2014-06-22 / Front Page

Chesaning Union Schools prepare to bond for improvements

By Jeanne Marcello
Staff Reporter

CHESANING – The Chesaning Union Schools Board of Education took steps necessary to transition away from the sinking fund and toward bond funding for school improvements during the June 16 meeting.

Bond counsel Jesse Nelson of Umbaugh & Associates presented information about how the debt-related millage rates would be distributed. He explained that through Dec. 1, 2013, taxpayers were paying a total of five mills for school improvements. The millage was divided between 3.50 mills for the sinking fund building improvements, and 1.50 mills for the building and site fund. When Superintendent Mike McGough contacted Nelson about funding additional school improvements, McGough made it clear that he did not want the millage rate to go above five mills.

Earlier this year, voters approved millage for school improvements that could be supported through bonds, with the promise that it would replace the sinking fund millage. Voters also approved additional millage for the construction of an auxiliary gym. As a result, the total will exceed five mills.

The Dec. 1, 2014 school millage will total 5.62 mills broken down into 3.81 mills for the new building and site bond projects (including a new auxiliary gym), 0.5 mills for bus and technology bonds, and 1.31 mills to make the final payment on the outstanding 2012 sinking fund borrowing.

The Dec. 1, 2015 millage will be the last step in the transition. The sinking fund millage won’t be levied; as voted by school board members at the June 16, 2014 meeting. The bus and technology bond levy holds at 0.5 mills and the building and site fund levy with the auxiliary gym increases to 5.12 mills.

Nelson explained the process of how they would solicit for bus and technology bonds differently from the site and building fund bonds. The bus and technology bonds total $345,000; they will save money by simply advertising them in a financial newspaper and through negotiations. However they will go out for bid on the building and site bonds, which will be issued in two separate series.

School Board Trustee Charlie Rolfe asked whether it would be better to consolidate the bond issues to one and putting the funds in an interest bearing account until it can be used.

Nelson explained that if they issue $20 million in bonds now, the school district would have to start paying interest on the entire amount now. “You’re receiving a half-percent interest; but you’re paying two or three percent,” he said.

Nelson said the bond runs for 27 years in order to protect the tax rate, keeping the cost to taxpayers low.

Later in the meeting, McGough said the criteria for phase one projects will be those facilities that can’t be used until repaired; such as the high school track and the heating and cooling system at the middle school.

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