RUSD staff outline planned defeasances to meet spend-down rules; two transfers expected to save future interest

Racine Unified School District finance staff told the board on March 3 that the district will present two resolutions on March 17 authorizing transfers to complete required spend-downs and defeasances tied to past borrowing; staff said the moves are expected to reduce future interest costs.

Finance staff reported that in April 2023 the district borrowed $27.9 million for construction projects at Starbuck (Starbucks IB) and Durst at Agri Home. To meet spend-down requirements, the district plans a debt defeasance with an estimated defeasance amount of $2,000,000; staff estimated the move would save about $588,000 in future interest costs. "In order to do that, we will be doing a debt defeasance for an estimated amount of $2,000,000, which will save an estimated $588,000 in future interest costs," the presenter said.

Separately, the board previously approved a $3,000,000 levy to fund AD Community Services to pay down aquatic center debt from October 2020. Completing a defeasance related to that levy, staff said, is expected to save approximately $191,000 in future interest expense. Staff indicated both resolutions will be presented for board action at the March 17 business meeting.

No formal votes were taken at the March 3 work session. Board members asked procedural questions and acknowledged the potential interest savings; staff noted the transfer/resolution process is for compliance with spend-down timing and to reduce long-term interest costs.

Next steps: both resolutions will be brought to the March 17 business meeting for formal board action. Staff said they have handled similar defeasances in prior months and will provide final figures and formal resolution language at that meeting.