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HLWW School District 2687 Board Minutes



Thursday, June 21, 2001, 7:30 P.M.


The Special Joint School Board Meeting of the Howard Lake-Waverly-Winsted ISD #2687 and Lester Prairie ISD #424 was called to order at 7:30 p.m. on June 21, 2001. After the Pledge of Allegiance, roll was taken by both Board Chairs. HLWW members present: James Fowler, Randy Heuer, Kirk Jensen, Richard Lammers, James Raymond, Charles Weber, Leo Weber, Ken Zimmerman. Eugene Lorentz was absent. Lester Prairie members present: Fred Blaser, Nancy Krull, Barry Kyllo, Gene Starke, Bob Remer. Chester Hoernemann was absent. Also present were Superintendents Riley Hoheisel (HLWW) and James Redfield (Lester Prairie); HLWW Principals Mike Day, Julie Millerbernd and Dean Wessman; and Lester Prairie Dean of Students, Joe Miller.

HLWW Vice-Chair Heuer opened the floor to consider approving the agenda. Fowler moved to approve the agenda of the June 21, 2001 Special Joint School Board meeting; Starke seconded; passed unanimously.

Members introduced themselves and the chairs identified their purpose for the meeting. Starke stated that Lester Prairie wanted to review their options as a district, and consider tax impact and what each district can offer.

Heuer said that HLWW wanted to consider cooperation or consolidation and determine next steps. He said the effort should be a 50/50 proposition, if the districts decided to consolidate; also that it would lead to a building project.

Hoheisel related information on costs, including transportation. He said that further information could be obtained, but that it would take several people working over a longer period of time to do so. He said, however, that CFL contacts Bob Buresh and Linda Schroeder had provided basic data regarding state transportation costs.

Miller shared information on current curriculum at Lester Prairie. Hoheisel stated that both districts have positive programs in place, including the proposed Ag Farm at HLWW, that would benefit students, which is the overall goal for both districts.

In discussing enrollment, Redfield commented that Lester Prairie primary grades have declined in recent years; Hoheisel said HLWW's primary grades have also slightly declined.

Kyllo related the experience of two companies that merged, saying that the merger was positive for both entities, resulting in new synergies and efficiencies. He asked if the consolidation of the two districts would also result in more efficiencies, and in more opportunities for students.

During further discussion, Raymond reminded the group of the purpose of the meeting, asking if they could jointly determine the best action for the districts.

Hoheisel suggested including a CFL representative as an expert and neutral party in formulating consolidation plans.

L. Weber said that consolidation should result in spreading the tax base for residents, which would be a positive for all.

Redfield asked what the reasons were when Winsted consolidated with Howard Lake-Waverly. L. Weber responded that it had been for financial survival. He and Zimmermann also said there were other reasons, including more progress and enhanced identity for Winsted.

Heuer stated three reasons for consolidation now: 1) tax advantage; 2) the need for facilities; 3) additional opportunities for students. He also agreed that trying to offset open enrollment to larger districts was another reason.

Blaser commented that we need to determine how best to use tax money and it was agreed that financial statistics and facts are needed to show whether costs will increase or decrease.

Carolyn Drude of Ehlers & Associates Financial Consultants presented historical and current information regarding the proposed consolidation and building projects. She said that in the past 20 years or so, school districts have combined for increased efficiencies in their operations. She said that in the mid '80s there were 430 school districts in Minnesota, and that now there are 350.

She presented tax rate information for various scenarios, for example: 450 student new high school with pool and auditorium; assuming 5.75% interest (she indicated that 5.75% is a bit high for today's market, which is actually at 5% or 5.25%), base cost of $23,500,000, tax capacity value $4,494,000 (no growth assumed), 25 year bond, tax rate would go from 41.38 in 2002 to 41.42 in 2027.

For 650 students, pool, auditorium; bond of $26,000,000, interest rate 5.75%, tax capacity $5,703,000, the tax rate would be 39.95 in 2002 to 39.83 in 2022.

She stated that HLWW currently has no debt and receives no state aid for debt equalization. She also described two unique programs that could possibly lessen tax impact for individuals.

State statute provides for a Secondary Facilities Grant of $6,000,000, which would reduce tax rate to 30.84 over 20 years.

The impact on a $100,000 homestead would be the least ($300) if the districts combined and received $9.25 million state grant (tax rate would then be 25.95).

She gave an example of the Swanville-Upsala school district that requested assistance from the legislature to relieve impact on district residents.

She said in our case, the combined districts could state that they wouldn't want more than a $300 tax increase on a $100,000 home.

She said that the districts, if combined, would share any debt; that state law allows up to 30 years for debt amortization, and that any bond issue must be for at least 20 years to be eligible for state aid. In answer to a question from Hoheisel whether Maximum Effort Capital Loan would be available to us, she said that it would not be feasible under current law.

Redfield asked the boards what a realistic timeline would be to decide how to proceed, since any grants awarded would be based on whether or not the districts would consolidate.

Heuer said he would ask Lester Prairie to decide within 30 days if they want to join HLWW and, if so, working committees would be established at that time. Starke said that their next board meeting will be 7/9, and that they're meeting with Glencoe-Silver Lake School Board on 7/24, so he expected Lester Prairie could get back to HLWW with an answer after that.

Pat Van Oss, Howard Lake resident, said that Lester Prairie has declined consolidation in the past and wondered if they've now changed their position. Starke responded that they wanted to look at possibilities and consider what to do. He said that Lester Prairie is currently losing money so they are interested in opportunities, and that if they gain students, they would have to consider building so they want to keep an open mind about options. He commented that in the past, his community had preferred to remain an independent district but that now, people seem to be about 50/50 in favor of consolidation with another district.

Kyllo said that their board needed to complete due diligence for the community.

Blaser said that differences of opinion exist on the Lester Prairie Board.

Dave Sherman, Winsted resident, suggested that the boards and public look at area school facilities and student programs to see what other districts are already offering their residents.

L. Weber stated that we must compete with other districts and provide opportunities for students.

Heuer summarized their overall goal of providing quality education at reasonable cost.

L. Weber moved to adjourn the meeting; Fowler seconded; passed unanimously and adjourned at 9:35 p.m.

Respectfully submitted,

Richard Lammers, HLWW School Board Clerk

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