While many are celebrating the School District of Rhinelander Board of Education's June 24 vote to build an air-inflated dome as a solution to the district's indoor athletic space issues, some questions have been raised about the cost of maintaining the structure once it's completed.
At the June 24 meeting, former director of business services Marta Kwiatkowski (who left her position with the district at the end of June) introduced a plan to address this issue - the creation of a new fund to be called Fund 46.
In fact, the suggested motion for both options, dome or steel building, included the following last sentence: "In addition, remaining allocated funds will be deposited in Fund 46, Capital Improvement Fund."
Kwiatkowski told the board the fund would be a way for the current board to ease the financial burden on future boards by earmarking money now for that specific purpose.
In an interview with the River News Wednesday, Kwiatkowski and district superintendent Kelli Jacobi explained the fund, and its restrictions, in detail.
Jacobi said the establishment of Fund 46 was an important component for either indoor athletic facility option the board could have selected.
"It is very important, in my opinion, because we want to make sure we are taking care of the district beyond the near future," Jacobi said. "This Fund 46 will allow for funds to be targeted for the purposes that we know are going to be here in the next 10, 20 years. So we're not going to put future boards or superintendents at a disadvantage. And that's because we've done work and 15-20 years down the road, they can't afford the maintenance that we know is going to be necessary. So I think that's critical. I don't know for sure, but I would recommend to the board that at this moment, how much I would like to see put into that Fund 46, but it's really important that we get it set up and put something in it to ensure we have those maintenance costs."
Kwiatkowski said the creation of a Fund 46 was something that has always been available to the district.
"We just never had a project of that nature to have a need to do that," she explained. "We can take care of the little maintenance projects as we go. But because this is such a big project that is going to require ongoing maintenance - the fabric replacement and the turf is going to have to be replaced in 10 years - we want to make sure that we set money aside to be able to do that. When 10 years comes and it is time to replace the turf, we have money to do that, we're not scrambling."
Kwiatkowski said the money in the fund cannot be used for the annual costs associated with operating the dome, such as electricity and gas. There is also a caveat that comes with the fund.
"In order to be able to take the money out of the Fund 46, it has to be in existence for five years from the day you set it up," Kwiatkowski said. "You can put the money in (to establish it), but you can't start taking it out until then."
Money earmarked for the fund would be placed in a trust, which would be interest bearing, she added.
"There are multiple ways to set up a Fund 46. You can do it by annual meeting and setting a (tax) levy; we're not doing that, we're actually making a transfer from the general account to Fund 46," Kwiatkowski said. "It will be a resolution that the board would accept, they will be setting up a trust just for that purpose, which will have a separate bank account, and that account will earn interest."
There are also restrictions as to how the money in the fund can be spent.
"It (Fund 46) has to be used for long-term capital improvements, it cannot be used for utilities," Kwiatkowski explained. "It cannot be used to pay wages, it has to be related to capital project."
The district can only have one Fund 46, but it can be used for any project the board specifies as long it is for capital improvement proposes, she added.
"You can designate the type of projects, but once you set up that trust, that money could be used for any purpose as long as it's capital improvements," Kwiatkowski said. "For example, if the board decides to do replacement of the turf and they have $600,000, but the turf only costs $500,000, they have extra money (left) to do something else with."
While the motion approved at the end of the June 24 special board meeting stated that "remaining allocated funds will be deposited in Fund 46, Capital Improvement Fund," the board has yet to specify an amount to place in trust.
A separate resolution will be drafted specifying the amount to be placed in Fund 46, district officials said.
"If they just put enough in to do the turf replacement and that's all they ever funded, then you're not going to have any money left," Kwiatkowski noted. "If they decide to put more money in there, it's up to the board how they use it five years down the road. Things can change."
She said it would take board action on each expenditure from Fund 46 because board policy specifies any expenditures over $25,000 requires board approval.
"Whatever the (future) superintendent wants to do, he or she would have to bring it back to the board for approval, making sure the board knows this is coming from Fund 46," Kwiatkowski noted.
In recent years, as the general fund balance has grown larger than anticipated due to higher than budgeted state aid increases and prudent spending by the district, board members have grown concerned that the Wisconsin Department of Public Instruction might step in and take part of it to give to a district without such a financial cushion, Kwiatkowski explained.
It is important that a school district have a sufficient fund balance to cover payroll and normal purchases without having to resort to short-term borrowing, which incurs interest and other costs, she added.
"It has always been our concern that the State of Wisconsin can either take the money away from us or they can decrease our aid because the fund balance is large enough," Kwiatkowski said. "And that is why we're trying to be proactive and designate some money and put it in a trust in case the State of Wisconsin ever did that. They can't touch that money that is already in a trust."
With the fund balance at $24 million, it was possible to take $3 million for additions to three elementary school buildings and the $2.5 to $3.5 million the dome is projected to cost, depending on the size selected, from the fund balance, she added.
Jacobi said the vote to authorize the construction of the dome "was amazing".
"I think it (the dome approval vote) was a good thing for our community as a whole," Jacobi said. "I was pleasantly surprised that they were willing to make a decision. I was expecting being requested to gather more information, as an option, a possibility. I think the presenters did a nice job on the differences between the two options that we were looking at, so I was impressed with that. And they did a really good job at answering questions. I think that board members had been paying attention all along, and seemed to be very well prepared for the conversation."
Jamie Taylor may be reached via email at email@example.com.
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