Cheney school board contemplates high school bond decision
Cheney School District board of directors received a financial outlook at their July 16 meeting concerning a possible bond vote to fund a remodel and expansion of the district’s high school — an outlook that left them with even more questions.
The district is hoping to hold a bond vote in February 2015 on a measure that would raise $44,885,830 for the first phase of upgrades, including adding 12 more classrooms, a second main hallway to ease congestion, increasing the size of the entry and cafeteria and reconfiguring of other classroom and administrative spaces. A decision on whether or not to hold the bond vote could come at the school board’s Aug. 20 meeting, to be held at the conference center at the district’s new administrative facilities on Andrus Road.
If voters approve the bond, sales will take place in two phases. The first $24,885,830 would be sold in June 2015 and the final $20 million in December 2016.
“That keeps a good balance between keeping interest rates reasonably affordable and allowing people who will be using that building to pay for it over time,” Mark Prussing of Public Financial Management, Inc. told the board.
By holding an early 2015 vote, the district would also still be taking advantage of still very low general obligation bond rates. Rates have been dropping steadily since July 1984 from a high of roughly 10.75 percent for 20-year general obligation bonds to just short of 4.35 percent in July 2014.
Rates have spiked periodically, including a sharp climb between August and October 2013 that sent rates up to just over 5 percent in September. District financial advisor Jon Gores of D.A. Davidson and Company told the board that he anticipates rates slightly increasing sometime in the final third of 2014, first quarter of 2015.
“Even though rates are going up, we’re still in a period of very low borrowing historically,” Gores said.
The bond would increase the district’s tax levy amount by 75 cents per month per $1,000 of assessed property valuation. That would mean the owner of a $166,900 home in the district would see a net monthly increase in their tax bill of $7.51 after allowing for the federal property tax deduction, based upon being in the 28 percent federal income tax bracket.
Those in the 25 percent bracket would be assessed $7.82 per month, while those in the 33 percent bracket would be at $6.99 and $6.30 in the 39.6 percent bracket. The home evaluation was based on the 2014 median Zillow Home Value for Cheney.
Cheney School District Director Rick Mount questioned the home value estimate, noting the district’s boundaries are broad and include property in Airway Heights and unincorporated parts of the county. These will likely carry a different value than Cheney.
“Is there any way we can get a better number?” Mount asked, to which Prussing said they would work with the county assessor for better figures.
Mount and Director James Whitely both expressed concern about the levy rate to property tax payers. In 2008 the total tax rate was $3.96 per month, but increased to $4.98 in 2009.
It dropped to $4.86 in 2010, but jumped to over $5 at $5.09 in 2011 with the voter approval of $79 million in bonds to build two new middle schools and an elementary school. Since then the rate has fluctuated, sitting currently at $5.06 and estimated to drop to $5.04 in 2015.
If voters approve a 2015 high school bond measure, that rate will shoot up to $5.79 in 2016 and could remain there through 2027.
Both Whitely and Mount said the district had told voters the levy rate would remain below $5 when asking them to support the new schools bond.
“We didn’t follow through with our commitment,” Mount said.
Also adding to the board’s concerns was that in 2025 the district hopes to go back to voters to approve $42.9 million in additional bonds for phase two of the high school project that would provide technology and other upgrades to existing classrooms.
“That will depend on if we qualify for a state match,” Superintendent Dr. Deb Clemens said. The district could receive up to $25 million in matching funds from the state, assuming the money is still there.
John McCallum can be reached at firstname.lastname@example.org.