem from a recent bond refinancing that will save property owners about $3 a year for the next 17 years, and an assertion from a parent-led group that the fund balance is unnecessarily high.
“The cost of what it’s taking away from the education system far exceeds the benefits,” said Susan Meek, vice president of Strong Schools Coalition.
An underwriter praised the school board during its meeting for conservative financial policies that help feed an AA+ credit rating, one that ranks DCSD third among the state’s 178 school districts.
“There were some impressive results here,” he told the board.
Fitch Ratings reviewed the district’s financials for a recently completed bond refinancing that dropped the interest rate from 5 percent to 2.99 percent. That paired with another refinancing in late 2012 will save taxpayers about $5 million, he said.
The county has about 110,000 taxable parcels, according to the assessor’s office, for an annual savings of about $3 on each Douglas County property.
“It's great to capitalize on lower interest rates," said Laura Mutton, president of Strong Schools."But if you're withholding money from the schools in order to have a high bond rating and you're only saving taxpayers $3 a year, that's a questionable trade off. Especially at a time when schools have endured serious budget cuts from the state and parents are being asked to pay higher student fees."
For the first time in five years, the district plans no cuts in the coming academic year. Last year, it met an $18 million shortfall with money found in over-budgeted line items, as well as cuts to central administration and the high schools.
DCSD has an unrestricted fund balance of $86.7 million. The unrestricted funds are those limited for use by statutory requirements. Its unassigned fund balance — money the district has not earmarked for specific uses — is $18.1 million.
Meek, former DCSD spokeswoman, said the district has maintained a high credit rating for many years and through large fluctuations in the general fund balance.
DCSD has had an AA rating for several years running, and was assigned the AA+ in 2010.
Spokeswoman Cinamon Watson said the district “takes every opportunity to do everything we can to be good stewards of the taxpayer dollars. We’re using it wisely, and producing a great product.”
Meek and Mutton formed the now 600-member group to “inform, engage and positively impact the public schools in Douglas County,” according to Strong School’s website. They’ve criticized the district’s fund balance, budgeting and time the board spends in executive sessions.