By Charlene Bielema
A two-hour special work session this week provided the Clinton School Board with in-depth information about how it can piece together funding to cover construction of a new $20 million middle school.
Matthew Gillaspie, senior vice president of PiperJaffray in Des Moines, presented the board with many different funding options to fill the gap between the $12 million the district has set aside for the construction and what it will actually cost.
The amount yet to be covered is predicted to come in around $8 million, said Clinton School District Chief Financial Officer Jan Culbertson
The $12 million already secured is coming from a $30 million bond sale in 2010, with that full amount divided up to pay for several projects as well as a portion of the new middle school, which when complete will house all of the district’s seventh- and eighth-graders. The plan is to move sixth-graders into the building after funding becomes available to build a sixth-grade wing.
With the assessed valuation of the properties within the school district coming in at $1.348 billion, and a 5 percent statutory debt limit, the district has a debt limit of $67.4 million. When all current outstanding bonds and notes are deducted, the school district would be allowed to take on no more than $34.4 million debt.
The board will have to consider four components when deciding whether to proceed with borrowing the money in either 2013 or 2014, those being statewide sales tax revenue predictions, fluctuating interest rates, enrollment figures that could decline or even increase, and possible changes to school finance law.
Gillaspie provided many scenarios, and guided the board through a run sheet that listed the district’s current debt obligations to show board members how the running cash balance would be affected over time. The board could have to face the possibility of operating with a negative cash balance for a three- to four-year time period, but has other funding mechanisms available, such as interfund borrowing, a bond anticipation note that would allow the board to borrow against future bond revenues, or subordinate bonding to get through that period, which could extend into 2018. The board also could bring a bond issue to voters requesting a property tax levy — which would have to be approved by 60 percent of voters — and then abate the taxes. The board then could pay for the as-yet unfunded portion with sales tax revenue and not collect it through property taxes.
Gillaspie said the goal is to build the school while at the same time protecting the district’s future finances.
“I don’t want you in a position that you can’t get out of,” he said, adding it is not good for the district, the kids or the community.
The board will meet in a future work session to continue discussions on funding options.