Dixon Public Schools plan to issue $4.5 million in bonds as part of long-range financial plan

DIXON – The Dixon Public Schools District 170 Board has approved a resolution declaring its intent to issue $4.5 million working cash fund bonds as part of the district’s long-range financing plan to keep the district current on curriculum, technology and social-emotional services through 2045.

In December 2022, the board was presented with a long-term financial plan to improve the financial position of the district. The first step, approving $650,000 in taxable general obligation refunding school bonds, was completed in February 2023. The board took the next step at its Nov. 20 meeting by issuing $4.5 million in working cash fund bonds.

[ Dixon schools OK $650,000 in bonds, first step in long-range financial plan ]

The $4.5 million bonds had not yet been issued, but “the ball starts to roll,” Dixon Public Schools business manager Marc Campbell said at the meeting.

A contracted team from Stifel Public Finance and Speer Financial – two municipal adviser firms that specialize in debt issuance – “will move forward with all of the nuts and bolts,” which includes bidding the bond series out.

He said the preliminary approval also keeps the district in compliance with Illinois law regarding bond issuance.

One of those measures is to have a public hearing; that hearing is planned for 6 p.m. Dec. 18 at the district’s administrative center, 1335 Franklin Grove Road in Dixon. At that hearing, the board will explain the reasons for the proposed bond issue and allow for public comment.

Once the bonds are sold, the $4.5 million will go into the district’s working cash fund.

“There’s clear initiatives that we’re going to try to use those funds for,” Campbell said.

That includes things such as the district’s one-to-one initiative, ongoing updates to curriculum, major construction projects and staffing for social-emotional needs.

In addition to those things – which are part of the overall financial plan – some of the funds may be used for operational initiatives to balance the district’s budget, Campbell said.

At a Sept. 25 meeting, the board adopted a deficit budget for fiscal 2025. The deficit is mainly due to the fact that salaries are growing, the audit adjustment from fiscal 2023 will affect the beginning fund balances, the Lee County Special Education Association budgeted assessment was increased, and the funds from the Elementary and Secondary School Emergency Relief grants still are inflating revenue and expenditures, according to the budget summary overview.

District officials have said that although the district is in a deficit budget, it’s not operating outside of its means and is actively looking for ways to spend less. As one example, the district is nearing the end of its transportation contract and is considering the possibility of bringing transportation in-house rather than paying another company.

On top of that, “the board would have 100% control over how [the bond] funds are actually spent throughout the course of the district,” Campbell said.

As a working cash fund bond, those dollars cannot be spent by district administration without prior board authorization. Any spending would be brought before the board in the form of a resolution during a regular meeting.

“I would just reiterate the why,” Campbell said. “If you remember back a couple of years ago, we presented to you a kind of a long-range financial plan.”

In that plan, this $4.5 million working cash fund bond issuance is only the first in the short-term borrowing plan. Every five years, the plan has the district paying off the bonds and then reissuing the debt for capital.

The underlying objective is to wean the district off long-term borrowing – it already has four debt service bonds issued in 2014, 2016, 2017 and 2019 – and instead implement a regular schedule of more modest short-term borrowing with lower interest rates that can be paid off with available resources, such as working cash gained through internet sales receipts.

In 2030, the district will borrow $4 million for new tech and curriculum. In 2035, borrowing another $4 million can pay off the 2036 and 2038 revenue bonds. In 2040, borrowing $4 million again will be used for tech and curriculum upgrades.

If cleared of the debt service bonds in 2045 – which coincides with the expiration of the tax increment financing district and the addition of the TIF properties into the tax rolls – the expectation is that the district would be free to borrow up to $10 million if it desires.