On Friday, November 22, 2024, at 3:40 PM, Robbinsdale Area Schools took a significant step by moving forward with plans to issue $18 million in bonds for long-term facilities maintenance. This decision came as the district faced a daunting $20 million shortfall in its general fund, with part of the deficit attributed to an accounting error.
Financial Realities and the Impact
District CFO Kristen Hoheisel vividly described the situation in the Nov. 18 "State of the Budget" address, stating, "I look at this number and it's startling. The financial realities are difficult." Long-term facilities maintenance is a distinct fund from the general fund, so the bond issuance doesn't directly contribute to the general fund deficit. However, the overall financial situation has a significant impact on the district's credit rating and the costs of borrowing money.Recently, the district's credit rating dropped two scores, as noted in an S&P Global Ratings report. The report cited the "rapid financial deterioration" as a reason for the downgrade. A higher credit score typically leads to higher interest rates for the bond.A district financial consultant with PMA Securities emphasized, "We believe we went through a successful process and it worked well, but it is fair to say that it did cost you some money because of this downgrade."With the general fund shortfall, the district may be forced to take drastic measures such as closing buildings to fix its balance sheet. Hoheisel clarified that district officials don't plan to invest large sums in buildings that might be at risk. She said, "You don't want to invest money, you don't want to invest multi-million dollars into a building that may not be a viable building to us in two years, three years."The Robbinsdale Area Schools serves various communities including Brooklyn Center, Brooklyn Park, Crystal, Golden Valley, New Hope, Plymouth, and Robbinsdale. Each community is affected by these financial decisions and challenges.In terms of long-term facilities maintenance, the $18 million bond issuance aims to address the necessary upkeep and improvements. This includes ensuring the safety and functionality of school buildings for years to come. By investing in these maintenance projects, the district hopes to avoid more significant financial issues down the line.However, the current financial situation requires careful consideration and strategic planning. The district must balance the need for facilities maintenance with the need to address the general fund shortfall. This involves making difficult decisions about which buildings to prioritize and which ones may need to be temporarily closed or reevaluated.Overall, Robbinsdale Area Schools is facing a complex set of financial challenges that require a comprehensive approach. The bond issuance for long-term facilities maintenance is just one part of the solution, and the district will need to continue to work closely with financial experts and the community to navigate these difficult times.