MARINETTE—Now that the Marinette School District’s rightsizing referendum has passed, the Board of Education began discussing the next steps in actualizing the project.
Lisa Voison of Baird, a financial group based in Milwaukee, on Tuesday, walked the board through the options available to the board for financing the project. She went over current interest rates, possible board action timelines and a few options for a financing plan.
“When I started (at Baird), schools were borrowing at 70%. Today, you’re going to be between 2 and 3%,” Voison said. “Interest rates are at historic lows; it’s a great time to borrow. I will say there is some volatility in the market, and we’re going to try and minimize that risk, but just so you know that it’s a great time to borrow money in the bond market.”
Voison said one of her goals in helping the district to finance the project is to land on the 93 cents or less impact on the public, which she said is what the district had told the public they would do. “I was conservative enough from the get-go that we’re going to be able to get that. We’ll have no trouble with that,” she said.
Since the district will be borrowing money, one of Voison’s other goals is to minimize the district’s interest costs, as the district will be paying the loan back with interest over a long period of time. “You’re going to have to pay back over a period of maybe 20 years; I want to minimize that as much as possible. I also want to try to minimize risk of interest rate fluctuation too; in any given day interest rates change in the municipal market, sometimes jumping half a percentage point in one day, so I want to minimize the risk of you walking in on a day like that,” she said.
Voison also said one of the big goals in financing the project is also to maximize the district’s earnings. “When you borrow these funds, you’re going to be investing them and putting them in a bank because you’re not going to be spending it all up front. You’re going to have time to earn somewhere around $13,000 a month in interest earnings, and that $13,000 can be used for other projects,” she said.
She said the two loan options she wanted the board to consider for a timeline were a 15-year plan or a 20-year plan. “I feel like this (20-year) plan is going to get the lowest interest rate. That could change in the spring, but right now this is what we’re looking at. What I want to point out is that we’re actually at 70 cents right now for a tax impact, so we’re well under the 93,” she said.
“If we extend out 20 years, you’re going to see your payments drop significantly. So we talked about, do we want to allow for your payments to drop in 2026 to about $2,337,000 per year, or a 15-year plan? Now (with a 15-year plan) your payments pretty much stay the same with the exception of the first couple years. Do you want to give yourself the flexibility for statutorily 20 years, or do you want to go to a shorter ‘mortgage’ and go with the 15 years?”
Since this was an information-only item on the agenda, the board did not make any formal decision on this matter.