The turbulent stock market shifts from the Trump Administration’s tariff implementations have found a way to impact the Shawano School District’s capital referendum projects.
The Shawano School Board voted unanimously April 14 to approve over $27.3 million in bonds to help pay for construction and renovation projects at the public schools over the next two years. The bonds would be paid back over a 20-year period, with a maximum interest rate of 5.25%.
That interest rate is not what officials wanted, however, according to business manager Bryan Kadlec.
“We thought we had a great opportunity when the markets were really pretty stable,” Kadlec said. “As you know, the stock markets took a little interesting turn here. Thankfully, we have some flexibility because of the fact that the district’s reorganization is in May, and we have a later closing.”
Eric Kass with PMA Financial Network noted that the deadline to close on the bonds is May 22, and the district has the option to enter the stock market with the bonds by the end of April. He noted that the first set of bonds approved had an interest rate of 3.8%.
Kass said that he’d discussed with the district’s finance committee about “executing the competitive sale” on the day of the school board meeting and presenting board members with final resolutions and rates at the meeting.
“Unfortunately, last week hit, and we needed to take a little bit of a pivot,” Kass said. “The stock market took a plunge. Normally, when the stock market drops, we see municipal rates drop equally, but we saw the inverse, and what that tells us is a lot of people that normally would look at the stock market dropping and flood into fixed-rate investments like tax-exempt securities like the one we’re talking about this evening, but we didn’t see that. Popular opinion is a lot of people are sitting on cash, not knowing exactly what’s going to happen.”
There’s been a 90-day pause on the tariffs until July, which is generating a lot of buzz as 150 countries are expected to be impacted, according to Kass. He said trying to lock in interest rates while the stock market is so volatile can be a risk.
The turbulent markets have also prompted a lot of people to pull back on their investments, Kass said, so it’s best to take a little time to see if interest rates improve.
“We’re going to try to meet your obligations of cash flow, maintain the levy that we’re projecting out,” Kass said.
Previously, the school district had closed on over $14.7 million in bonds at the end of December 2024. Almost $10 million in bonds is expected to be approved in the future.
Kass said that, in the worst case scenario, the district could use the $14.7 million already authorized to pay for projects happening over the next few months, although the money was supposed to be gaining interest to help give the district a start on repaying the debt. The $27.3 million would not be authorized until interest rates stabilize.
lpulaski@newmedia-wi.com
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