CUSD 200 will ALWAYS be in Debt

Feb 12, 2014 CUSD 200 Board Meeting
video: http://www.youtube.com/watch?v=ry_GQwmD1q4
starting at the 1:13:10  time mark.
Jim Mahieson explained the tax code, how they can get around the tax cap and why we will always be in debt.

“… long term plan…

Basically there are two components… to the tax levy…

  • one is operating money and
  • the other is capital money or debt money…

The operating money can only go up with cpi… very limited.

The debt fund or the bond resource payment… there is technically no limit because that is determined when bond referendums are issued.

There are opportunities… to fund the working cash bonds or whatever, to pay for costs that are quote, not operating, that are the property improvement and so on.

As the committee on facilities mentioned, we are looking somewhere in the area of $80 million in improvements, or fiscal problems that we have over a cycle of time.

Basically, One of the comments I heard from the community after we talk about the bonds is that we already built the buildings why don’t we have the funding.  I think again – we are at that stage of our facilities.

So, we got to basically bond – In this case the working cash bonds to create the dollars to pay for this.

As you know, it is unfortunate that the state legislature…, in  its limitation of operating moneys – the 1.7 or 1.5 rate – does not do that on the other part, the debt services.  So, I think the reality that we have to face as a community or as a taxpayer is that we will always have debt in the district.

We built the buildings when those buildings get old and start deteriorating, you have to fix them. You know the roof is going to go bad… That program is allowed for by the state legislature… just because we did this over a cycle of time… It is really a function of the age of the buildings.

It is not some mismanagement … if we had all new buildings that would not be a problem.

I would love to say that we could do this with operating money, but we are beyond that – you know in the time frame of life…we have major improvements that need doing. It is basically that type of restructure that needs to be done…

 The other thing we talked about, this whole discussion about fund balance. And we can designate fund balance toward improvements.  You know we are kind of behind right now, $10 million…,  so depends upon the dollars – I would love to say that some day we could start funding these out of operating money.

 At least designate that fund balance to remove it from the discussion, off the table…

The designation would have to be, maybe transfer to capital improvement fund or reserve it in some way.

that is really identifying some future repairs we need, maybe technology or some other.. that we really cannot fund out of operating… that we reserve that money for those types of items

Not lend itself to the confusion that it is some kind of operating reserve or some big ball that we have.”

 

My (Jan Shaw) response to this:

 I noticed that when done, no one corrected anything.  In fact, they thanked him… They admit that debt services can be used to get around the tax cap. When buildings were built, or totally brought up to snuff, the district should have known that someday they would need repairs.  Roof, flooring, paint, even heating systems have a life expectancy.  With 22 building there should be dollars allocated every year from the operating budget for building maintenance. 

The root cause of the district’s financial problems is that money has been spent on “wants” or “unfunded mandates” or higher than inflation raise… that the taxpayers would not prioritize.  And so the necessities like building maintenance are moved to debt services – because they can.

At the February 26, 2014 board meeting, the board voted to issue $10,000,000 in working cash bonds. 

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