How the GC school district referendum debt payment would impact the tax levy
By LeAnn R. Ralph
GLENWOOD CITY — A paid down existing debt for the School District of Glenwood City will make it financially possible to fund $4.74 million in referendum projects without raising property taxes and to fund another $4.5 million in projects with an increase in taxes of $83 per $100,000 in property value.
Residents in the Glenwood City school district will be asked to vote on two binding referendum questions in the April 7 election totaling $9.24 million.
Question No. 1 for $4.74 million includes moving the elementary and middle school/high school offices from the interior to the entrances of the building for safety purposes; remodeling the old offices for classrooms; remodeling a room for the Board of Education meetings; replacing the elementary school roof; installing new fire alarms; improving traffic flow in the bus and parent drop off and pick up area by the elementary school, and replacing the heating and ventilation system in the elementary school.
If voters approve referendum Question No. 1, money that had been used to pay the previous debt service payment could then be used to pay the new debt service payment for projects included under the question, without increasing the property tax levy to cover the new debt.
“In the last five years, we have paid off two referendum debts. They included building the elementary school, adding on to the front of the middle/high school for rearrangement in the music, technology, welding, wood shop and the agricultural area, adding a room for our charter school students, redoing the high school gym and locker area, building the middle/high school office and commons area, and heating upgrades to the middle and high school,” said Tim Johnson, Glenwood City school district administrator.
According to an analysis by the school district’s financial consultant, Robert W. Baird & Co., the existing debt service payment of nearly $397,000 in 2014-2015 would remain at around $397,000 in 2015-2016 to cover the new debt.
The debt service payment would remain fairly steady until 2020-2021, when the payment would decrease to $380,688, and would remain around $380,000 until the debt is paid off in 2035.
The total amount of interest on the $4.74 million in general obligation bonds, calculated on an interest rate of 3.75 percent over the next 20 years, would be $2.27 million.
Total payments for principal and interest on the debt for Question No. 1 would be $7.01 million.
Question No. 2 on the April 7 ballot for $4.5 million would upgrade the heating and ventilation system in the middle school/high school.
If Question No. 1 and Question No. 2 were both approved by voters in the Glenwood City school district, the debt service payment of $397,000 in 2014-2015 would increase to $573,850 in 2015-2016 and would gradually increase to about $740,000 in 2020-2021, where it would remain fairly steady until the debt was paid off in 2035.
The debt service payments for Questions No. 1 and 2 would be offset by anticipated increased payments in state aid of nearly $90,000 in 2017-2018, which would gradually increase to around $160,000 in 2021-2022, where it would remain until 2035, according to a Baird & Co. report.
The increased debt service payments, with the increase in state aid factored in, would result in an increase in property taxes of about $83 per $100,000 of property value beginning in 2015-2016 and continuing until 2035.
The total interest on $9.24 million in general obligation bonds at 3.75 percent interest would be $4.38 million.
The interest rate of 3.75 percent is a near-record low, Johnson said.
If the referendum projects are delayed for a year or two, more than likely, interest rates would be higher than they are now, he said.
If the interest rate went to 4.5 percent, over the 20-year term of the general obligation bonds, taxpayers in the district could expect to pay nearly $1 million more in interest for the projects included in the two referendum questions, Johnson said.