The bond issue for the Worth County School will be held on April 5th along with local municipal and school board elections. See ballots in this week's Sheridan Express.
by Superintendent Dr. Matt Martz
Last year
I wrote about the different funds that are used to pay for our public
education. Funds 1 & 2 are used to
pay for the operating expenses of the school district (buses, food service,
utilities, and teacher’s pay). Fund 4, capital improvement, is used for
equipment purchases and small maintenance purchases. Fund 3, or the debt service fund, is used
strictly for building projects or large improvement to the facilities.
On April
5, the Worth County R-III Board of Education will ask voters to extend the 25
cent Debt Service Levy. This levy will
not cause patrons yearly taxes to rise and will give the school district
$500,000 to make improvements to the building and grounds. At the March board
meeting, the Board of Education heard from ConEdison Solutions, a construction
management company, regarding the costs of projects that have been proposed
from the district facilities committee.
The Board will need to prioritize the projects in order to stay within
the $500,000 budget. Projects that the
committee recommended include replacing the gymnasium bleachers and gym
flooring, replacing guttering, resurfacing the elementary playground, and
reconstructing the roadway that extends around the East and South sides of the
building.
If the
voters approve the bond levy on April 5, the board will move quickly to make
that determination and work would begin as soon as possible.
I am
including some of the more frequently asked questions regarding this bond
levy. Please contact the school if you
have additional questions.
Worth County R-III School District
(Frequently Asked Financing Questions)
1.
What
is the financing proposal of the Worth County R-III School District?
The Board of Education is seeking voter approval at the
April 5, 2016 election for a $500,000 general obligation bond issue that
extends but does not increase the current $0.25 debt service tax levy of the
District. The proceeds from these bonds are to be used for the purpose of
providing funds to complete safety and security improvements to the parking lot
and playground; to repair and replace the gymnasium floor and bleachers; and to
complete other remodeling and repair improvements to the existing facilities of
the District.
2.
Explain
what a general obligation bond is and how it relates to the financing for this
project?
Under Missouri law the only way a School District can legally
borrow money for school facility improvements or construction on a full faith
and credit basis is to seek voter approval of a general obligation bond issue.
A “general obligation” means that the School District can and must levy
sufficient taxes to repay the principal and interest associated with the bonds.
With voter approval of at least a four-sevenths majority at the April 5,
2016 election the District can then sell the $500,000 of bonds in increments of
$5,000. This financing process gains access to numerous investors at
favorable terms compared to what would happen if the District was dependent
upon a single lender to supply the funding. The interest earned by the
investors is exempt from federal and state of Missouri income taxes. With
the interest being tax-exempt, the actual rate the District has to pay is much
lower than would otherwise be the case for a typical loan. Based upon
current interest rates in the municipal bond market the average interest rate
is expected to be less than 3.00%.
3.
How
can the $500,000 general obligation bond issue be referred to as a no tax
increase program?
The current $0.25 debt service fund levy is adequate to repay the
existing bonds plus the $500,000 of new bonds by extending the levy eight
years (from fiscal year ending 2020 to 2028), but not increasing it above
the current level. This is feasible due to growth in assessed valuation
and very low interest rates in the current municipal bond market.
4.
Can
the District pay the bonds off early to save interest expense?
Yes, the bonds will contain optional redemption (call) features
that enable the District to repay them at no penalty in the event fund balances
become large enough for that to occur. The call feature also provides the
District the opportunity to refund the bonds to take advantage of lower
interest rates in the future, if the overall economic conditions create that
set of circumstances.
5.
Will
local investors have an opportunity to purchase the Bonds?
Yes, the bonds will be available to local investors prior to being
offered to others. If you are interested in purchasing some of the bonds,
let the District offices know and they will insure you are contacted after the
election.
6.
What
type of rating will the general obligation bonds have?
The District can expect to receive an AA+ rating by Standard &
Poor’s Corporation on the general obligation bonds. Missouri school
districts issuing general obligation bonds for construction purposes are
eligible in most cases to participate in the State of Missouri Direct Deposit
Program. This program provides each issuer with an AA+ rating.
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