Board sets tax rate for referendum

Gresham dealing with negative fund balance
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The Gresham School Board approved a plan Monday that would set the tax impact of its proposed referendum at $1.84 per $1,000 of equalized valuation.

The plan was one of three the board had to choose from, but it has a two-fold impact. While being a midway point between the least taxpayer impact and the most, the plan also gives the school district a chance to build its fund balance, which is currently nonexistent.

In the 11 years since Gresham broke away from the Shawano School District, it has underlevied its maximum amount allowed by law by an average of $1.3 million. However, in many of those years, the district spent more than it levied, giving it a negative fund balance at the end of the fiscal year, June 30. Currently, the district has a negative balance of about $525,000.

“You have not levied up to the limit,” said Michelle Wiberg, a consultant with PMA Securities, based in Naperville, Illinois. “The rationale for that is to control the tax burden to the taxpayers of Gresham.”

Even with underlevying, the district’s tax rate is expected to be around $10.93 per $1,000 in 2018, up from $10.54 in 2017. Nick Curran, the district’s business manager, told the board that the tax rate is expected to go up, regardless of whether voters approve the referendum, due to less state funding coming to the school district.

If the $6.5 million referendum passes in November, it would put the tax rate around the $13 mark for the future.

However, even if the referendum passes, that’s only the first hurdle for the district. With Gresham showing a negative fund balance, the district is a higher risk to lending companies.

One way the district is looking to strengthen its financial position is setting aside $200,000 annually to bring it out of the red in about three years and giving it a positive fund balance that equals 10 percent of its annual budget, about $400,000, in five years. The $200,000 had previously been set aside to pay back a short-term loan the district took out in 2014, but the loan was paid off last year.

“As we look to finding investors to lend you the $6.5 million, they’re going to want to see a strong financial position, or they’re going to want to see a plan to reach that position,” Wiberg said.

Under the plan approved by the board Monday, the district would issue $4.3 million in bonds on Oct. 1, 2019, and the remaining amount on March 1, 2024, once the district has achieved a positive fund balance.

Curran noted that having a fund balance in place is beneficial in case of some catastrophe or unforeseen circumstance where a major expense would need to be paid right away.

“If we have a major expense, the fund balance would be there to help pay for that expense,” Curran said.