U46 may OK working cash bond sale

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Updated: January 9, 2012 8:47AM

ELGIN — The School District U46 Board of Education once again discussed the possibility of issuing up to $20 million in working cash fund bonds at its regular meeting Monday.

That follows a $25 million working cash fund bond issuance in March, the first time the Elgin school district had borrowed money since 2003.

“You have in excess of 50 buildings, and if you don’t take care of them, they will deteriorate and will no longer be usable,” said Linda Bobert of Robert W. Baird & Co., the district’s financial advisors.

The new working cash fund bond proceeds would be used for roofing and paving projects, chillers, boilers, elevators, lighting and energy management systems for those district buildings, according to U46 Chief Operating Officer Jeff King.

Based on current spending habits, King said, that money would last the school district four to five years.

Those types of projects have been paid for in past years with life-safety bond proceeds, he said.

Working cash fund bonds would be “more flexible,” he said. That means the district would be able to expand its projects to include parking lots, chillers and other items that cannot be funded by life-safety bonds.

The district would bring those proposed projects to the school board in January, according to the presentation by King and Bobert. At that time, it would ask the board to abate the money needed for those projects from the working cash fund to its operations and maintenance fund.

U46 still has about $2.5 million to $3 million in life-safety bond proceeds, King said. It had 10 to 12 outstanding issuances when its last $25 million working cash fund bond issuance was approved in March, the district had said at the time.

Previously, the board had voted last December to give the district permission to issue tax anticipation warrants to make payroll while waiting on property tax revenue and state aid payments. It had done the same the spring before. It didn’t use those warrants either time.

The working cash flow bond issuance meant it wouldn’t have to continue going through the warrant process, the district had said at the time. While tax anticipation warrants only cover a short period and must be paid back right away, working cash fund bonds are more of a long-term debt.

“I think that’s part of the reason for the improvement in your audit,” Bobert said.

Earlier in Monday’s meeting, John George of McGladrey & Pullen LLP said the district’s financial profile had improved from “watch” status to “review” in this year’s audit of U46, which began in June.

“It seems like we’ve worked really hard to get through these times, and it sounds like we’re coming out very well — and yet we’ve also had some very cautionary things, especially with the state in its current position,” school board member Maria Bidelman said.

The state was $16 million behind in categorical payments to U46 when the board approved the last working cash fund bond issuance. It is now about $12 million behind, King said.

The school board will vote on a resolution of intent to issue working cash fund bonds at its next meeting Monday, Jan. 9. If passed, the sale of those bonds would take place in March.