Rob Abbott on Fort Atkinson's school district and defeasance

School District of Fort Atkinson Superintendent Rob Abbott discusses its Board of Education's decision to prepay debt, called defeasance, to save interest costs while holding its tax levy rate level.

By Zac Schultz | Here & Now

April 24, 2024 • South Central Region

FacebookRedditGoogle ClassroomEmail

Rob Abbott:
Our community was gracious in supporting a $22 million referendum two years ago, of which we're embarking on the work now in earnest. And with that debt, the board had the ability to keep the tax levy rate somewhat stable from last year to this year. And with the operational referendum failing, they, in keeping that rate at that level, created the opportunity to defeas or prepay debt. So in our case, they prepaid $7 million of the $22 million in bonds. In under statute, that's one of the things that they can do, but those funds cannot be used for operations. So the idea of defeasance or prepaying debt, you know, is difficult for people to understand, but it definitely is a strategy that is a long-term benefit to the taxpayer. In our case, it equates to around $3.4 million in savings of interest over the term of those 20 year bonds. And the other piece, and in some cases, you know, people are challenging us and saying, "Well, the board could have just let that tax levy rate drop," which is true, they could have. Their decision making was to do as I just described. But also in acknowledging that the state calculation for state aid is based on an averaging of years and how much districts spend. So had they let that tax levy rate drop, you know, it would've impacted our state aid, you know, after next year. So there's a lot more to those types of strategies, or decisions that boards are making, than a quick answer that some people would offer is, "Well, why didn't you just do this?" Or, "Why didn't you just do that?" So, while complicated, I think very beneficial to the long-term financial stability of our school district.

Statement to the Communities We Serve

There is no place for racism in our society. We must work together as a community to ensure we no longer teach, or tolerate it.  Read the full statement.