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'It's a catch-22' Missouri school districts could lose out on major bond savings if they don't sign Treasurer's letter

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Posted at 5:50 PM, Dec 20, 2021
and last updated 2021-12-20 19:23:42-05

KANSAS CITY, Mo. — From a Central Missouri courtroom to the ledgers of school districts, one ruling from a judge has put districts into what some call a catch-22.

Last month, a Cole County judge ruled public health orders related to COVID-19 are invalid.

Earlier this month, Missouri Attorney General Eric Schmitt told local school districts they had to stop enforcing masking, quarantines and any other COVID-related mandate. School districts generally followed protocols from the health department.

The state's treasurer took it a step further last week, telling districts if they didn't comply, they wouldn't get help with refinancing bond debt.

Ten school districts in Missouri got this letter from the State Treasurer's office and they were given a choice: Sign it or lose out on bond savings.

MO treasurer compliance letter
The Missouri Treasurer's office sent this letter to 10 school districts warning that if they didn't sign it and comply with the Attorney General's cease and desist order regarding COVID-19 policies, the office would not approve their bond refinancing.

"We were given last Monday the option of - if we want our bond refunding to go through on Wednesday of last week, I was going to have to sign that or it would not go through," North Platte R-1 School District Superintendent Karl Matt said Monday.

School districts go through a state program, Missouri Health and Educational Facilities Authority, to refinance bonds and get lower rates. All 10 districts that received the letter are in this process.

KSHB 41 News confirmed last week that the treasurer's office sent letters to the following school districts:

  • Warren County R-III - Signed
  • Hannibal 60 - Signed
  • North Platte R-I - Signed
  • Lone Jack - Signed
  • Harrisonville - Not signed
  • Holden - Not signed
  • Affton - Not signed
  • Windsor - Not signed
  • Thayer - Not signed
  • Oregon Howell R-III - Not signed

State Treasurer Scott Fitzpatrick is telling them that he won't approve their bonds unless they acknowledge they are complying with the Attorney General's cease and desist order to stop COVID protocols like masking and quarantines.

"We were made aware of several schools which did not intend to comply with the order," Mary Compton, spokesperson for the Treasurer's office, said. "Due diligence is always done in preparation for a financial transaction and the disclosure of pending or threatened investigations or litigation is a material consideration when making the determination whether to engage in a financial transaction with any party. The Attorney General has made clear he intends to pursue litigation against school districts who fail to adhere to the directives in his letter."

The North Platte School Board decided to sign off on the Treasurer's letter. Matt said that it's about students' education and taxpayer money.

"It boiled down to if we wanted to save what was going to roughly be $972,005 for our taxpayers," Matt said. "Being able to do capital projects sooner. We'd like to do a remodeling of our elementary building and put a tornado shelter room down there."

Matt said by not participating in the state program, they'd lose $200,000 - $400,000 in savings.

"The most important thing for us to do is educate kids and keep kids safe," Matt said. "That's our number one priority, regardless of what other political games are going on. My job is to not get involved in any of that."

The Harrisonville School District has not signed the compliance letter yet, and is negotiating with the Treasurer's office about the letter's language.

"It's just holding us accountable for something - this is a long process - something that may change, even a year from now," Harrisonville School District Superintendent Paul Mensching said. "I don't want to put us in any danger of future litigation or consequences of perjury."

Mensching said COVID-19 mitigation strategies could change in the future, and there's no way to tell if the Attorney General's directives will stick.

Mensching said things change, boards change, and COVID-19 mitigation strategies could very well change, too.

With the state bond program, Harrisonville would save about $330,000 because of the state's AA plus credit rating.

If districts don't sign the letter, they'll need to use their own credit rating. If you're a small district, your credit rating is small too, which means less savings.

Mensching said if they went that route, it would mean $100,000 less in savings.

"I know a lot of superintendents feel like we're put in between a rock and a hard place," Mensching said. "Are we going to save that money or are we going to leverage the future of the district? So it's a tough spot to be in, really."

Mensching said the school board will get together on Tuesday to figure out next steps.

Harrisonville passed two bond issues in 2020, a 50-cent mill levy increase for hiring and retention and approved $22.7 million in bonds for capital improvements.

"The taxpayers have put a lot of trust in us," Mensching said. "We are trying to be good stewards of those dollars and so it's, again, it's a struggle."

Many school districts are already in compliance with that the AG's office wants, like Harrisonville and North Platte.

North Platte hasn't had a mask mandate since last school year, and Matt said the majority of parents don't want one.

Prior to the Attorney General's cease and desist letter, public health departments decided on quarantining and contact tracing, while providing guidance to the schools. Now, many believe they can't do that.

Matt said they are still identifying positive COVID cases and can tell positive students to stay home.

While Matt referred to what's going on as political games. Mensching views it as ironic.

"It seems ironic when people in state office are telling us they don't want the federal government getting involved in the state. Well, I guess we're down the line a little bit and we don't want them involved with us," Mensching said. "But it is a catch-22 because we realize we're participating in a state program, and they're setting the rules for their program."