40 Million

With the county and school board budget process finally behind us, the time has come to address the long awaited school building plan. Commissioner Austin Shaver laid out his plan to commission at Monday's workshop. Austin's fact sheet that he passed out to commissioners shows that the amount of money commission has designated to the school debt fund could fund up to $40,000,000.00 for new schools. The exact amount of money that would be available for the building program will depend on the interest rate at the time money is borrowed. Austin's plan requires no property tax increase.

$41 million for 30 years @ 3% = $2,074,291.80/year ===== $41,000,000.00
$38.5 million for 30 years @ 3.5% = $2,074,586.40/year == $38,500,000.00
$36.4 million for 30 years @ 4% = $2,085,350.04/year ====$36,400,000.00
$32.4 million for 30 years @ 5% = $2,087,162.52/year ====$32,400,000.00

The current building program proposal from the school board totals around $47,000,000.00. But commissioner Shaver says that the 40-41 mil. number is the most the county could afford without a property tax increase. He proposes that just as the case of the budget, commission should set the amount and let the school board determine what their building priorities will be.

Not all commissioners agreed with Shaver's proposal. Commissioner Don Miller wants the school board to spend another 1.5 million dollars to take the current building plan to the bid level to determine just how much the plan will actually cost. The school board has already spent nearly a million dollars to have the plans taken to the design/development phase. This would mean the board will have spent 2.5 million dollars on plans without even knowing which projects may or may not receive final funding.

Over the last few years the school board has spent hundreds of thousand dollars on building plans that will never be used. They spent over two million dollars on a piece of land that will never be used. They have spent many hundreds of thousands of dollars to patch and prop up some of the older schools and bring in trailers to deal with overcrowding problems. Literally millions and millions of tax dollars have been spent needlessly that have solved nothing. It now appears that some on the school board and commission are ready to travel down the same tracks again. If the additional 1.5 million dollars is spent on top of the million already spent, then if commission doesn't come across with the funding for all four proposed projects, we will have another box full of plans that may never be used and hundreds of thousands of dollars thrown away.    


Commissioner Austin Shaver's Proposal

The Goal: To Build Without Raising Taxes

1. Authorize the County Finance Director to seek the best available rate for a 30-year loan to fund the school building program.

2. To pay out of Fund 156 – Education Debt Service – without impacting the reserves. Financial Options Without Tax Increase

$41 million for 30 years @ 3% = $2,074,291.80/year
$38.5 million for 30 years @ 3.5% = $2,074,586.40/year
$36.4 million for 30 years @ 4% = $2,085,350.04/year
$32.4 million for 30 years @ 5% = $2,087,162.52/year

Background Information on Fund 156

• 1 penny = $145,584 @ 98% collection rate (rate of collection will increase).

• Fund 156 has been allocated 21.21 pennies = 21.21 x $145,584 = $3,087,836 (property tax only).

• As of 8/31/09, Fund 156 contained approximately $4.5 million in reserves.

• There are currently three existing debts in Fund 156:

-$3 million loan – Payoff is approximately $1.4 million;
-$1.9 million for various school projects (designs, roofs, etc…)

-Payoff of the $900,000 requires approximately $700,000;
-The remaining $1 million will be rolled into the total school building program funding per the commission’s statement at the time the money was allocated;

-$12.5 million that will require 6.87 pennies to maintain payments for final payoff in 2025.

• These payoffs will leave approximately $2.4 million in reserves.

• Under current funding, based on property tax alone, Fund 156 will accumulate $3,087,836 per year but would also receive other revenue sources.

• Payments on the $12.5 million loan require an average of $1 million per year.

• Based on property tax alone, this will leave a little over $2.087 million per year to pay any new debts. Points to Consider

• The Fund 156 numbers above are based on property tax only. There are other revenues.

• The value of a penny is based on a 98% collection rate. This number will be higher.

• The economy of a 30 year vs. 20 year vs. 10 year vs. 0 year loan. Although less interest is paid on a 20 year loan, we must consider what we can afford. There are no early payment penalties - meaning we can pay more quickly if desired - but a 30 year allows for flexibility in financially lean years.

• It will be some time before full payments will be made, allowing for the fund balance to accumulate significantly.

• Adequate Facilities Tax has moved to Education Capital Projects, which will provide for other needs that arise, such as air conditioning units, repairs, etc..