Iron Range to borrow $38 million for school improvements
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- October 9, 2013 - 2:37 PM
Iron Range public school students are about to get $38 million in new computers and other school improvements, the single-largest infusion of money for upgrades to the area’s schools.
Iron Range legislators led an effort at the Capitol to allow the local economic development agency to sell bonds to pay for upgrades in 15 school districts in northeastern Minnesota.
The debt will be repaid through a tiny fraction of the region’s taconite tax that mining companies pay instead of property taxes. The money does not come from the state general fund.
“It’s a good deal up here for our schools,” said Tony Sertich, commissioner of the Iron Range Resources and Rehabilitation Board.
School districts throughout the state regularly sell bonds to pay for new schools, computers and other improvements. But Sertich said Iron Range schools are at a disadvantage because mining companies don’t pay property taxes like homeowners and business owners do, restricting the amount of money local school districts have to repay debt.
Legislators devised the idea to ensure Iron Range schools can compete with districts in the rest of the state, Sertich said. Improving the region’s schools has a direct impact on the board’s mission of improving economic development on the Iron Range, he said.
“It is the biggest investment that the local legislators have done in school bonding,” Sertich said. “This was an initiative by Iron Range legislators to reinvest in our schools.”
The IRRRB did a similar bond sale about six years ago for half the amount.
Moody's Investors Service, one of the nation’s premier credit-rating agencies, gave the IRRRB’s school debt proposal a good rating and deemed it a low credit risk.
Moody’s analysts said their only concerns were uncertainly surrounding future demand for taconite and the lack of a debt service reserve fund.
The IRRRB is expected to sell the bonds next week.
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