St. Joseph board hears bond-arbitrage update; projects largely on track

District staff told the St. Joseph School District Board of Education on Tuesday that the district has met early spending tests tied to its recent bond borrowing and that most bond-funded construction and equipment purchases remain on schedule.

The staff presentation explained arbitrage rules that limit how much interest earnings on bond proceeds the district may retain. "Arbitrage is not a bad thing ... it's just one of those things," a district finance staff member said, explaining that if the district misses certain spending deadlines it could owe money back to the Internal Revenue Service. The presentation identified roughly $225,000 as the amount that could be refundable under the current projections if later spending deadlines are not met.

The update covered the schedule and status of major projects funded by the bond program. District staff reported that science and technology purchases are being finalized after teacher input; final HVAC work at three elementary schools — Edison, Eugene Field and Mark Twain — is out for bid and planned for summer work; and most fine-arts equipment purchases are complete. Sidewalk work, track and field work, and turf installation timelines were included in the presentation; staff said turf would be produced starting May 19 with installation beginning around June 1 at multiple sites.

Why it matters: meeting the tax-exempt bond spending deadlines limits the district's exposure under federal arbitrage rules and allows more of the bond funds to be used locally rather than refunded to the IRS. The status of HVAC and other summer projects matters for school operations and addresses equipment failures reported during the previous winter.

District staff gave several budget cautions. The speaker told the board some individual projects are coming in under budget while others exceed estimates; she said earlier planning placed any leftover budget from underspent projects toward HVAC or sidewalks and that, when needed, remaining work could be paid from the district capital fund program. A staff exchange noted the district was "running 2.4 out of a budget of 2.6" for one HVAC allocation; the transcript did not specify units (for example, thousands vs. millions).

On project details, staff described specific schools and work: RubyDew HVAC to start after school ends; Oak Grove and Carden Park to receive audio upgrades via a forthcoming change order; Parkway nearly complete; Spring Garden bids under review for an upcoming recommendation; Carden Park road work essentially complete pending traffic signal installation; and turf and track elements nearing completion at Central, Lafayette and Benton.

Discussion, direction, decision: Board members asked whether the $225,000 figure was a ceiling or an anticipated payment; staff said that figure represents what the district would owe only if it failed to meet remaining spending deadlines and that, to date, the district has met the 10% spending test (reported as met by Dec. 4, 2024) and the 45% test (reported as met by June 4, 2025). Board members pressed on whether projects would be completed within bond funds; staff said they expect to meet all deadlines and, if necessary, would shift funds from other bond categories or the CFP budget to finish critical HVAC work this summer.

Ending: Staff asked the board to note the update and said they will return with recommendations as bids and change orders are finalized. The board did not take a separate, formal vote on the project update during the presentation.