Jackson Heights pays off bond issue early

In late 2007, voters in the Jackson Heights school district approved a $3 million bond issue for construction of a 10-classroom addition to the middle and high school building, with the bond to be paid down over a 20-year period.

But because of “excellent accounting and stewardship of taxpayers’ money,” as USD 335 Board of Education president David Allen noted on Monday, that bond will be paid in full this year — about six years ahead of schedule — and district taxpayers will not have to pay as much in ad valorem property taxes this year to support the district.

That was the big news during the Jackson Heights school board’s public hearing held that evening on the district budget for the 2022-23 school year, with District Superintendent Jim Howard suggesting that the headline for the news should be “School Pays Off Bond, Taxpayers Rejoice.”

At the close of the hearing, the board approved the 2022-23 budget, which, at 45.930 mills, represented a decline of 4.972 mills from the 2021-22 budget of 50.902 mills and matched the “revenue neutral rate” for the district for the year.

The main reason for the decline in the mill levy, board members noted, was a zeroing out of the levy for bond and interest payments on the 2007 bond for the middle and high school addition. Last year, the district levied 8.635 mills for that bond.

“The bond that started in 2007 and was set to be paid off in 2028 will be paid in full this year,” Allen said. “Through excellent accounting and stewardship of taxpayers’ money, USD 335 will pay off the bond six years ahead of schedule, benefiting every stakeholder at Jackson Heights.”

As a result of the early payoff, the district will see a total savings of $112,440 in debt interest payments over the next six years, as well as revenue increases of more than $100,000 in capital outlay funds each year, Allen said, noting that the 2022-23 budget would receive about $103,055 in additional capital outlay funds.

Allen also pointed out that a yearly decrease of 13 percent in the overall tax rate would save district taxpayers more than $100,000 each year through 2028, with a total of $112,836 saved during the 2022-23 school year.

The 2022-23 budget included a $1,548,640 payment on the 2007 bond, which was significantly higher than bond payments in previous years — $238,640 in 2021-22 and $232,820 in 2020-21, with each of those two payments covering about $200,000 in bond principal. The approved budget showed a remaining principal amount of $1,510,000 on the bond.

Howard cited the work of Board Clerk Sheri Dibbern in “building cash” over a period of several years to pay off the bond while the board either inched the mill levy upward or left it flat from year to year.

“We promised the taxpayers a flat mill rate, but over the years, the assessment kept going up,” Howard said. “You could have moved that mill down over time as the assessments went up, but you didn’t… As the assessment went up, you just got more money.”

Dibbern added that lowering the district’s mill levy in any given year while the district was trying to pay off debt might have sometimes resulted in the levy being raised again in the next year due to fluctuations in the district’s assessed valuation.

“It was almost better to just kind of move the money into savings, you might say, for the rainy day,” she said. “The rainy day has come.”

The 2022-23 budget as approved by the board includes 20 mills for the general fund, 17.93 mills for the district’s local option budget (LOB) and eight mills for capital outlay. In the 2021-22 budget, the district levied 17.807 mills for the LOB, 4.46 mills for capital outlay and 8.635 mills for bond and interest payments.

This year’s budget is expected to generate a total of $1,283,261 in local taxes, compared to $1,408,122 generated during the 2021-22 school year. The district’s assessed valuation for 2022 was listed at $29,503,448, up $1,106,579 over the 2021 valuation of $28,396,979.

Zeroing out the debt on the 2007 bond will not entirely erase all of the district’s debt, however. The district still has $820,000 on a lease purchase for the installation of energy-saving equipment installed throughout the district at the time the middle and high school was built, according to the budget.

Howard said that paying off the 2007 bond early will allow the district to pay the lease purchase down that much quicker as well, provided the district doesn’t have “any major mechanical things” happening in the near future.