School Bonds & the Cost of a Cup of Coffee

In what must be a truly amazing coincidence (or merely a good marketing scheme), a number of school bonds are marketed as only the cost of a cup of coffee. One might almost think there is a school bond playbook for school districts. In fact, see the article entitled “Passing a school bond in the era of social media.”

When a county commissioner opposed the bond due to potential tax implications, we fought back with facts. We broke down the potential tax impact in terms anyone could relate to with this simple message: “For less than a cup of coffee per month, the bond will address growth, safety and infrastructure needs.” [Emphasis added.]

The Round Rock School District saw its 2017 $572 million school bond package” fail.

…people on the online blog were angry about a mailer comparing the cost of the bonds to buying a cup of coffee. [Emphasis added.]

Aaron Cleaver, the Democratic chairman of Travis County Precinct 328, …said the “consensus of the people I talked to felt the bond issue was too vague and the projects were not developed well enough.”

And from Portland, Maine where bond supporters pushed the city council to endorse a bond….

A $64 million bond authorization with borrowing and repayment over 26 years would result in a total of $92 million in principal and interest. Strimling and supporters said that amounts to an average cost of $8.67 per month for a property valued at $240,000, or about the cost of a weekly cup of coffee. [Emphasis added.]

The problem is what is not said. The devil is always in the details and repetitions of “about the cost of a cup of coffee” are meaningless. Now if you start dividing the real cost of a school bond by the price of a gallon of milk on sale at Walmart or an Iowa football ticket or a drug copayment, that might mean something.

 

Posted in Bond, Bond Ballot, Bond vote, Cup of Coffee, ICCSD, Iowa City Schools, Marketing a School Bond, Uncategorized | Leave a comment

Prospecting for School Districts with Debt Capacity

As Iowa City Community School District’s (ICCSD’s) stakeholders watch to determine whether its bond ballot referendum for $191.525 million (plus interest) will pass or fail on September 12th, there is an interesting discussion in some of the comments sections of posts on Chris Liebig’s Another Blog About School about whether school districts across the country have been targeted by those with a profit motive for these districts’ ability to borrow money to finance infrastructure plans. Certainly there is money to be made, and alongside the money to be made potential and real conflicts of interest exist so voters should carefully scrutinize what is in (and as importantly what has been left out of) ICCSD’s September 12th bond ballot referendum.

Question: How easy is it for business development professionals to prospect or mine for school district customers that have the capacity to borrow money via debt financing/bonds?

Answer: Very easy.

To test how easy it is to identify and target school district prospects such as ICCSD, one only has look at page 46 of ICCSD’s yearly audit, which is publicly filed and found here.

ICCSD's Debt Capacity

Iowa City Community School District Information About Its Debt Capacity From Its Latest Financial Audit

A school district like ICCSD that has the capacity to borrow hundreds of millions of dollars using bond financing is a “hot” prospect, especially considering it is an area where there is a low unemployment rate and a good property tax base. Of course voters will pay property taxes they would not otherwise pay to support repayment of these bonds.

ICCSD’s  $191.525 million dollar bond referendum could be followed by another bond referendum, and/or there is widespread support across Iowa for extending the penny sales tax for schools known as SAVE (Secure an Advanced Vision for Education) from the year 2029 through 2049.

ICCSD’s financial advisor is reported to have stated “that if 100 percent of the sales tax remains for Iowa school use out to [the year] 2049, ICCSD would ha[ve] access to roughly $440 million.” (see page 2 here, and for more information about ICCSD and SAVE, see here and here). ICCSD could then, as could potentially other Iowa school districts, issue additional bonds (more debt) in anticipation of receiving sales tax revenues, which would then be used to repay the bonds.

20170722_155217

From ICCSD’s Facility Master Plan (FMP) Proposed General Obligation Bond Funding  Key Facts and Details 1/10/2017

Lest one think ICCSD is unique with regard the ease of locating its debt capacity, the most recent audit for the Cedar Rapids Community School District (CRCSD) found here also makes its capacity for additional debt easy to find. CRCSD has also seen its bond rating improve within the last couple of years (see here) helping to make it a “hot” sales prospect for taking on additional debt.

Cedar Rapids Debt Capacity

Cedar Rapids Community School District Information from Latest Financial Audit  about Debt Limit

In addition to financial audits, credit rating agencies and EMMA (Electronic Municipal Market Access) are among the sources of information available to business development professionals and others.

To see see exactly what you are voting on in ICCSD’s upcoming bond referendum, see here and note, the ballot language does NOT mimic ICCSD’s facilities master plan (nor will voters vote on ICCSD’s facilities master plan).

Objectively, borrowing money using debt financing needs to make sense not just for one’s school district and all of the outsiders who might financially benefit, but also make sense for a voter’s individual circumstances. Please mark your calendars and vote on September 12th.

Posted in Bond, Bond vote, Budget, Conflict of Interest, Debt Levy, Facilities Master Plan, FMP, General Obligation Bond, ICCSD, Iowa City Schools, Uncategorized | 2 Comments

Promises About How Little a $191.525 Million Dollar School Bond Referendum (With Interest)Will Cost–Don’t Count On Them

Below is what the Iowa City Press Citizen reported about Iowa City Community School District’s (ICCSD’s) proposed $39 million dollar bond referendum in February of 2003. That bond referendum subsequently passed under a former superintendent.

The district’s current tax levy rate is 11.53 percent. If passed, the referendum would rise to 11.84 percent.

As you can see from ICCSD’s reported tax rates below*, over time, ICCSD’s school tax levy rose above 11.84 and is now 13.98260 per thousand dollars of assessed property valuation. The better figure to pay attention to when examining what a school bond will cost property owners (and anyone to whom property owners pass their costs onto) is not the total school tax levy, which can be subject to some manipulation of its parts, but the debt service rate for general obligation bond debt.

Year

ICCSD School Tax Levy        (Total Rate)

ICCSD Debt Service Rate     (Debt Levy)

2010-11

14.68972

.72701

2011-12

14.59055

.74900

2012-13

14.07327

.69729

2013-14

13.68792

.63500

2014-15

13.69999

.59831

2015-16

13.86773

.58612

2016-17

13.98935

.55017

2017-2018

13.98260

.52868

A question was asked at ICCSD’s “Board of Education Work Session Discussion October 11, 2016” about what size bond could be had if property owners continued to pay a then projected $.54 debt service levy. The answer can be found on page 15 of “G.O. Bonds Funding for ICCSD Facility Master Plan”–a $46.705 million dollar bond–see below. The payoff would have been the year 2037, not the year 2042 as is now projected for the $191.525 million dollar bond referendum.

20170710_092713

Some ICCSD officials and many bond supporters now assert the existing debt service levy for debt related to the $39 million dollar bond should continue past 2018 to the year 2042– an additional 24 years on top of the original 15 years. Remember that payments related to the $39 million dollar bond referendum were only supposed to be paid for 15 years ending in the year 2018, not for 39 years total ending in the year 2042.

It is no coincidence that many proposed school bond referendums take place just as existing bond debt is scheduled to be paid off. Such scheduling helps school officials and bond supporters sell school bonds to the voters.

So what number has ICCSD (or its outside financial consultant PFM Financial Advisors LLC) currently forecast for the proposed $191.525 million dollar bond referendum (plus interest)–the answer is a debt service levy of $1.95033 per thousand of assessed property valuation for the year 2018-2019. This fiscal year is the first year payments would be made if the referendum passes. Payments are projected to be made for 24 years.

Can ICCSD truly confirm yet what the $191.525 million dollar bond referendum with interest will cost if approved by voters? No. There are lots of factors that impact the costs of bonds, including that budget decisions are board decisions as it is the school board that must certify the budget each and every year and set the tax rate. No one now can confirm now how future school board members will vote. However what property owners will pay for a $191.525 million dollar bond with interest is going to be more than the “the cost of a cup of coffee.” Consider,

1) the debt service rate for debt related to the $39 million dollar bond plus interest and spread over a fifteen year period has ranged from .52868 to .74900 per thousand of assessed property valuation in recent years, and

2) ICCSD reported a $46.705 million dollar bond referendum could be had for $ .54 per thousand of assessed property valuation.

So, imagine what taxes property owners will pay for a $191.525 million dollar bond referendum plus interest spread out with payments made each year to the year 2042.  For many people, this bond referendum will be expensive if it passes.

 

The source of the tax rate information is the chart at the top of page 28 in ICCSD’s own “Iowa City Community School District 2017-2018 Certified Budget prepared by Dr. Craig Hansel, CFO/Board Secretary.  Also see http://www.boarddocs.com/ia/iccsd/Board.nsf/goto?open&id=AKNHD347EE34.

 

Posted in Bond, Bond vote, Budget, Debt Levy, General Obligation Bond, ICCSD, School Taxes, Uncategorized | 1 Comment

Does an Iowa School Property Tax Rate = School Property Taxes? No.

In Iowa, school property taxes do not equal the school tax rate, the latter of which is just one input in calculating school property taxes. Equating a comparably low school tax rate to low school property taxes is an interesting debate tactic when marketing an upcoming school bond vote but is not accurate. School property tax inputs include:

  1. Assessed Value of Home
  2. Iowa’s Residential Rollback
  3. Credit(s)
  4. School Tax Rate aka School Levy (which has multiple parts)

For a general idea of how school property taxes might shake out by city in Iowa, see below. The information with an asterisk came from the Iowa City Community School District (ICCSD). The assessed valuation of comparable homes in various cities does not seem to be easily available so the “median price of a home” from Zillow was used.

For the most accurate information about the total dollar amount of school property taxes you pay, check your own tax records. Or if you are a renter and curious about what your landlord pays, Iowa property tax information is publicly available.

ICCSD Compared to Nine Other Iowa Districts with Larger Enrollments

ICCSD’s property tax rate is the lowest among the ten school districts listed above; however, ICCSD’s “Fiscal Year 2017 Assesssed Valuation Per Pupil” is the highest among the ten districts listed above.  The assessed valuation of your home will have a significant impact on the dollar amount of property taxes you owe and must pay.

Posted in Bond, Bond vote, Debt Levy, ICCSD, Iowa City Schools, Iowa Schools, School Taxes, Uncategorized | Leave a comment

School Property Taxes: What Do We Really Pay?

School Taxes, such as those levied by the Iowa City Community School District (ICCSD), are a big percentage of property taxes. So what percent of one’s total property taxes are paid to ICCSD?  The ICCSD board president has stated that ICCSD taxes represent 36% of total property taxes–is this number accurate? The answer is no, not for all ICCSD residents.  For example, about 42.07% of property taxes North Liberty home owners pay are ICCSD taxes. For other taxpayers, the figure is as high as 55%.  And if the proposed ICCSD general obligation bond is passed this September, the debt levy portion of school taxes will further increase substantially.

The chart below shows the accurate total tax rate (total levy) in dollars per thousand dollars of assessed property valuation of areas within ICCSD and applies to taxes payable in 2016 to 2017.

It is also necessary to determine what a particular property is valued at by the assessor in order to calculate the true dollar amount of property taxes  The assessed property values in the ICCSD are some of the highest in the state of Iowa.

You can get the current assessed value of your property from the county and city assessors, which are available here for Johnson County and here for Iowa City.  Also, see here for specific Johnson County, Iowa, property tax information, enter your address information, then click on “Property Taxes” at the bottom of the web page and then click on “Explanation of Tax Format” if you are interested in viewing the school tax dollars from the previous year and comparing these dollars to the current year.

School Taxes Current

ICCSD SCHOOL PROPERTY TAXES AS A PERCENT OF TOTAL PROPERTY TAX LEVY

 

Posted in Bond, Bond vote, Coralville, Debt Levy, Hills, ICCSD, Iowa City, Iowa City Schools, North Liberty, School Taxes, Uncategorized | Leave a comment

ICCSD’s General Obligation Bond Myth

The following rumor about Iowa City Community School District’s proposed upcoming general obligation bond vote is simply false.

Myth:  If voters in the Iowa City Community School District pass a general obligation bond this fall, it will restore and save fourth grade orchestra [which was cut in 2014].

This statement is not true.

 

Posted in Bond, Bond Myth, Bond vote, Budget, General Obligation Bond, ICCSD, Iowa City Schools, Uncategorized | Leave a comment

New Guidance from ED about the “Rights of Students with Disabilities” and “Restraint and Seclusion” in Public Schools

The U.S. Department of Education (ED) has released the following documents to assist the public in understanding how the Department interprets and enforces federal civil rights laws protecting the rights of students with disabilities and how the use of restraint or seclusion can result in discrimination against students with disabilities….” See the ED Press Release dated December 28, 2016.*

The Dear Colleague Letter: Restraint and Seclusion of Students with Disabilities states the following:

Specifically, students with disabilities served by the Individuals with Disabilities
Education Act (IDEA) represented 12% of students enrolled in public schools nationally, but 67% of the students who were subjected to restraint or seclusion in school.


The same Dear Colleague Letter notes in numbers 9 and 10 on pages 13 through 16 that even unintentional discrimination in schools’ use of restraint or seclusion may be illegal. Locally, Iowa City Community School District’s (ICCSD’s) superintendent stated at the December 2016 District Parent Organization meeting that its “time out” rooms were not used with non-special education students in recent years and that a committee will examine best practices and bring a recommendation to the board. See also the ICCSD board work session minutes here and The Gazette article here.

ICCSD’s board member Chris Liebig has written ICCSD should Dismantle the boxes at his Another Blog about School. The Dear Colleague Letter  notes on page 21 that school districts may be required to provide compensatory services (among other remedies) if a student entitled to a free appropriate public education (FAPE) is denied the same because of wrongful restraint or seclusion–so there is potential school district liability, a further reason to eliminate the use of locked seclusion rooms.

The Dear Colleague Letter on page 22 poses the question Where can school districts turn in order to learn how to reduce or eliminate the use of restraint or seclusion in their schools? Notably, the response to this question includes the following, suggesting that an expert in childhood trauma and its treatment should be part of any ICCSD committee examining “time out” rooms.

Students who have experienced trauma in the past may be vulnerable in ways that some of their peers are not, and could therefore be impacted by the use of coercive practices in a much more significant way.


Absent an immediate and emergency threat to the safety of the students or others, school districts should eliminate the practices of restraint and seclusion.

 

*Thanks to COPAA’s Facebook page  for bringing these documents to my attention.

Posted in ICCSD, Iowa City Schools, isolation box, Restraint and Seclusion, Students with Disabilities, Time Out, Uncategorized | Tagged | Leave a comment