In an effort to address District 861's retirement health care obligation in the future, the Winona Area Public School (WAPS) Board borrowed $8.7 million in 2009, when it was not required to seek voter approval to borrow through the issuance of such bonds. The money, used to pay the $40,000 per retiree health savings account contribution, was deposited into a state-run revocable investment account and earned four percent interest each year. Although the amount paid for retirees from the account varies year-to-year, and bond payments are funded by the property tax levy, the entire expense for 2015 is expected to be $800,000.
Under the current plan, the money will run out in 2024, although the district must still make bond payments until 2029, and, according to the district's actuaries, its current retirement health care liability won't be diminished until 2050. "We need to get a better return on our investments," WAPS Fiscal Affairs Director Dan Pyan told the board.
Last week, the board voted to reinvest the funds into an irrevocable trust at U.S. Bank that Pyan said would generate about eight percent interest on the money.
"My concern is risk," said board member Jay Kohner. "Usually, a higher return means more risk."
Pyan said that a financial advisor would help ensure that the money was invested in diverse investment opportunities, adding that the "right combination" of investments would help remove much of the risk.
Board member Ben Baratto said some are basing investment interest over the next 30 years at 10 percent, but warned against a potential hit to the market during that time. Pyan said that if the market did take a hit over the course of the investment portfolio, the state-run trust the district currently uses would also likely produce less in investment earnings.
The board unanimously approved the investment change.