OPEB Funding Bond - An easier way to tax?

At the working session last night, they spent a lot of time talking with financial advisors about OPEB (Other Post Employment Benefits) funding bonds. In a nutshell, the state has given the School Board permission to fund OPEB out of bonds. The payment of the bonds comes out of an increase in property taxes. As Steve Antolak pointed out last night, the State has basically given the School Board permission to raise taxes without the need for voters to weigh in. In a way, it could be seen as a backhanded way by the State of increasing taxes through the School Districts. So, the payment of the benefits ends up coming out of new tax dollars thereby freeing up more money in the general fund -- around $1.3 million per year if I am understanding everything correctly. (Those that know more about these things, feel free to weigh in as it was a very complex meeting.)

The one confusing aspect to the discussions around certain budgetary models for the coming year is that it also removes the need to make any cuts during the coming 2008/09 school year. This would indicate to me that there was more than $1.3 million.

Here are a few advantages and disadvantages that I gleaned from the discussion.

Advantages to OPEB

In a contentious polling season, the District does not have to go to the polls to increase funding.

It takes far less work to implement than running a costly campaign for a levy.

It appears to potentially solve the budget crisis for this coming year. Since the budget and expenses are very fluid, it would potentially alleviate the need to make cuts this coming year. It makes the budget more manageable. Therefore, it would put off the need to get a levy until next year rather than during an election year.

Nearly every School District in the state is doing it, because it offers even more significant relief to other districts. (I'm not sure we want to do it just because everyone else is.)

During the discussion last night it was pointed out that this is something that the State might take away next year. The reasons for taking it away centered around it potentially costing the State more (it really doesn't cost the State anything -- unless you view this from a political perspective and voters understand this is just a tax by the State in disguise.). This really isn't a reason to do it, but it was pointed out.

Disadvantages

It is a tax.

Doing OPEB might very easily results in even less of a chance that a levy would pass.

Although it solves the immediate budget shortage, I do not believe it is as much as a full levy.

These are just my initial notes -- please chime in with corrections or additions.