Geneseo School Board members have issued a $4 million five-year working cash bond to help cover shortfalls in the education fund.

Geneseo School Board members have issued a $4 million five-year working cash bond to help cover shortfalls in the education fund.

The bond represents money borrowed by the district and comes with interest fees as well as issuance costs.

“We like to avoid (issuing bonds), when possible,” said Tim Gronski, the district’s chief school business official.

However, for many districts, working cash bonds have become a way of life.

“It’s very common. I think it’s over 60 percent of districts in the state overspend in their education fund and use working cash bonds to cover,” he said.

Working cash bonds are nothing new for the Geneseo district, they’ve issued bonds in the past, including a $2 million three-year bond in 2016.

The process of issuing the recent $4 million bond started a year-and-a-half ago, when board members approved an intent to issue.

Should a district be unable to pay back the borrowed money, taxpayers are on the hook for the funds, as a result, after an intent to issue is approved, potential bonds are subject to a 30-day petition window, in which community members can garner signatures for a back-door referendum to place the issue on the ballot.

Once the 30-day petition window has passed, board members have a certain time frame in which to issue the bond.

In Geneseo, Gronski said the decision of when to issue bonds depended both upon when the money was needed and what the interest rates were.

District officials were hoping to lock in interest rates between 3.5 percent and 4 percent. In the end, they achieved a 3.79 percent rate, which is locked-in for the life of the bond.

“We were right in the middle, and we were happy with that. I think we did the issue at the correct time,” said Gronski.

Kevin Heid, a representative with Stifel, Nicolaus & Co., Inc., the district’s bond agency, told the board experts “expect interest rates to keep going up.”

Gronksi said the Geneseo School District was issued an A+++ credit rating for the bond. “What really helped us with our credit rating was our long-term budget sustainability plan. They saw we we’re working to address our deficits.”