With funds remaining from the Hartley-Melvin-Sanborn School District's facilities project, the question now is how to best use them for other purposes.

The school board met virtually on Monday with Tim Oswald, managing director of Piper Sandler, to learn the district's options for using approximately $367,000 in funds not required for the facilities project. Business Manager April Hengeveld said any remaining project costs would be final contractual obligations and bond fees.

According to Superintendent Patrick Carlin, the $367,000 is what remains from a $4.1 million loan. It is being repaid with SAVE [statewide sales tax] revenues, unlike the $18.9 million bond issue which is primarily financed through property taxes.

"One obvious option is to pay down on the existing debt, or use the money on anything lawful that was covered by the original [bond] ballot," Oswald explained.

One way to pay down the bond debt is to use the remaining loan funds for a one-time reduction of the tax levy in FY23. Another possibility is to designate a small amount each year to help reduce the levy.

The third scenario is to use the unspent funds to "back load" payments on the longest-maturing bonds.

"That will have the biggest bang for your buck for it will reduce the highest interest costs," Oswald said of the final option.

According to discussion, the debt levy would be reduced by just one cent each year if the board chose the second option, or there would be one-time reductions of as much as 21 cents for the first or third suggestions.

Board President Scott Heetland asked Oswald which he recommended. He preferred the third scenario to the first, because the district's goal is to keep the levy rate stable. To apply leftover loan funds for a one-time debt levy reduction in the short term would be, in Oswald's opinion, "monkeying around with numbers."

Oswald was also asked if the remaining funds should be applied to reduce the loan debt or be used for other projects. He said the board would have to determine if there were any facilities needs that had been delayed that need to be addressed.

An immediate decision was not required because none of the scenarios would affect the current budget. The information will be considered as the board prepares to approve the FY23 budget in the spring.

"We asked so we can get ideas and hear an unbiased opinion," Heetland said.

• Additional spending authority requested

Contained within two required annual reports to the state are requests for modified supplemental amounts. One is based on the number of enrolled students identified as returning or potential dropouts. That number totals 227. Based on the funding formula, H-M-S is eligible to request $232,822 in additional spending authority.

In the other report, H-M-S is requesting additional spending authority for on-time funding due to increasing enrollment. The district's certified enrollment grew by 30 students compared to the prior year. That requested amount is $221,666. Additional requested authority for the cost of providing instructional services to limited English proficient students served beyond five years totals $4,563.

The amounts, if approved, will increase the amount H-M-S may spend from the general fund; however, they do not necessarily result in an increase in revenue.