HOW DOES A NO TAX INCREASE WORK AND FAQS
Under Missouri statutes, a school district must ask for voter approval for issuing bonds for:
Purchasing sites for school buildings and libraries.
Construction of new school buildings.
Repairs and capital improvements of existing facilities.
Purchasing school buses and other transportation equipment.
Paying off bond obligations (discharge and assessment) to other governments with the erection, construction, and maintenance of sewers and sewer systems, sidewalks, guttering, curbing and paving of streets, and alleys adjoining and abutting real estate of the district. **This is used if the general funds of the district are insufficient in the judgment of the board to pay and discharge the assessment.
1. **How many bond issues has the district had in the recent past and how much were they?
2002 = 4 million
2005 = 3.1 million
2015 = 1.8 million
*As a result of four "refundings" (refinancing) and one prepayment, the district has saved $864,000 in future interest expense. A refinancing was completed in 2017 which saved $262,900 in interest payments.
2. How much debt does the district have?
By law, some of our tax money is diverted (or escrowed) to pay off our bond issues. This is a separate account that is used to pay off our debts. Voters passed a bond issue levy to pay this debt. We have approximately 3.2 million dollars of net bonded indebtedness. Our lawful bonding capacity is approximately 7.7 million dollars.
This leaves us with approximately 4.5 million dollars of bonding capacity.
Other Frequently Asked Questions
1. How does a no tax increase bond issue work?
Bonds are loans to the District at generally low-interest rates. We will have a bidding process to get the best market interest rate. Right now, interest rates are historically low. We can expect a rate of 2-3%. The bonds are sold to investors, and the money is made available to the District. Our community agrees to pay off the obligations for 20 years. Districts use bonds if the general funds of the District are insufficient to cover major projects.
2. Does the issue require a 4/7 vote to pass?
3. The Ballot language mentioned 4 million dollars. Would the tax sunset after that amount is collected or would it go on forever?
No, we would pay the same tax rate from now until 2040. We are asking the voters to pay the same tax as they currently pay for another ten years or until this new issue is paid off in 2040. So we are asking for a 10-year extension of the tax unless the bonds could be paid off early, then it would sunset at that time. Districts often refinance when it is advantageous to do so and save money.
4. If the tax is just until 4 million is raised, how long is that expected to take?
Bonds are loans to the District, and the District raises the money as soon as the bonds are sold. This is very similar to getting a loan from a bank to buy a home. The bond money can only be used on capital projects. Our municipal advisor will bid bonds, and we can expect historically low rates, in the neighborhood of 2%. Tax money designated to pay for the bonds is "captured" via an electronic deposit into a separate account to pay bonds (like an escrow account for your home if you have a mortgage) - this is happening now in any school district that has bonds.
5. Can the bond issue be put on the August ballot or is it too late?
The Board passed a resolution to place the issue back on the Aug. 4 ballot. Due to the delay of the April election to June 2 due to COVID-19, we had already missed the typical cutoff to put this on the August election. The statute allows for us to file a request with the counties and the circuit court to put this on the August ballot if the request is after the normal deadline. We have approval from all three counties, and our paperwork was completed.
6. Why do we need to borrow money?
Our District does not have millions of dollars in reserve for large capital improvement projects. Few districts do have large piles of cash sitting around to accomplish major projects. Our tax rate is low, and we ask permission from voters to maintain our current level of taxation and then seek bonds to pay for large projects like the one we are proposing. Our current budget allocates approximately 70% of our funds each year for salaries and benefits to school personnel.
The HVAC alone will require approximately half of our bond money. However, there will be a return on investment. We can expect significantly lower energy costs. Also, we're able to replace all lights to LED to save money, and we're looking at a solar option.
7. Could we run out of money before all the projects are completed?
No. We are planning to enter into a contract with a Guaranteed Energy Savings Contractor - GRP-WEGMAN - they will quote one price for all the projects (except some technology used for safety and security). We will LOCK IN A PRICE - with NO CHANGE ORDERS. So what they commit to complete, they must complete for the price we've negotiated.
8. The voters already turned this issue down in June, why are we rerunning it?
We are rerunning this issue because the District believes people needed more information - at least that's what was communicated to us. If you're reading this website, then that's good - this website is a response to the community for more transparency and more information. We want you to have all the information you need to understand the District's needs. If you need more information, please feel free to reach out to the Board of Education and/or the Superintendent, Dr. Terry Robinson.
9. I heard our Superintendent is leaving after "he" passes the bond issue since it seems all superintendents have to meet this prerequisite before they can move up to a bigger school. Is that true?
Ok, this is Dr. Robinson, and I'm writing this answer: I have no intention to go to another school district or update my resume and seek another position. I am 50 years old, and this is my 24th year working with kids. I don't want to leave Tipton and my wife, and I love being in Tipton serving our community - the school is not a job; it's a lifestyle. We bought a great home here, and like everyone else, we pay taxes here. I currently have a three-year contract with the District, and I love working with the Board of Education to help make our community THE BEST place to raise and educate kids. As long as the Board of Education wants me here, I'm staying.