on Bonds

For those of you who are not familiar with what a bond is, for all intents and purposes it is another form of debt, which government entities usually use to finance large projects. Think of it kind of like a mortgage for new government property, except unlike a mortgage, it cannot be paid off early until the term is halfway through, and instead of using a bank, it is funded by outside investors who purchase the bonds to get the interest return. So who are the borrowers that ultimately pay it off? We, the taxpayers.

Going into debt is always something that needs to be considered carefully, regardless of whether it is personal or in government. Present benefit does not always offset future impact, so every aspect of the situation should be examined in order to make the best decision. Our school has placed a $4 million dollar bond on the ballot for September 10th, so the full nature of the impact of that indebtedness needs to be understood so as to make the best decision in casting a vote. Here are some basic facts (provided by either our school or the Iowa Dept. of Education):

* The amount of the proposed bond: up to $4 million (no project bids have yet been received)

* The proposed length of the bond: 20 years

* The estimated amount of annual property tax increase: $1.20 per $1000 taxable value (note, if your property value goes up every year, then your tax would as well). To find your taxable value, look on the annual property tax statement you receive from your county.

* Properties affected by the increase: All property classifications within our school district, which incorporates parts of both Dallas and Madison counties

* The purchase price of the existing modular classrooms to be replaced: $188,500

* The age of the existing modular classrooms to be replaced: 6 years (installed Fall of 2007)

* Estimated life of modular classrooms to be replaced: 20-25 years

* Number of total school classrooms not used (2012-2013): 1

* Number of current students (2012-2013): 618

* Estimated net student increase over next 5 years: 15

* Average annual enrollment over last 5 years: 628 (peak was 657 in 2007-2008, six years ago)

* Number of teachers active in classrooms: 50

* Current student to teacher ratio: 12 to 1

* When the Football Athletic Facility bond will be paid off using penny sales tax revenue: 2019

Like the rest of us, I would love an expanded gym, its associated amenities, and some permanent classrooms right now, however after looking at our current school stats above, I am wondering if “right now” represents the best time to do this. Why not just wait 6 years until after the football facility is paid off and reallocate the penny sales tax revenue to pay for this next project? If we did it this way, we could avoid both burdening our residents and businesses with a property tax increase for the next 20 years, and doubling the school debt. After all, the modulars were designed to last far longer than that (when properly maintained), and we aren’t even using all of our classrooms. Plus, our student to teacher ratio is such that we could easily absorb additional students, perhaps just shuffling a classroom or two.

I guess the three questions to ask yourselves next are: 1) Does this debt prioritize academics enough to justify this long term tax increase on my family or business and if so, how? 2) Would not doing this project pose any real harm to the students, and if so, in what way? 3) Based on your answers and the school stats provided above, is the bond a want or a need? And if a need, is it one so great that it justifies committing every resident and business in our community to each paying thousands of dollars more in property taxes over the next 20 years, instead of just waiting 6 years in order to avoid such an increase?

Perhaps the wisest answer regarding this bond is not saying “yes” or “no”, but just saying “not now”.

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