Evansville Water: The Movie: Part 1

Audio/Video Evansville Schools Meetings

Seek the High Ground

Loading...

Search This Blog

Wisconsin Wit

Sunday, February 13, 2011

Nostalgia: 2005: Re:Bill Connors writes: School District Debt Service Heavily Back Loaded; Reflection on the Growth bicycle; or What mix and rate of Growth is right?

--- billconnors <noreply-comment@blogger.com> wrote:

---------------------------------
Managing growth is essential. But it would not be
prudent to constrain growth too much. The school
district's debt service for 2005-06 is $1.98 million.
In 2014-15, the school district's debt service will
exceed $3 million, even if no additional debt is
issued between now and then. In 2020-21, the last
year of payment on the bonds for the new high school,
the school district's debt service will exceed $4
million. The school district heavily back-loaded the
repayment schedule on the bonds for the new high
school, which means they are counting on large
increases in the school district's property tax base
through new construction to be able to pay for the
escalating debt service costs.

This appears to be prudent financial planning on the
part of the school district, but I wonder how many
people are aware that continued growth is essential to
keeping the school district's mill rate in line.

Of course, we could get away with fewer new houses in
the school district if we had more commercial or
industrial development or a greater proportion of the
new houses were larger and more expansive, and fewer
new houses would save on operating costs for the
school district.

Bill Connors
Evansville City Administrator

--
Posted by billconnors to Evansville Observer at
9/19/2005 10:20:06 AM

6 comments:

  1. This is an interesting point. I had never heard that the bonds are "back-loaded" before. I would like to attend the meeting this evening, but I am not sure If I will be able to attend. One question I have is if the school board has any idea how long it will be before additional facilities are needed if the current growth rate continues?

    What I have heard brought up by people in various meetings (off the record remarks) is that the school is in danger of outgrowing its current facilities in 7 years if the current growth trends continue. It appears that there needs to be a balance. While there is obvious benefit to growth given the structuring of the bonds, there is still danger of outgrowing the current facilites before the bonds are paid off.

    Can anyone from the School Board (or anyone that has knowledge of what the Board has indicated) confirm whether there is any truth to this or if it is just a rumor?

    ReplyDelete
  2. I was at the school board meeting last night. If I remember correctly, the District Administrator said that the current facilities will be OK with optimal class sizes until well after 2014. Just how long after is hard to say at this point. With cramming kids in, the facilities should be adequate until at least 2020, when the current bonds are to be paid off. Don't quote me on this.

    My impression was that the the Board and Administration are on top of this. A report showing the enrollment numbers and facility capacity was available, but I somehow failed to get one. I suppose interested citizens could get it by calling the District Office.

    ReplyDelete
  3. I learned from school district staff that the school district does not need as much new construction each year to cover the back-loaded debt service schedule on the bonds for the new high school as I had thought. It turns out new construction helps in two ways. First, obviously, it increases the tax base over which the debt service levy is spread. Second, it increases enrollment, and under the state education funding formula (this is the part I did not know), increased enrollment will allow the school district to cover a greater percentage of the debt service with state aid rather than property tax revenue.

    Because of this double impact of new construction, a 4% increase in the school district's equalized value each year will be sufficient to cover the back-loaded debt service schedule. Put another way, if there is enough new construction in the school district each year to increase the school district's equalized value by at least 4% each year, the back-loaded debt service schedule will cause not an increase in the mill rate on assessed value. (School district staff said the assumptions underlying the debt service schedule did not differentiate between the two primary sources of increases in equalized value--new construction and inflation in sale prices--but only an increase from new construction could prevent an increase in the mill rate on assessed value.) In the last five years, the annual increases in the equalized value of the city (I do not have data for the whole school district) from new construction have been 5.2%, 5.6%, 3.4%, 6.5%, and 6.1%. If and when I obtain comparable data for the whole school district, I will pass it along).

    Bill Connors
    Evansville City Administrator

    ReplyDelete
  4. Thank you Cueball and Bill for posting on last nights meeting. It was good to have City and School in the same room for this meeting.

    Yes, the 4% assumption was good to hear about, but there was a follow up question I was not fast enough to ask. Heidi had said that current facilities at the intermediate school looked good till 2015 and then some improvising could be done. My question would have been whether if all the homes that the developers have penciled in and the city has given its blessing on for the 10 year plan were done in 5 years, how would that effect the enrollment projections she has done. It was not clear from the brief discussion of enrollment projections what the BASIS of those enrollment projections was.

    I think it would be nice to get the financial consultant from the City, Mr. Wagner, and the financial consultant from the school district as well as staff from both and do a power lunch where they could share the assumptions on the projections and make sure they all are on the same page.

    I wonder if Heidi realizes that the 10 year target is here, and that with the builders being allowed to use offsets they can build all the homes now. That impacts enrollment.

    Again, thanks to all who came to the meeting.

    The Observer

    ReplyDelete
  5. Under the final land divider's agreements we have entered into and are likely to enter into, the developers will not be permitted to construct infrastructure for 10 years worth of lots in 5 years.

    Actually, if you look closely at the enrollment projections, you will see Heidi flat-lines the incoming kindergarten classes in future years, I believe because the school district does not have a reliable way of determining the impact of housing starts on enrollment--the numbers jump around from year to year without a clear pattern. She has 134 in K in 2006-07, '07-08, and '08-09 and 133 in K in 2009-10 and '10-'11. The largest K class in recent years was 143 in 2002-03, followed by 139 this school year.

    I'm sure Heidi will keep a close eye on this and update her enrollment projections, , particularly the projections of the incoming K classes, as she gets more years of actual data. It is my impression that the school district staff and school board are on top of this issue and will sound an alarm if things start to look like they are getting out of hand.

    Bill Connors
    Evansville City Administrator

    ReplyDelete
  6. Bill, you nailed it. Very good for-sight.

    ReplyDelete