Sunday, June 2, 2013

Now We're Cookin' With Peanut Oil!

With mortgages well below 4%, it seems a travesty to be paying off a big ticket loan at more than 5% interest rate.  With new School Board Treasurer Mike Krachey leading the charge, however, the way has been paved to knock that loan principal down significantly, reducing interest payments.   Huh!   Why wasn't such a move proposed by past Treasurers?

Currently, The State trust fund loan has four more years of payments and the total principal due is $615,567.79. 

The district pays 5.25% interest on the loan.

A motion to spend $300,000 of a possible (READ: very likely)  budget surplus to reduce the Sun Prairie Area School District’s State Trust Fund loan was approved by the Sun Prairie School Board on Tuesday, May 28.  This cuts the principal down almost in half and saves at least $40K in interest payments.

Not so fast, says Dr. Culver!

District Administrator Tim Culver pointed out that because the district is estimating anywhere from $0-$448,000 for a surplus, there is the possibility the district could come out in the red after a $300,000 payment.
“We need to be prepared to explain this was a conscious choice to take this particular risk,”
--District AdministratorTim Culver.
Explain what, Tim?  Instead of spending the $300K very likely surplus on other things (which always happens!), this year the money is earmarked to pay own debt and save money.  Newsflash, Dr. C:  While your salary puts you in a very comfortable position to be virtually debt free, the rest of the world has spent the better part of the last 4-5 years paying down debt.  This makes perfect sense to us.

Now you might encourage some folks to come to the annual meeting to boo and hiss that the money should instead be spent on more staff, higher pay or more toys.  We don't think so.