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District faces about $3.5M chargeback from city/Froedtert settlement; staff recommends hybrid payment plan
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Summary
Staff told the committee the district must pay roughly $3.5 million by mid‑February because of a city–Froedtert assessment settlement; staff recommended a hybrid approach (pay now from fund balance with a standby borrowing resolution) to manage cash flow and statutory approvals.
District finance staff told the committee that a settlement between the city and Froedtert Hospital reduced Froedtert’s assessed value for prior years and created a chargeback the district must pay — approximately $3.5 million — with payment required by mid‑February. Staff said the payment cannot be recouped until the next year’s revenue‑limit process and therefore will cross fiscal years.
Staff presented three options to meet the payment deadline: (1) enter a promissory note with the city to preserve cash but pay interest and satisfy statutory approvals, (2) pay now from the district’s fund balance (least costly but creates cash‑flow anxiety), or (3) a hybrid recommended by staff: pay now and, if needed later in the fiscal year, use a board‑authorized short‑term borrowing resolution as a safety net. The director said the hybrid option preserves better economics (the district would effectively act as its own banker) while leaving a statutory borrowing mechanism in place if cash tightens later this year.
Staff cautioned that while the recoupment mechanism exists through next year’s revenue‑limit process, it depends on the board’s future levy decisions. Committee members discussed outreach options to Froedtert and the city for partnership offsets and agreed staff would bring a recommended motion and related budget adjustments to the board for action at the upcoming meeting cycle. No formal board vote on the chargeback was taken at the committee meeting.
