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Timing is everything - and this is the time

POSTED: March 9, 2012 7:00 a.m.

The USD 327 Board of Education is in the process of proposing a bond issue for voters to consider making significant improvements to our existing facilities.

A common question has been, why now, and this column will outline to you the financial reasons why now is a beneficial time. Currently, the State of Kansas supports school building projects that are passed under bond elections. The percentage of support is based on valuation per pupil, and the assistance rate for USD 327 stands at 30 percent right now.

The governor has proposed an elimination of this support in his plan for education and appropriations legislation for bond issues passed after July 1, 2012. This proposal may not pass this session, but it is certainly at risk of going away or being reduced in the near future. The question to ask on this is how much trust do we place in the legislature and governor to prevent this from happening?

Since 1992, USD 327 patrons have paid taxes contributing in some form to finance building projects in other districts across the state (many districts are currently eligible for assistance now). With proposed legislation, this could be our final opportunity to benefit from the current law rather than paying into the system for years to benefit other districts without us receiving similar assistance. For example, Gardner-Edgerton USD 231 recently passed a $72.7 million bond issue and will receive 35 percent assistance saving their local taxpayers around $25.45 million that will be supported partly with our state tax dollars. While state revenues are used to support this assistance formula, it has not previously caused a direct increase in state income, sales, or property taxes. I’d like to see some of that come back to USD 327 instead of us solely supporting other districts.

The more projects we can put on the bond the greater the advantage that we take with 30 percent assistance from the state. This could allow us to address several capital projects across the district at a lower cost to local taxpayers than through capital outlay levies. If multiple projects can be completed under bond, there is a possibility that USD 327 could decrease the capital outlay mill levy in future years. Some of these projects could increase our energy efficiency as well throughout the district such as HVAC/windows at KMS and some AC options at EJSHS. The choice is to include these in bond at 30 percent assistance or pay through capital outlay at 100 percent local dollars. We have smaller projects in all three buildings that could be included.

Right now we have favorable interest rates and competitive construction costs. If we wait until the economy fully recovers, chances are interest rates will rise and construction costs would also see an increase. These factors along with the potential of losing state support would make a similar project in the future much more burdensome on local property owners, or the project would be drastically scaled back at the same cost. Another benefit is the growing valuation of the district due to current construction projects within our boundaries which in the future would spread the tax burden out when new buildings are on the tax rolls.

Bottom line is passing of a bond issue would increase local property taxes. The financial benefits are maximizing local dollars through the state assistance that is currently available, taking advantage of favorable interest rates, and competitive construction costs. Many times we ask for the best bang for the buck, and I see the opportunity to invest now and enhance the facilities and opportunities for our students. By not pursuing this option, we could be placing all future facility improvements 100% on local taxpayers through capital outlay levy or an unassisted bond instead of taking advantage of 30% support from the state under current law. It doesn’t appear that our future buck will have as much bang as it does right now. There is never a good time to raise taxes, and the strain that it can put on property owners is understood, but we hope this helps with some reasons why now seems to be a favorable time financially to move forward. In the future, we hope to bring you reasons for the proposed components of the bond issue in greater detail, so please stay tuned for more information. Please keep an open heart and mind as you envision what is needed in the future.

 

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