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School officials propose using bond interest to reduce local tax impact
Summary
At a Bristol select board meeting, school finance staff proposed applying interest earned on a $6.425 million construction bond to reduce next year’s debt payments and lower this year’s local appropriation; the presenter said $279,841 was earned and that after a prior principal payment about $195,428 remains available.
School finance staff told the Bristol select board that interest earned on the district’s $6.425 million construction bond could be used to reduce next year’s debt payments and bring down the local tax impact.
The presenter said the construction checking account had earned $279,841 in interest as of the close of February and that Drummond Woodson advised on permissible uses of that interest. “What they told me was … the IRS prefers you spend it on more construction,” the presenter said, adding that counsel also explained an alternative: apply the earned interest to pay down debt within one year of the project’s completion so the amount can be treated as revenue in the coming budget year.
The presenter and board members clarified accounting: $84,771 of previously earned interest had already been applied to principal, leaving roughly $195,428 available to apply toward debt service. The presenter said the school committee intends to have its chair make a motion from the floor at town meeting to lower the local additional appropriation by that amount so voters would see a reduced tax impact.
Board members asked for documentation and clear language. The presenter said the town office would share Drummond Woodson’s written guidance and the exact figures ahead of town meeting; several members emphasized the need to reconcile the accounting with auditors before finalizing actions. One member said they wanted the number “in writing so that everybody gets the exact number” before a floor motion.
The meeting also covered closely related budget logistics: the presenter said the school committee will deliver a brief PowerPoint packet before voting at town meeting to explain cost centers, and that the project closeout and audit are still pending. The presenter described a plan to return unexpended construction funds to the capital reserve after the project closes, subject to accounting rules and any limitations noted by counsel.
On procurement, the presenter said the generator purchase is separate from the construction bond. Two separate RFPs (electrician and site work) will appear in the Lincoln County News; the presenter said the school hopes bids will come in under the $400,000 set-aside.
Next steps: the presenter will share the Drummond Woodson guidance and the reconciled numbers with the board and school committee; the motion to apply earned interest is expected to be offered from the floor at town meeting (date set in meeting notices).
