Mehlville school board directs staff to pursue possibility of no-tax-rate-hike bond issue

By MIKE ANTHONY

The Mehlville Board of Education last week directed staff to pursue the possibility of placing a no-tax-rate-increase general obligation bond issue before voters to fund some district capital needs.

If the school board ultimately decided to pursue a no-tax-rate-increase general obligation bond issue, the district’s debt-service tax rate would remain unchanged at 34 cents per $100 of assessed valuation, but would be extended for an as-yet undetermined period of time if approved by voters. A four-sevenths majority would be required for approval if the proposal was placed before voters in November 2006, April 2007 or August 2007.

Chief Financial Officer Stephen Keyser last week outlined what steps need to be taken if the board decides to pursue a no-tax-rate-increase general obligation bond issue and how the revenue from such a measure could be used.

“We have over the last year, primarily through the Long Range Planning process, talked about the concept of a no-tax-increase general obligation bond issue and how the district might use that in terms of some capital needs,” he said. “Basically, in about a year from this August, if the board does nothing or we do nothing else, as a result of the principal and interest that matures on our existing general obligation bonds, we would lower the debt-service tax levy by 10 cents.

“There are other options that the board has. They could present to the voters a process for transferring that 10 cents from the debt service to the operating (levy) or they could put to a vote of the voters a general obligation bond issue, the amount to be determined, but the concept being that that amount would be then serviced by the 10 cents that would otherwise go down in the debt-service tax levy,” Keyser said.

In a memo to the board, he identified three areas of need — technology, buses and facilities.

“As part of the Long Range Planning process, the Technology Committee identified approximately a million dollars a year that it would take to maintain and grow the technology plan that was basically brought into place by the Prop P (program),” Keyser said, adding that within the existing operating budget, it’s unlikely that funds will be available for the technology plan.

“I think the board is aware that the technology plan that the district submitted to the Department of Elementary and Secondary Education was considered the best plan that they had received. Unfortunately, it’s a plan that we don’t really know how to fund in our current situation. So the concept of a no-tax-increase general obligation bond issue could be used to fund the million dollars a year that was identified through that process,” he said.

Keyser also cited the district’s aging bus fleet — nearly 48 percent of Mehlville’s buses are 10 years old or older.

“… In the past, we’ve purchased about three buses a year. We’re talking for next year purchasing six. But even at that rate, even with a smaller bus fleet, we will have a bus fleet that continues to age and is less cost efficient than a new bus fleet,” he said.

“Finally, we spend approximately $500,000 a year thereabouts within our operating budget just on physical facility needs in the areas of surfacing, doors, windows, concrete work, etc., etc. — nothing horrendous, but things that help maintain the district and were we able to spend that money or more in the past, then we might not have gotten to the situation we were in with the massive infusion which was required through Prop P …,” he said.

“A benefit also to moving the bus purchases and the facilities needs to a general obligation bond issue is that those operating dollars, and that’s estimated to be around $700,000 a year, could be freed up from operating, and therefore that $700,000 a year could be used in other areas in academics, whether it be for teachers, textbooks, supplies, but in other operating needs rather than using operating for capital needs,” Keyser said.

The chief financial officer recommended that if the Board of Education wanted him to further pursue the possibility of a no-tax-rate-increase bond issue, a financial adviser will be needed to run projections on what the district could finance using the 10 cents and to formulate a timeline for the issuance process. In addition, bond counsel would be needed to develop ballot language.

The board by consensus directed staff to pursue the possibility of placing such a proposal before voters.

Board member Micheal Ocello told the Call Friday that he believes the possibility of a no-tax-rate-increase general obligation bond issue is worth pursuing.

“I thought it was a great idea. I really do. It’s something that right now everybody recognizes that there’s so much more that we need to do to provide a quality education for our kids or even be able to continue to provide that quality education,” he said. “To have that money infused in the operational component of our district I think is going to make a real significant impact, and I think it couldn’t come at a better time.”

Board members at this time are uncertain about when such a proposal could be placed before voters, but Keyser noted in his memo, “The voters would have to approve the issue in November or April to give the district sufficient time to issue the bonds prior to setting the tax rate at the end of August ’07. The district would have to notify the county by Aug. 29 if it wanted to put a bond issue on the Nov. 7, 2006, ballot.”

Asked about placing such a measure before voters in November, board President Ken Leach told the Call, “… Part of me says we need to do it as soon as we can and the other part says we need to make sure we get everybody’s trust and confidence. I’d say if we’re going to do that, then we’ve got a couple things we need to do — not only set that up, but we need to get out there and talk with the people, find out what their concerns are, get their support, talk about the things we’ve done in the last few weeks and see if they think we’re going in the right direction.”

Ocello said, “… As a lot of folks in this district know, I knocked on an incredible number of doors during my campaign and what I heard over and over again was that people realize that we need money in this district. I mean that seems to be what I would consider an overwhelming consensus. The question was how we went about it.

“The point is this money is going to help us on two levels. It’s going to allow us to move our district forward and help improve our education. I think everybody in the district wants to see that happen,” he said. “So the question about November, I think when they understand that this money is going to make an impact on the education and it’s not coming out of their pocket. And I think that’s another aspect of this. We all know these are tough economic times, and this is really an opportunity for people in our community to show the support to our students, to our teachers and to the district without having to come out of their pocket. So this is their chance to really help make a quality impact on moving this district forward.”