School board OKs bond issue for Longfellow, clean ’08 audit

Approval of an $8.6 million bond issue and a clean audit for 2008 topped action items at Monday’s meeting of the Mitchell Board of Education.

Thomas Grimmond, senior vice president for Sioux Falls underwriter Dougherty & Company LLC, was on hand to answer board questions on a bond issue that will pay for a new Longfellow Elementary School and the consolidation of two past bond issues — one in June 2003 for $505,000 and the other in December 2004 for $585,000.

The consolidation will save the district approximately $16,000 in interest payments, said Steve Culhane, district business manager. The bond issue does not change the maturity dates of the earlier bonds, said Grimmond, who assured the board that short-term debt was not being refinanced with long-term debt. The district is not obligated to proceed with the consolidation if interest rates go up prior to the bonds being offered for sale, he said.

The major reason for the $8.6 million offering of the bonds, or more accurately the “limited tax general obligation certificates,” is to raise money to cover the costs of building the new elementary school. The amount includes the two consolidated issues of $1.09 million, $7 million for Longfellow and roughly $110,000 in expenses, for a total of $8.09 million.

The $8.6 million authorized Monday is essentially a “cap” or maximum amount, said Grimmond, who expects the bond issue to come in at between $8.2 and $8.3 million. Originally, planners thought a new Longfellow would cost the district $7.5 million, and the papers approved Monday reflect that earlier amount, Grimmond said.

The resolution passed by the board Monday, explained Grimmond, “is an authorizing resolution that sets in motion the ability to start the process of getting our offering documents together.” The documents also cover the legal details of issuing bonds, he said.

Grimmond said no information is yet available on stimulus funds that might reduce school building costs. The availability of the stimulus money might coincide with the bond sale.

“If that happens we might have an opportunity to downsize the bond offering,” he said.

Also Monday, the board heard and approved a clean district audit for fiscal year 2008. Presented by CPA Jay Tolsma of Endorf, Lurken, Olson, the audit shows the district incurred a net cost of $19.44 million to educate Mitchell students.

Overall, said Tolsma, the district’s financial position is sound and the audit corrected two items noted in the 2007 audit. The 2008 audit exhibited no “material weaknesses, significant deficiencies” or issues of noncompliance with state or federal regulations.

The district has about $30.8 million in long-term assets and liabilities, and district assets increased $1.6 million in 2008.

Tolsma said Mitchell has managed its money well in light of declining enrollment and “flat” tax revenues.

“There are no negative trends at this time and your financial situation is solid,” said Tolsma.

Also Monday, the board:

n Reviewed documents relating to Dakota Wesleyan University, which included an update to the district’s agreement with DWU, which include: an updated lease of L.B. Williams Elementary School, leasing building grounds for $29,736 through 2038 with a 2.5 percent annual increase; a “Comparative Education Compact,” which memorializes the district’s relations with DWU for internships, student teaching, etc.; and a third amendment to the original lease agreement. The amendment recaps the major points of the original 1992 lease agreement and subsequent amendments, said Superintendent Joe Graves. The district opened L.B. Williams in 1994 and it will be paid off in 2018. The third amendment, among other things, also outlines the district’s responsibility for restoring the school in the event it is damaged or destroyed.

DWU President Bob Duffett encouraged swift approval of the agreements, previously OK’d by the DWU board of directors. He said the university has “always had a very constructive and positive relationship with the district.”

There will be a public hearing on these agreements prior to the regular 5 p.m. board meeting on April 13.

- Briefly reviewed an updated agreement between the district and DWU for the use of Joe Quintal Field.

- Approved one school exemption, or home-schooling, application.

- Approved a three-year joint use agreement with the city of Mitchell for use of the Corn Palace. Board member Neil Putnam, a city employee, abstained from voting.

- Approved updates to the Mitchell High School 2009-2010 student handbook. Among other details, the book updates graduation requirements and correctly lists Geoff Gross as student activities director.

- Approved the following personnel items: New hire: Mark Gierach, electronic media development director, MTI, $45,000 a year, pro-rated at $11,250 for fiscal year 2009, effective April 1, 2009; Isaac Reuben, MTI tutor, $6.75 an hour; Ron VanderHeiden, MTI adjunct faculty for welding, $1,506. Resignation: Joy Anderson, educational assistant, Second Chance High School, effective May 19.

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