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OSWEGO ELECTION FORUM: Debt is Managing School District When District Should be Managing Debt

Mar 13, 2017 01:12PM ● Published by Steven Jack

In the race for Oswego 308 school board, much talk of late has been focused on the announced reduction of nearly 45 positions. (Board candidates Robert Graves and Brent Lightfoot) have been actively researching the district’s current debt structure and linking historical decisions that have created the current financial conditions.

The current debt service is estimated to exceed $670 million, (we) have concluded the employees laid off are collateral damage from the negative aspects of debt refinancing. 

The most recent refinancing happened in March 2016 and most of the bonds were not callable until February 2017. Accordingly, proceeds from the sale of the new bonds were placed in escrow for nearly a year.

Since the debt to be refinanced still required an interest payment, the taxpayer would need to make two interest payments in February 2017: $4m for the bonds to be refinanced and nearly $4.7m for the new bonds minus interest earned in the escrow account. Candidate Lightfoot notes the extra interest payments could easily have paid the salaries of those released employees.

The ongoing cycle of refinancing is offering minimal benefits to homeowners as the additional interest payments on the Capital Appreciation Bonds (CAB’S) from 2003, 2005 and 2008 will now exceed $137 million. The repayment of those CAB’s have a large portion of the actual amount due in the next 10 years. “Debt is managing the district and we need to manage the debt," Lightfoot said. 

Mr. Graves and Mr. Lightfoot propose setting up a framework to safeguard financial resources so they can be used in the classroom. The decisions to continuously refinance debt created today's risky financial condition."

Robert Graves, candidate for School District 308 Board
Elections, Opinion

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