County school board approves draft budget, OKs refinancing of bonds

By JIM BROOKS
Nelson County Gazette / WBRT Radio

Tim Hockensmith, chief operating officer for the Nelson County Schools, gestures while discussing the draft of the district’s 2015-16 budget.

Tuesday, Jan. 20, 2015 11 p.m. — The Nelson County Board of Education approved a draft of the 2015-16 budget that was accompanied by ominous warnings from Tim Hockensmith, the district’s chief operating officer, of possible financial trouble ahead.

The draft budget assumes the board will take a four percent revenue increase when it sets tax rates later this year, which Hockensmith said will be necessary to make up for a combination of unfunded required raises and reductions in state funding.

“If we take less than the four percent (tax revenue) increase, cuts would be required, and I don’t think these are cuts you want to make,” he said.

The 2015-16 budget must include funding for a 2 percent across-the-board salary increase which will cost the district about $460,000, he said. Adding to that is the cost of normal step raises, which will increase that figure to approximately $700,000.

The district’s budget will also need to cover the the additional cost of a 3 percent contribution to the teacher retirement fund of approximately $125,000.

Hockensmith called the draft budget “our best guess,” adding that what the legislature might do and the ebb and flow of state revenues may change the final budget the board will approve later this year.

Board member David Norman listens during the discussion of the district’s budget.

BOND REFINANCING. The board adjourned briefly and reconvened as the district’s finance board to approve refinancing of two groups of the district’s construction bonds.

The board approved a plan to refinance the 2010 “Build America” bonds for the construction of Thomas Nelson High School and the 2005 bonds for the construction of the Boston school. The refinancing plan will save the district $285,000 in interest over the remaining 17-year term of the 2010 bonds and $191,000 in interest saved on the remaining years on the 2005 bonds.

The Kentucky Department of Education has minimum savings requirements for bonds that are refinanced, and if interest rates rise suddenly the refinancing can be stopped. The board will hear a report in February of the impact the refinancing will have on its bonding potential for future projects.

INVESTMENT OPTIONS. The board also approved a request from Hockensmith to authorize the district to shop around for opportunities for the district’s money to earn some interest.

Currently, the interest the district gets on its funds pays most of its banking fees, Hockensmith said. The move will allow the district to place some of its funds in FDIC-insured investments — if the opportunity arises.

“It gives us the opportunity to shop for better rates of return” on its investments, he said. “If we can earn a substantial rate of return, its worth it.”

With the board’s approval, Hockensmith said he would begin evaluating investment opportunities, starting locally first. He said he advise the board of any planned investments as they arise.

In other business, the board:

— approved the offer of assistance in the amount of $33,535 from the School Facilities Construction Commission. The money will be used for technology upgrades and requires the district to commit to a dollar-for-dollar match.

— approved Feb. 13, 2015 as a make-up day for Nov. 17, 2014, which classes were canceled.

— approved a grant application to WHAS for $41,000 in funding for five ActivTable, an interaction tabletop that assists learning for students with learning disabilities.

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