Robbinsdale Area Schools Issues $18M Facilities Bond Amid Budget Troubles
Robbinsdale Area Schools moved ahead with plans to issue $18 million in bonds this week for long-term facilities maintenance.
The decision came as the district announced it’s facing a $20 million shortfall in its general fund. That deficit is partly due to an accounting error.
“I look at this number and it’s startling,” said district CFO Kristen Hoheisel in a Nov. 18 “State of the Budget” address. “The financial realities are difficult.”
Long-term facilities maintenance is a separate pot of money from the district’s general fund, so the bond issuance doesn’t add to the general fund deficit.
However, the district’s overall financial situation has an impact on its credit rating, and the costs to borrow money.
The district’s credit rating recently dropped two scores.
An S&P Global Ratings report cited the district’s “rapid financial deterioration” as a reason for the downgrade.
A higher credit score means higher interest rates for the bond.
“We believe we went through a successful process and it worked well, but it is fair to say that it did cost you some money because of this downgrade,” said a district financial consultant with PMA Securities.
With the general fund shortfall, the district may need to close buildings to fix its balance sheet.
Hoheisel said district officials don’t plan to spend large sums on buildings that might be on the chopping block.
“You don’t want to invest money, you don’t want to invest multi-million dollars into a building that may not be a viable building to us in two years, three years,” she said.
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