Action of the School Board Action of the School Board 02/23/15 | Page 5

ing is,” said Vargas. “The fund balance is available to take that reduction.”
She explained that Anoka-Hennepin relies heavily on state aid. It receives 77 percent of
revenue from the state and 18 percent from property taxes (federal revenue is three percent;
other local revenue is two percent). The district currently spends:
• 75 percent on instruction.
• 9.5 percent on student support.
• 8.7 percent on facilities operation and maintenance.
• 3 percent on district support.
• 2.5 percent on administration.
• 1.3 percent on other items.
“We have a lot of work to do in St. Paul so they know the significance of this shortfall,” said
Board Chair Tom Heidemann.
The legislature is expected to finalize the state’s budget late May. Between now and then,
the finance department will continue to gather feedback from stakeholders as it builds the
2015-16 budget. If reductions are needed for 2016-17, they will be shared at the end of December with an opportunity to provide input at public hearings in January 2016.
View the presentation in its entirety on the Feb. 23 School Board agenda.

Debt summary presented

Michelle Vargas, chief financial officer, shared Anoka-Hennepin’s debt summary. In accordance with the district’s new debt management policy, staff must provide the board with a
debt summary each time the district is adopting a budget or proposing to issue new debt.
Vargas explained that the district could legally have debt of up to 15 percent of its economic
market value, which is currently $2.5 billion. With debt of $58.6 million, the district’s debt
is substantially lower than the limit. This $58.6 million is general obligation debt paid for
with property tax revenue from the debt service budget. It was incurred primarily through
construction of school buildings and additions.
“We’re pretty low in debt,” said Vargas. The report shows the that principal and interest
payments on the debt drop off substantially after 2020, from about $9.8 million to $2.1 million, when final payments are made on some of the bonds.
In addition, the district has debt of about $35 million from construction of recent additions.
This includes $10 million in certificates of participation the board will consider that evening
to pay for additions at Johnsville and Wilson elementary schools. This is paid with general
fund revenue from the lease levy.
In addition, the district owes about $4.2 million in lease payments for the district’s Secondary Technical Education Program (STEP) building. Under an arrangement with Minnesota
State Colleges and Universities and Anoka County, the county sold bonds to pay for the
building, which is located at Anoka Technical College. The district has been making lease
payments to the county to pay off the bonds. Once the bonds have been paid off, the district will pay $1 to purchase the building from the county.
Board member Bill Harvey asked how Anoka-Hennepin’s debt compares to other districts
of the same size. Vargas commented that the district is on the very low e nd compared to
Minneapolis or St. Paul, which are similar size districts. Anoka-Hennepin levies about $10
million annually to pay off debt while they levy $30 or $40 million a year.
The full debt summary is available on the Feb. 23 School Board agenda.

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ACTION

Board approves borrowing resolution for elementary additions

Michelle Vargas, chief financial officer, shared a resolution of intent to issue up to $10 mil-