By Jodie Zesbaugh, Senior Municipal Advisor
and Beth Downes, Municipal Advisor

Cass Lake-Bena School District: A Legacy of Partnership & Progress

For over three decades, Cass Lake-Bena School District has partnered with Ehlers to navigate the complexities of school finance and community investment. Since 1991, we’ve proudly served as the District’s municipal advisor, supporting a wide range of initiatives including operating referendum elections, school building bond elections, and the issuance of various debt financing tools such as school building bonds, refunding bonds, one-day bonds, aid anticipation certificates, and facilities maintenance bonds.

A Unique District Profile

Cass Lake-Bena is a district unlike many others in Minnesota. Its enrollment and demographic makeup reflect a rich cultural heritage and a diverse community. The district’s tax base is equally unique, shaped by the presence of seasonal resorts and major commercial entities like Enbridge. These factors require a nuanced approach to financial planning and voter engagement for bond referendums.

Building Together for a Brighter Future: Elementary School Project

One of the most significant milestones in recent years was the successful passage of a bond referendum in 2022 to construct a new elementary school and renovate the existing facility. This achievement followed a failed attempt in 2017 and a postponed effort in 2020. The 2022 referendum passed narrowly, but several key factors contributed to its success:

• Unified Campus Vision: The proposal to consolidate facilities into a single academic campus resonated with voters.
• State Debt Equalization Aid: Given the community’s unique tax base makeup, the district qualified for a portion of the debt to be paid through state debt equalization aid which helped to offset local taxpayer burden.
• Targeted Tax Impact Communication: Resort owners, who are taxed differently than typical commercial properties, received individualized tax impact analyses. These properties often include seasonal restaurants and homesteaded portions, with only a small fraction of the real estate classified as commercial. This tailored outreach helped clarify the financial implications and build broader support.

The successful bond helped deliver a transformative learning environment, including:

• Modern Learning Spaces: A new elementary school and realignment of 5th grade created a more effective and future-ready learning environment.
• Community & Equity Enhancements: Expanded spaces for public use and improved facilities for Special Education, ECSE, ECFE, ALC, and the Boys and Girls Club provided more learning options for all students, as well as more gathering options for community members.
• Safety & Early Learning: Better transportation safety and expansion of early childhood programs, including partnerships with Leech Lake Head Start helped ensure young students can travel too and from school safely and benefit from a more robust beginning to their academic journeys.

Bond Sale & Investment Strategy

The bonds were sold on January 25, 2023, attracting ten competitive bids—a strong indicator of market confidence in the District’s financial health and project vision. The District’s funds were invested on February 23^rd  to align with the draw schedule provided by Ingensa, the District’s construction management firm.

However, the District did not meet its one-year spending exception target for the 2023A bonds. As a result, Cass Lake-Bena began accruing an arbitrage rebate liability. To date, the District has earned nearly $2 million in interest, but it will need to account for roughly $700,000 in excess earnings that would need to be rebated back to the Internal Revenue Service (IRS).

This growing liability prompted a closer examination of the draw schedule, spending pace, and investment options. As the project neared completion, it became increasingly important to monitor the District’s arbitrage liability and look for ways to reduce it while increasing the District’s retainable earnings. Ehlers worked with the District to implement a tax-exempt investment strategy using Demand Deposit SLGS (State & Local Government Series) which allowed the District to lower its overall arbitrage liability and retain additional earnings not subject to arbitrage rebate.

Celebrating Success: Grand Opening in May 2025

The District celebrated the grand opening of its new elementary school in May 2025, marking the culmination of years of planning, community engagement, and financial stewardship. The final project included several added components that further enhance the District’s educational experience and community value.

Required Disclosures: Please Read

Ehlers is the joint marketing name of the following affiliated businesses (collectively, the “Affiliates”): Ehlers & Associates, Inc. (“EA”), a municipal advisor registered with the Municipal Securities Rulemaking Board (“MSRB”) and the Securities and Exchange Commission (“SEC”); Ehlers Investment Partners, LLC (“EIP”), an investment adviser registered with the SEC; and Bond Trust Services Corporation (“BTS”), holder of a limited banking charter issued by the State of Minnesota.

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