Huntley School District 158 is on track to restructure its debt after moving forward with two resolutions at a special meeting last Thursday.
While it won’t lower tax bills from their current amounts, the adjustment will keep residents from seeing a spike in what they owe, district Chief Financial Officer Mark Altmayer said.
Referred to as a “wall of debt” due to how it looks on a graph, the resolutions passed Thursday night will smooth out the sudden increase scheduled for next year and bring the district’s yearly debt into a more manageable range, Altmayer said.
The pair of resolutions will go in front of the board on Sept. 15 for final approval. Each one deals with a portion of the district’s debt, totaling about $20.5 million.
Board member Paul Troy said it felt like closure after dealing with the issue over multiple years.
“As one of those people who have been here long enough to watch this progress … to see that last segment of the wall go away,” he said, “it’s been a daunting challenge.”
The district typically aims to have its annual debt payments around $10 million, Altmayer said. Looking on a graph, that debt is expected to jump north of $20 million in next year’s budget.
Over the past several years, the district’s yearly debt was structured in such a way that would have seen it in some cases triple after just a couple years, from about $7 million per year to $20 million, Altmayer said.
As a result, the district over the past decade began restructuring its debt to avoid that rapid increase. The pair of resolutions to be voted on at the board’s Sept. 15 meeting is the “final leg” of flattening that debt, Altmayer said.
Based on the plan before any resolutions are approved, that sharp increase, or wall, was followed by a dip that steadily increases from 2023 to 2026, according to a presentation made at Thursday’s meeting.
The new resolutions discussed Thursday bring that back down to a more normal level, and fills in that dip to make it a more consistent plan. Payments will be slightly higher in 2022 and 2023, but that amount is similar to debt paid in 2020 and 2021, documents show.
Starting in 2024, the debt returns back to around $10 million, where it will mostly stay through 2034.
Altmayer described the resolution as something similar to refinancing a house.
The purpose of discussing it on Thursday was due to current interest rates, which district officials felt were favorable as opposed to waiting longer to take action, Altmayer said.
Specifically, interest rates dipped in May and June, but rebounded after just a couple weeks before declining slightly between early July and early August, district documents show.
Now, interest rates are ticking up again, prompting the district to take action before they rise more.
“You need to strike when the iron is hot,” Altmayer said.
Source: The Daily Chronicle