Supt. Davies explains school bond issue
The Holton School District continually evaluates ongoing building maintenance and facility needs through the development of a long-term capital improvement plan.
In addition, the district has a plan for prioritizing these needs and allocating funds from its annual operating budget to make these improvements. In most cases, ongoing maintenance and repairs, as well as equipment and transportation needs, are paid from the district’s capital outlay fund.
The capital outlay fund is limited to 8 mills and is used primarily for these types of district projects. For larger projects that can’t be paid from the district’s capital outlay fund, the district has requested the authority from voters to issue bonds to fund projects.
With voter approval, bonds are issued to pay for projects and then repaid over time with the district’s bond and interest mill levy. The present district’s bond and interest mill levy is a dedicated mill levy that can only be used for the retirement/repayment of outstanding bonds and is currently 14.025 mills.
As you may recall, the district’s last bond issue was in 2014. The bond issue to construct and furnish a new elementary school was approved by voters. The bonds for that project were originally issued over a 25-year period and the mill levy requirement to repay the bonds is 14.025 mills.
Since 2014, the bonds for the elementary school have been refinanced, saving the district more than $2,427,311 of interest cost and also reducing the term from 25 years to 22 years.
The ability to pay off the bonds earlier than expected is a result of conservative fiscal management, maintaining appropriate fund balances (reserves), higher amount of state aid and higher assessed valuation growth than originally projected.
These factors allow the district to maintain a constant bond and interest mill levy and provide flexibility for the district to consider other bond projects without requiring a mill levy increase.
The project the district is asking for on Nov. 5, 2019, is to deal with aging HVAC (heating, ventilation, and air conditioning) in the high school where things have reached their end of life and the school is unable to obtain parts for the classroom unit ventilators. Parts of the middle school need updating as well.
The district already started this summer with finishing phase one that updated one of the school chillers and eight unit ventilators on the third floor of the high school since the school’s chillers were spitting out metal shavings and we had unit ventilators that had to be replaced.
This is a large capital project that requires the district to seek voter approval to issue bonds in order to pay for the project. The district is in a fortunate financial position to be able to issue the bonds to fund this project without requiring a mill levy increase.
The bonds would be issued for a term of 20 years at an estimated interest rate of 3.75 percent and can be repaid within the district’s current bond and interest mill levy of 14.025 mills.
No new taxes will be assessed for these upcoming bonds as funding will occur by reestablishing the original timeline to pay off the bonds in 2039.
The district will be hosting three meeting on two nights next week on Wednesday, Oct. 23, and Thursday, Oct. 24, at 6 p.m., 6:30 p.m., or 7 p.m. at the Holton High School library. Please come learn more at one of these sessions if you have questions or concerns. Thank you.