From: James Puz
Winona Area Public Schools (WAPS) is still in the process of deciding whether or not to close certain schools as well as trying to come up with a workable budget.
WAPS is also still lamenting the defeat of the November referendum that was soundly rejected by 90 percent of the voters. The lamenting is over not having $82.4 million in its pocket to spend as it sees fit. However, in my opinion, that was not the issue last year.
The public didn’t turn down the $82.4 million; it voted down the $62.6 million in interest. The total bill would have been $145 million over a 25-year period.
Therefore, how would WAPS have been able to pay off the $145 million? Well, the referendum asked for an increase in the tax levy in hopes of raising the needed $6 million per year to pay off the bonds. While I’m sure voters might have been willing to have their taxes raised to pay off the bond money and a reasonable amount of interest, in scuttling the referendum and declining to have their taxes raised, the voters effectively thumbed their noses at paying $62.6 million interest on a loan of $82.4 million.
A casual search of school bond information reveals that school districts generally get low interest rates with regards to bond money if their bond rating is good. The $62.6 million in interest on a $82.4 million loan amounts to just over a 75 percent interest rate. That implies that WAPS doesn’t rank very high (meaning not too reliable) when asking for money. High risk, high interest; low risk, low interest. In fact, 75 percent is pretty much like going to a load shark.
To pay back nearly twice what you hoped to borrow is why I believe Winonans trashed the November referendum. They were smart to do it.