Coronavirus makes status of future Mehlville bond issue uncertain

Mehlville+Board+of+Education+member+Jean+Pretto+and+CFO+Marshall+Crutcher+discuss+the+2020+budget+during+a+meeting+June+5%2C+2019+at+Mehlville+High+School.

Photo by Jessica Belle Kramer

Mehlville Board of Education member Jean Pretto and CFO Marshall Crutcher discuss the 2020 budget during a meeting June 5, 2019 at Mehlville High School.

By Erin Achenbach, Staff Reporter

This is the first in a two-part series about a potential Mehlville School District bond issue. See the second article in this two-part series in the July 9 print edition of The Call.

In the uncertainty caused by the COVID-19 pandemic, the Mehlville School District is wondering if it will be able to move forward with a possible ballot measure that could have otherwise happened in November. 

The district has been exploring the possibility of placing a no-tax-rate-increase measure on the ballot in 2020 for investment in the district’s facilities and operations, in what would be an extension of 45 cents of the 49-cent Proposition P tax-rate increase from 2000 that could sunset in 2022. 

A Facilities Steering Committee comprised of more than 40 parents, teachers and community members has been working over the past 18 months to look into what, if anything, should be placed on the ballot. The committee included at least one parent from each of the district’s schools.

The committee began meeting at the end of 2018 and was tasked with prioritizing projects needed around the district by physically touring all the district schools as well as collecting surveys from teachers, parents and students at each school. 

The plan was to present the committee’s findings to the Board of Education to determine if a bond issue could be placed on the ballot in November, but the committee’s work and school tours were sidelined when the coronavirus pandemic hit, forcing the district to close its buildings for the remainder of the school year. 

At a Finance Committee meeting June 10, many committee members said that they felt as though they did not have enough information to make any kind of decision around recommending a bond issue and how to spend the money without first hearing from the Facilities Steering Committee, which later gave a presentation to the Board of Education at its June 25 meeting, held virtually.

“Unless you got some really, really dire needs, it’s starting to look like maybe you got to let the dust settle. That’s an 18-month facility project that people put so much time, energy and passion into this,” said Chief Financial Officer Marshall Crutcher. “With COVID turning our world upside down in an unprecedented fashion, how much more of that do we need to rethink?”

Currently, the district is scheduled to pay off the rest of its certificates of participation, or COPs, by fiscal year 2022. Once those bond-like certificates are fully paid, $8.8 million will be available for the district to use to fund operations or a capital levy.

But because coronavirus has cast economic uncertainty across all political subdivisions in the state, Crutcher warned that depending on how the cards fall, the $8.8 million may have to go toward addressing any kind of deficit in future years once the COPs are paid off. 

“There’s really three conceptual things we’d do with that $8.8 million,” Crutcher said. “On a worst-case basis, if the deficit after the dust settles is sizable, it may take much or all of that $8.8 million just to cover the deficit. If things are better than that, then you have the option of putting some of that toward capital project financing … But that’s really a decision that we’ve got to ultimately make down the road. We’ve got $8.8 million and we’ve got to figure out how to best utilize that.” 

Superintendent Chris Gaines told the committee that “they could not wait for the dust to settle” if the district wanted any kind of ballot measure on the ballot for November because a decision would have to be made by August. 

“I do know that more than likely on July 1 that we’re gonna get an announcement of withholdings of $123 million from the governor … So if you take the July 1 announcement and back up over the last couple of months, that’s going to be about $300 million in withholdings … in a really, really short period of time. And that’s something that schools have never experienced,” said Gaines. 

The superintendent also pointed out that because this year’s tax deadline was delayed from April 15 to July 15, school districts could possibly see two tax collections in the next fiscal year. 

“It (the tax extension) really took a lot of revenue from us in the current year but if the timeline stays the same … We’ll potentially have two tax collections in the next fiscal year,” said Gaines. “The belief is we’re gonna get that withholding right off the bat, but we’ll maybe see some of that money get released later in the year if things look up.” 

Gaines also added that there were growing expectations that the federal government would have to step in to aid schools. 

 “I think whenever we get the Finance Committee and the Facilities Committee together … I think it’ll be helpful for us to understand what are the dire capital needs,” said Crutcher. “The bottom line is … we don’t really know what our budget is gonna be. We’re gonna produce a number, but it could be plus or minus due to many factors.”  

Some committee members asked if it would be possible to place any kind of ballot issue on the ballot in April 2021, which would still come before the start of fiscal year 2022, when the Prop P tax could sunset if not extended. 

“I feel sorry for the committee, they put in 18 months of work, but in my opinion a lot of those surveys are obsolete because you’re under different circumstances now,” said Crutcher. “It doesn’t mean it’s gotta be eliminated, it just means patience and maybe we gotta do it a year later or something.” 

After some further discussion, Crutcher encouraged committee members to write articles to The Call to explain the committee’s opinion on the potential for a bond issue, as well as to praise the district’s predicted cash reserves for the 2020-2021 year at 28.6 percent, well above the required 3-percent balance. 

“The only way it means something to the community is when other community members like yourselves say it,” Crutcher told the committee members, who are financial professionals. “You have way more power than we do.” 

The consensus of the committee was that the absolute essential needs would need to be identified by the Facilities Steering Committee before any further action or decision could be taken.

“This budget thing is like triage,” said Board of Education member Jean Pretto. 

At the June 25 meeting, the board also approved the 2020-2021 budget and approved final amendments to the 2019-2020 budget. 

The district is holding a joint meeting of the Facilities Committee, Finance Committee and Facilities Steering Committee at 6:30 p.m. Monday, July 6 over Zoom. The meeting will be livestreamed on the district’s YouTube channel. 

A final recommendation from the Facilities Steering Committee will be presented to the Board of Education at its meeting Thursday, July 16. The board will then make a decision whether to place a bond issue on the ballot.

For more on the board’s deliberations, stay tuned for Part 2.