Local residents won’t be asked to pay more in property taxes as a way to help Franklin schools pay down debt.
Franklin school officials have ruled out seeking a tax-hike referendum to pay for the school district’s debt as well as help make payments for building upgrades and technology.
While legally an option, Franklin has not asked for referendums in the past because residents aren’t likely to support them, executive director of finance Jeff Mercer said. Center Grove schools proposed a referendum in 2010 when it was concerned about having to make cuts, but voters rejected the idea.
“I don’t think our community would view that favorably,” Mercer said.
Still, Franklin needs to find a way to reduce its annual debt payments. Property tax caps limit the amount of money the school district can collect in taxes and use to pay its debt, including more than $100 million borrowed nearly a decade ago to renovate the old high school and construct the new high school. School officials expect shortfalls on average of $2.5 million per year for the next 10 years.
One option to lower the debt payment involves refinancing the debt from 2004 that paid for the high school. But that option alone isn’t enough to make up for the shortfall, school officials said.
Franklin also might begin taking out $2 million loans as early as this year so the school district will have the money needed to pay for any building improvements and for new technology, such as computer upgrades, Mercer said. School districts typically use property tax dollars to pay for those expenses, but Franklin has had to use that money to pay down its debt as well, Mercer said.
“The key is to allow us to maintain our buildings and our technology,” he said.
The school district also might have to use money from the fund that pays for employees’ salaries, health coverage and utilities to pay other expenses, Mercer said.
Next year, Franklin will eliminate a principal position by having one principal oversee Webb and Union elementary schools.
School officials are reviewing all expenses to see what additional savings can be found and whether any cuts will be needed, Mercer said.
“Everything is a possibility at this moment,” he said.
Franklin’s debt payment will reach $16 million in 2015, and next month the school board should receive information on the best way to refinance the 2004 debt.
One option being considered would save the school district a total of about $937,000, most of which would be used to lower the 2015 debt payment.
Mercer said another option would save Franklin about $866,000, and the school district would be able to apply the savings to any year needed.
If Franklin also begins taking out $2 million loans this year, the total amount of debt will rise, but the school district wouldn’t need to repay the loans until a later date after the total debt amount were lower, Mercer said.
The $2 million loans typically can be taken out every two years, and the total amount of money borrowed by Franklin would depend on the number of building and technology upgrades that are needed, he said.
Franklin also is looking for ways to cut energy costs and might consider paying additional utility costs from the fund that covers employees’ salaries and medical expenses.
Mercer said the school district will continue to review this year whether any additional money can be used from that fund to cover debt payments.