District may issue bonds to pay for repairs
FairfieldBeach - Walnut Township Schools Superintendent Ron Thornton is now working on Plan C to come up with funds for critical roof and HVAC repairs. He has spent several months trying to raise about $3 million for critical repairs without having to ask district taxpayers for more money.
Last month, Thornton told board members about the Qualified Zone Academy Bonds, QZAB for short, at about one percent interest for 15 years. Eligibility for the federal/state program is based on the number of students qualifying for free and reduced lunches. The district just meets the threshold at the elementary school, but falls short for grades 7-12. He hoped to overcome that by presenting research about the effect of poor facilities, specificallyleaky roofs and poor air, on academic performance.
Monday night, Thornton said he ran into "a brick wall" at the Ohio Department of Education on QZAB. They didn't buy his argument. A quick check with the Ohio School Facilities Commission was also negative. Walnut Township is ranked #484, thanks to its high lakefront property values. The Commission expects to fund down to #320. Where some districts contribute as little as 10 percent for construction projects, Walnut Township, again due to its property valuation, would have to pay 80 percent of the cost even if the Commission got down to #484. "It's not that sweet of a deal," Thornton said.
The focus is now on Certificateof Participation bonds. The bonds can be issued without voter approval. Thornton suggests the district borrow $3 million and pay it back over 28 years. The expected interest rate is 4.5 percent, setting a $200,000 annual payment. He believes and the district's most recent five-year financial forecast confirmsthat the $200,000 a year payment can come out of current resources. "Let's use what they (taxpayers) have already given us to fixour buildings," he explained.
Thornton wants to move quickly so the district can be seeking bids for the high school roof and HVAC replacement/repairs in January-February. "We need to start working immediately so we can avoid that bid rush," he added. Early bids typically get better prices, Thornton added.
Board members agreed and Thornton will have a bond resolution ready for a special board meeting at 8 a.m. on Monday, Oct. 15. There's one more option if board members ultimately reject the COP bonds. Thornton said HB264 allows the district to borrow money at 4.5 - 5.0 percent for energy conservation projects. The loans are repaid with the energy savings. "I don't like 264 because it is limited," he said. It is unlikely the roof replacement would qualify, but the HVAC replacement/repairs would likely meet muster.
Board member Faye Whittaker asked how the COP bonds would be repaid if voters fail to renew the district income tax in 2013. "We are sunk if we don't renew that income tax in 2013," Thornton said. The annual bond payment would be "a drop in the bucket" if the tax isn't renewed. "If that income tax isn't renewed, we're in a world of hurt," he added.
The longer the high school roof leaks, the more costly the project becomes, Thornton said. There were nine leaks during the last rain storm in spite of ongoing efforts to patch the roof.
The district can not pay off the bonds faster during the first two years, but can increase payments after that to pay down the principle faster.
Treasurer Kirk Grandy presented an updated five year financial forecast that runs through June 30, 2012. He said 46 students are coming into the district, down from 52 last year. Four more district students are going out of this district this year. Nevertheless, the net impact of open enrollment is a positive $144,690 for the district.
Grandy is projecting a modest one percent per year increase in revenues from the district's income tax. The tangible personal property tax which generated $22,179 last fiscal year is being phased out by the state. It ends in 2011. Foundation payments from the state on a per student basis will increase 3 percent to $5,732 next fiscal year based on the last biennial state budget. The increase is just 2.2 percent the following year. Grandy projects that student enrollment is a constant 615 students during the five-year period.
His forecast uses the negotiated increases in the recently approved union contracts that run through June 30, 2010. He assumes that the current 3 percent, 3 percent and 4 percent increase structure over the next three years will be repeated for fiscal years 2011 and 2012. Health insurance is projected to increase 10 percent this year and then 20 percent a year for the next four years.
His forecast projects that the district will continue to take in more than it spends this fiscal year and next. Beginning in fiscal year 2010, the district will start spending down its carryover as expenditures exceed revenues. The district last spent more than it received in fiscal year 2004 (July 1, 2003 through June 30, 2004). That deficitspending will continue through the final two fiscal years of the forecast. If voters fail to renew two emergency levies with collections ending respectively January 2010 and January 2012, cash balances will drop from an estimated $3,001,000 on June 30, 2008 to a projected $159,061 on June 30, 2012.
"This is a forecast - it's a working document," Grandy emphasized. "Great job on the forecast," Thornton told Grandy.
In other business Monday night, board members unanimously approved supplemental contracts with Holly Ankeney as Sophomore Class Advisor and Sarah Rhodes as Junior High Cheerleader Advisor. Teacher Leslie Osterman was increased from half-time status to full-time status as a third thirdgrade class was added. There are a total of 60 third grade students. Board members also amended their policy by waiving the second reading requirement for job descriptions. Thornton asked for the change so he can expedite board approval of job descriptions. He wants to have approved job descriptions for all positions by early January. Job descriptions for superintendent, treasurer, superintendent's secretary, cafeteria manager, web master (supplement contract held by a teacher) and substitute teacher were approved Monday night.
Thornton is also organizing a committee to help develop a statemandated policy on bullying. He asked for up to two board member volunteers for the committee. The committee will include a principal, teachers, a parent and possibly a student. Thornton wants to get started this month.
The board's next regular meeting is being pushed back a week to accommodate the Ohio Capital Conference. The meeting is set for 7 p.m. on Monday, Nov. 19 in the elementary school library.