Committee breaks down cost of school improvement proposal
Meeting for just over three hours Monday night, the Marshall Public Schools Facility Committee took time to discuss possible costs of the proposal it plans to take to the Marshall Board of Education in December. The plan, as it is currently being developed, calls for:
* the construction of an upper elementary for grades three through five;
* renovating Bueker Middle School;
* adding two new science labs to Marshall High School;
* adding air conditioning to the industrial arts building; and
* renovating the existing elementary schools.
According to cost estimates provided by architect Michael Kautz of the firm ACI/Frangkiser Hutchens, the project carries a price tag of about $14 million. This was a cause of concern for some committee members and led to a discussion of ways to keep costs down.
Marshall Superintendent of Schools Joe Aull said he believed the estimates provided by Kautz were probably higher than the actual cost of the items. However, he said in the case of a bond issue that was probably a good thing.
"If there is going to be a bad scenario, it's probably better to have too much than too little," Aull said.
Some members of the committee felt the project needed to be trimmed more than others. Lester Bailey was among those in that group and noted that the last bond issue asked voters for $13 million.
"If we could hold it to that figure, or even less, it would be better," he said. Greg Bricker, the district's financial adviser, disagreed with Bailey on this point. He noted that if the amount of the bond issue was lowered each time it failed voters could come to expect it. This could eventually be damaging to future bond attempts.
Bricker also said that because of the nature of economics, there is an increased cost factor associated with waiting.
"Anyone who thinks that costs are going to be less than they were two years ago isn't dealing with reality," he said.
What the numbers mean
Bricker said districts in Missouri are limited by the constitution as to how much indebtedness they can undertake. At the time of the April 2003 election, the Marshall district will have a bonding capacity of $15,962,000, more than enough to cover the project's anticipated costs.
"Whatever you do, don't come up with a list bigger than $16 million," he said.
Currently, the district has a total levy of $3.55, 36 cents of which is used to pay off the existing debt. That debt service portion is scheduled to drop to zero cents in 2004 when the existing bonds are paid off. However, being debt-free isn't always a good thing, Bricker said.
"It is an absolute correlation," he said. "You can point to a district that is debt-free and see that they have some serious capital improvement needs."
Bricker said a $14 million bond issue in 2003 would require the district to maintain the 36-cent debt service levy now in place and add to it an additional 55-cent levy. To show the effect this would have, Bricker used the example of a $75,000 house. He said for the owner of such a house the levy increase would represent about $77 more annually in property taxes, or about $6.50 per month.
The home value used in Bricker's example was chosen for ease of calculation. Census data shows that the actual median value of an owner-occupied house in Saline County is slightly lower, coming in around $60,000. This includes houses located in the district but outside the city limits.
Looking into the future
Bricker also took time to discuss the district's financial future in terms of the next few capital projects.
Projecting the district's assessed valuation growth at 2 percent, a figure exceeded in nine of the last 10 years, Bricker said the district would have recovered about $7 million in bonding capacity in time for the April 2008 election. This issue would be used for the construction of the second elementary building.
Bricker said the new possible 2008 bond issue would also require a new levy increase. The increase for the 2008 bond issue would be somewhere in the neighborhood of 10 to 15 cents, he said. One alternative would be to get voters to support a larger increase in 2003, so that no increase would be needed in 2008. However, he noted this might be a hard sell considering the opposition to the district's previous bond issue attempts.
"No offense to the community, ... but there will be scrutiny on the issue," Bricker said. "They can hold your feet to the fire."
After the second issue in 2008, it would take the district another seven to eight years to build its bonding capacity to $10 million, the amount needed to build a new middle school. Bricker said the good news about this issue is that by the time it comes around the district would be able to do it as a "no increase" bond issue, meaning the existing levy would be enough to cover the additional indebtedness without an increase.