Current District Indebtedness
|
Issue Date |
Maturity Date |
Original Issue |
|
Re-Fund Date |
Re-Funded Amount |
Cost to Re-Fund |
New Maturity Date |
Amount Outstanding |
|
11/1/89 |
|
875,000 |
1 |
6/1/93 |
180,000 |
|
12/1/99 |
0 |
|
670,000 |
30,000 |
12/1/05 |
250,000 |
|||||
|
6/1/92 |
12/1/06 |
1,295,000 |
2 |
10/15/02 |
665,000 |
30,000 |
7/1/06 |
520,000 |
|
12/1/97 |
1/1/12 |
7,000,000 |
3 |
1/1/04 |
1,780,000 |
|
1/1/12 |
1,780,000 |
|
4,585,000 |
485,000 |
1/1/12 |
4,980,000 |
|||||
|
6/1/01 |
12/1/08 |
170,000 |
4 |
|
80,000 |
|||
|
Totals |
$9,220,000 |
|
$7,880,000 |
$545,000 |
|
$7,610,000 |
||
1 This issue of $870,000 was crossover re-funded on 6/1/93, splitting
the balance on the bond issue into two issues: one for $670,000; the second for
$180,000. The cost to crossover
re-fund this bond issue was $30,000, which was added to the $670,000 on
12/1/99. From 6/1/93 until 12/1/99,
the district taxpayers paid nothing against the principal ($670,000) on this
bond issue, only interest. As of
12/1/99, the escrow agent paid off the $670,000 and replaced it with the
$700,000 bond issue.
2 The balance of this issue was paid off in December 2002 and
re-funded; the cost to re-fund being $30,000.
3 For a period of several years, taxpayers paid nothing against the
principal on this issue, only interest.
Then the issue was crossover re-funded on January 1, 2004 at a cost to
the taxpayers of $485,000.
4 This is a bond issue that did not require voter approval, just the
approval of the school board.
How financially secure is the district? One can usually get a
feel for how financially secure a district is by looking at how they deal with
bond debt. When a bond issue is
purchased, the more short-term bonds that can be purchased, the less it costs
the taxpayers in interest over the term of the bond issue (the debt), just as a
15-year mortgage costs a homeowner less in interest than does a 30-year mortgage. Such is the result of paying more on the
principal of the debt from the outset – from the start. This results in
less interest paid over the term of the debt, although paying more against the
bond principal does increase the property tax mil rate at the outset as more
principal is paid from the outset, therefore included in the amount on which
the mil rate is figured. Long-term,
however, it is better to increase the short-term debt and decrease the
long-term debt in the interests of insuring that the future financial needs of
the district can be met without placing the district in a financially
unfavorable position.
Deferring debt also costs the taxpayers more
money as only interest is paid on the principal with no reduction of the
principal. Deferring debt is often
done because deferred debt does not have to be reported as part of total debt
when requesting a bond rating. The
lower the reportable debt, the better the bond rating will be resulting in
lower interest rates.
How does the Nine Mile Falls School
District stack up?
If you look at the schedule of bond debt above, you will note that all
three voted bond issues have been re-funded since their issue, splitting two of
the bond issues into two issues – a larger amount and a smaller
amount. Re-funding these bonds has
added to the cost of the bonds by $545,000. Was this added expense disclosed to the
voters before they approved these bonds?
Likewise, the
$7,000,000 bond issue to build the Lakeside Middle School was deferred for
several years, meaning that taxpayers paid interest on the principal but
nothing against the principal. Were the voters told this would
be the case before the approved this bond?
Of the 296 school districts in
Washington state, ranked from the highest taxing
district (1) to lowest (296), the following chart shows the ranking and mil
rate per year:
|
Year |
Ranking |
Maintenance & Operations Levies |
General Obligation Bonds |
Total Mil Rate |
|
1996-97 |
40 |
3.77890 |
2.00965 |
5.7886 |
|
1997-98 |
42 |
3.58619 |
1.96280 |
5.5489 |
|
1998-99 |
9 |
3.46010 |
3.26190 |
6.7220 |
|
1999-2000 |
15 |
3.26000 |
2.90294 |
6.1629 |
|
2000-01 |
18 |
3.32320 |
2.94002 |
6.2632 |
|
2001-02 |
7 |
3.94070 |
2.89692 |
6.8376 |
|
2002-03 |
5 |
4.14165 |
2.86696 |
7.0086 |
|
2003-04 |
14 |
3.94280 |
2.68720 |
6.6300 |
|
2004-05 |
13 |
3.93266 |
2.61504 |
6.5477 |
Source: School District Property Tax Levies
report; SPI Form 2010
Are
the voters aware of the school district ranking state-wide?
For the 2004-05 tax collections the mil
rate for the Maintenance and Operations Levy was 3.93266/$1,000 assessed
valuation and the General Obligation (Capitol Bond) mil rate was 2.61504/$1,000
assessed valuation for a total of 6.5477/$1,000 assessed valuation. On a home valued at $200,000, the property
tax bill just for the Nine Mile Falls School District would be $1,309.54 or
approximately 40% of the total property tax bill. Are the voters aware what the combined mil rate for
school district appropriations in the Nine Mile Falls School District is and
how much of their total property tax bill that represents?
What is the responsibility of district officials in this? There is no doubt
that the district is growing, but drinking champagne on a beer budget does not
lend to financial stability. The
Nine Mile Falls School District does not have what most other school district
do — a large business base.
This places the bulk of the cost on taxpayers and families are being
taxed right out of their homes.
Likewise, the taxpayers have a responsibility to know the whole
story before they enter the polling booth to vote.
Formula for figuring mil rates: (Debt Amount ÷ Total Assessed
Valuation)X1000
How to figure taxes. If the mil rate is
$4.50/$1,000, the tax on a home assessed at $240,000 would be $1,080.00
($240,000 x .00450 or 240 x $4.50).
This is just for the school
portion of the property tax. It
doesn’t include any other tax levies such as fire district, emergency,
county or state property taxes.
While district maintenance and
operations levies continued to be approved by over 60% of the voters in the
years between 2000 and 2004, in 2004 the district asked the voters to approve a
bond issue of $7,990,000 to
supposedly upgrade buildings. That proposed
bond issue failed both times it was put to the voters.
On May 17, 2005 voters were asked to
approve a bond issue of $13,300,000. As of May 20, 2005, the issue failed to
meet the 60% approval required.
|
|
Spokane Cty |
Stevens Cty |
Total |
% |
|
Approve |
421 |
795 |
1216 |
52 |
|
Reject |
450 |
651 |
1101 |
48 |
|
Total |
871 |
1446 |
2317 |
100 |
While the actual issue would be for
$13,300,000 school district put out material stating the bond was for $17,400,000
reduced by $4,100,000 from the state.
No letter of guarantee from the state for the $4,100,000 was, however,
evident. Resolution No. 2-05, signed by four of the five
school district board members, sheds some light on this, making it plain that
the school district would be “eligible” for funds under the terms
of RCW
28A.525. The resolution
also makes it very plain that once the voters approved the issue of the bonds,
the money might or might not be used for the stated purposes (see page 3,
paragraph 3 of Resolution No. 2-05).
Considering that the total cost of the project — $17,400,000
— was contingent on receiving $4,100,000 from the State of Washington,
which might or might not happen, the aforementioned paragraph gave the school
board carte blanche capability should
the $4,100,000 not be forthcoming or not be in the amount expected but not guaranteed.
Source: Treasurer's Office, Assessor's Office,
Office of Superintendent of Public Instruction
Last Updated: 5/2005
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