Auditors give Racine Unified a clean opinion; board briefed on borrowing plan, defeasance and early project procurements

CliftonLarsonAllen auditors told the Racine Unified School District Board of Education that the district’s financial statements for the year ended June 30, 2024, were presented fairly in all material respects, a “clean” opinion the auditor described as the firm’s strongest form of assurance.

Erica Schaeffer of CliftonLarsonAllen summarized the audit and supplemental schedules, noting the district’s unassigned general fund balance stood at roughly $64 million (about 24% of budgeted expenditures), above the board’s 15–20% target. The auditor said the district qualified for a single-audit because of federal funding levels; the auditors tested the child nutrition and Medicaid clusters and reported no findings that rose to reportable levels.

Following the audit presentation, the district’s finance team and municipal advisors reviewed borrowing plans tied to the facilities referendum. Bond counsel and advisors described a parameters resolution the board will be asked to adopt at its January 27 business meeting to authorize general-obligation promissory notes in an amount not to exceed $135,000,000. The borrowing plan includes refinancing a roughly $22,000,000 note anticipation note (short-term) and issuing approximately $113,000,000 of new-money borrowing to fund remaining projects. Advisors said the not-to-exceed interest rate on the parameters resolution was set at 5.25 percent to provide market flexibility, though recent market activity suggested borrowing could be closer to the mid-4 percent range.

The district also presented a defeasance plan to prefund outstanding referendum-related debt. Officials said proceeds and interest earnings from completed projects (notably earlier borrowings for Horlick and Starbuck projects) can be escrowed to prefund future principal payments, eliminate associated interest, and thereby create room for future borrowings. The district’s analysis showed an illustrative defeasance that could free up roughly $9,000,000 of debt-service savings, depending on final project budgets and market rates.

District staff outlined several project actions that will come to the board for approval at the business meeting, including early procurement packages and a guaranteed maximum price (GMP) recommendation: - Early procurement for Gifford K–8: $1,292,131 (HVAC, structural steel, precast panels) to avoid long lead-time delays. (Shear Construction package.) - Early procurement for Wadewitz Elementary: $1,196,977 (HVAC, precast, electrical). (Riley Construction package.) - Guaranteed maximum price for Fratt Elementary construction: Total project cost presented $13,941,501 (reported over prior estimate by $14,851, primarily to add roof scope and additional parking). - Renewal of the district’s Procore construction-management subscription: $205,600.87 (software used to host project documents, submittals, change orders and invoicing).

Advisors and district staff said they are trying to minimize total interest cost by using existing cash where possible and timing borrowings to match the district’s referendum revenue stream; they told the board some later phases may require short-term borrowing because project schedules and revenue timing do not align perfectly. Officials also said as projects wrap up, remaining bond proceeds and interest must either be spent on qualified project costs or moved to an escrow account to avoid arbitrage issues.

Board members asked clarifying questions about subscription-based software accounting, the mechanics of defeasance, and how contingency and alternate scopes were handled on the Fratt GMP. Administration said final numbers would be refined before the board vote on the parameters resolution and related borrowing items at the upcoming business meeting.