Buildings, Infrastructure, & Equity 2019 Bond Finance Video

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Hi i’m ken guttman superintendent of wild lakes schools mrs. terry last assistant superintendent of business services is with me today to help explain what bonds are how they work as a school district serving nearly 14,000 students and 23 buildings we have no shortage of infrastructure needs just as our homes require a tremendous amount of maintenance and upkeep

So to do the many buildings in a school district a homeowner may face the need to replace the roof of furnace appliances or windows similarly the needs of our 23 buildings can be immense it’s estimated that in order to properly maintain our buildings we should spend 16 million dollars every year we’re really fortunate that our community has continued to support

Our sinking fund but this generates only about two to two and a half million dollars a year that’s only 10 to 15 percent of what we should spend limited funds mean that maintenance is delayed and many things are not able to be done mrs. luss please share what options the school district has to cover these significant costs mr guttman because we do not have any

Extra operating revenue really the only available option is to borrow just like you might obtain a mortgage to purchase a home a school district uses a bond to borrow the money needed for large projects this allows us to pay for them over a period of time in order to issue bonds the school district must go to its community please talk about this requirement bonds

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Are paid off by way of property tax revenue generated through a special debt millage what that means is that all homeowners and business owners within our school district boundaries pay additional property taxes in order to cover the mortgage payments if you will on the bonds every year i must calculate what our debt millage needs to be in order to raise enough

Revenue to pay the principal and interest payments that are due that year since all taxpayers in the community are subject to that debt millage we must have the community support and vote of approval we know we’re not alone is virtually every district has similar needs and requires additional funds for infrastructure from time to time this chart shows the debt

Millage rates of many of our neighboring school districts this is also not the first time we’ve borrowed in this way this chart shows the various debt issues that are currently outstanding we please explain a little bit about what we see here each bond is a separate debt issue and we currently have five of them the expiration date is a date that each of them

Will be paid off four of our five issues are refunding bonds which means that over time we have refinanced previous bonds this is similar to how you might refinance your home mortgage refinancing allows a district to pay off the loan quicker and at lower interest cost the reason that this is important is because it is one of the factors that has positioned us

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Well for going out for a new bond now during recent community meetings we shared that it is possible for us to borrow a large sum through a new bond yet still provide a decrease in the debt millage i think that’s very confusing how is that even possible well mr. guttman several factors working together have created an opportunity for us to do just that within

Five years four of our five debt obligations will be paid off as we approach paying them off the total payments required decline and as the overall principal and interest payments decline the debt mill is required to produce the necessary dollars also declines in essence we can charge the taxpayers less and still have enough money to make the required payments

The structure of the 2014 bond also plays a part the timing of principal and interest payments were set up in a way to allow for a reduction over the next couple of years this chart shows how principal and interest payments will be impacted over the next ten years we’ve been fortunate the taxable values in the community have stabilized and even grown does that

Also factor into why this is an opportune time yes it does improving taxable values have assisted us in two ways first it has allowed us to put aside some savings within our debt funds keep in mind that money collected for bond payments can legally only be spent on bond payments but we can take the savings to further pay off debt and buffer any tax increase it

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May have been necessary in addition growing taxable values means that the debt millage required to produce a given amount of income is less all of these items come together to produce a period of opportunity where we can indeed go out for a sizeable bond and still provide a tax decrease to our community thank you mrs. lass there’s a lot of additional information

On our district website we’ll have community meetings at all of our schools and plenty of opportunities to ask questions about this bond initiative thank you for your interest we look forward to interacting with you with this entire community to ensure that everyone is aware of this community opportunity

Transcribed from video
Buildings, Infrastructure, & Equity 2019 Bond Finance Video By Walled Lake Schools