Published: October 18, 2008 12:10 am         

Financing for proposed school improvements is explained

By Rebecca Boysen

Herald Staff Writer

CLINTON — Community members attending this week’s facilities task force forums got a detailed explanation on how the Clinton Community School District plans to finance proposed improvements to the middle and high schools.

Matt Gillespie, financial consultant with Piper Jaffray, was on-hand to answer questions and explain the use of the new 1-cent sales tax, which district officials hope can be used to fund the much-needed upgrades.

The facilities task force is a committee made up of nearly 50 area educators, administrators and community members who have been meeting for more than two years to determine what improvements are needed, and decide on the best options for going forward. The task force started out with more than a dozen proposals, and after receiving community feedback during a series of public forums in April, has narrowed the field to options A and B.

Both options include the same plan for Clinton High, with extensive remodeling and renovation and two major additions to the current building. Option A calls for renovations and improvements at Lyons and Washington that would make the two schools similar in size, both capable of accommodating around 450 students. Option B includes the creation of a new 900-student middle school to be built at a central location in town, with an energy-efficient geothermal heating and cooling system, and maximum academic space.

District architect Dave Briden, with Frevert-Ramsey-Kobes Architects-Engineers, explained that option A, with renovations at Clinton High and remodeling of the two current middle school buildings, would cost around $66.9 million. Option B, which includes the same renovations at Clinton High and the creation of a new centrally-located middle school facility, carries an estimated price tag of $76 million.

Both options also include adding air conditioning to the two remaining elementary schools without central cooling systems, Bluff and Whittier.

Gillespie explained that options A and B would both require the use of funds from the new 1-cent sales tax. Voted into law by Gov. Chet Culver in April, the new statewide version replaces the existing local version. Because of this change, the school district must restate how they intend to use those funds.

The statewide 1-cent sales tax took effect on July 1, and was implemented with the purpose of equalizing the funds received by school district’s across the state.

“It absolutely makes sense that it’s statewide,” Gillespie said. “We work with about 95 percent of all the school districts in Iowa, and, I’m not here to be on a soapbox by any means, but there were huge inequalities. It’s good that they changed that law.”

He explained that, because the new sales tax has been extended to run through 2029, Clinton County must extend its revenue purpose statement through that time period, which outlines what the sales tax revenue will be used for.

“The statewide sales tax is now law, and it’s going to be collected, and every district is going to continue to receive the money,” Gillespie said. “But, your school board does not have the authority to spend the money or to borrow against it, beyond when the Clinton County tax would have otherwise expired.”

Gillespie explained that, although district officials are hoping to use the revenue from the sales tax to fund the building improvements, the revenue purpose statement must be approved with or without the proposed renovations, in order to give the district the authority to spend any of it.

“Even if these projects go away, and even if the school board said, ‘we’re not going to do anything, there is no more construction,’ you still have to have this vote eventually if you ever want to spend the money beyond when the Clinton County tax would have expired,” Gillespie said. “And by spending it, I’m not necessarily saying constructing a new building. You can’t even go buy a school bus with it. You can’t fix a leaky window, you can’t fix a crack in a sidewalk.”

Gillespie explained that the district’s only option beyond approving the revenue purpose statement would be to first use the money to buy down all of the district’s debt and infrastructure levies, including debt services and PPEL, which amount to just more than $1 million.

“All of those levies would have to be taken away, brought back down to zero, and then the school board could spend it without having a vote,” Gillespie explained. “It would be very unusual for most school boards to do that, because you’re committing yourself to never having those levies in the future, and you don’t know today what five, 10, 15, 20 years from now you’re going to need.”

Gillespie pointed out that the issue is not reserved to Clinton, adding that every school district in the state will have to put a revenue purpose statement on the ballot. He noted that 50-60 of the districts have already brought the issue before voters, and as far as he knows, only one district had it fail.

“And the other schools had it pass by 70 - 95 percent,” Gillespie said. “So those are very high approval ratings.”

The district is hoping to place the revenue purpose statement before voters on Dec. 2. According to Gillespie, the ballot question will be a lengthy one, and will ask voters to give the school board the authority to spend the sales tax revenue through the life of the sales tax, for the listed legal purposes. He pointed out that “legal purposes” include fixing or building new buildings, acquiring property, of paying down existing debt. Legal purposes do not include funding the general operating budget, or paying teachers’ salaries.

“This (building improvement) project, it’s true, cannot proceed in this scope unless you approve the statement in December,” Gillespie said. “But the vote itself has to take place whether option A or option B or nothing happens at all. It will eventually have to happen. If you don’t approve that, they can’t spend it even to buy a school bus later.”

Gillespie added that, because the district plans to complete the renovations at the middle and high schools in a relatively short span of five to seven years, it must bond against the future collection of the 1-cent sales tax revenue.

“You don’t have enough sales tax coming in over that short period of time to fund everything,” Gillespie explained. “So there would be a voted general obligation bond component (to the December vote) that would require a property tax increase, for either option.”

He noted that once the projects are completed, the sales tax revenue would eventually be freed up again to use for other purposes.

“Once the projects are finished, then you only need the sales tax money to repay the bonds that you’d issued against the sales tax,” Gillespie stated. “And theoretically, we’re quite certain that revenues will grow over a long period of time, so there will be more money later for other projects, but not in the immediate future.”

Gillespie explained that, for improvement option A, the increase in property tax is estimated to be about $1.75 per $1,000 of taxable value. If option B is chosen, the tax is estimated at $2.85 per $1,000 of taxable value.

Gillespie stated that someone at each of the public forums had asked ‘how will this affect me as a property owner?’ He stated that residents must understand what is meant by “taxable value” in order to determine the impact it will have. He pointed out that taxable value and retail, or assessed value, or “two totally different numbers.”

He provided an example using residential property valued at $100,000.

It is very important to know that when you’re talking about an increase in taxes, whether it’s a $1.75 or $2.85, it’s very important that you’re basing that off the taxable value of your property, not the assessed value and not the retail value, two totally different numbers.

Example: Last night a gentleman came and said, my property is worth about $100,000, so a $2.85 tax increase is $285 per year, but no, that is not correct. That’s not the way it works. “You have to apply rollback for residential properties. That takes the $100,000 home down to around $45,000 in taxable value,” Gillespie explained. “The $2.85 property tax increase in option B would create a $130 tax increase per year on a $100,000 home.”

He added that, for commercial property, there is virtually no rollback, and the property tax increase on a $100,000 commercial property would likely see a $285 increase per year.

Gillespie suggested property owners look at a recent tax bill to determine their property’s taxable value.

     

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