The Broken Bow Board of Education continues to focus attention on trying to meet the challenging needs of the district’s facilities, and at Monday evening’s meeting information was presented on what could be a very promising financing solution.
Jay Spearman and Mark Mumford of Ameritas Investment Corp., discussed Qualified School Construction Bonds, of which BBPS has qualified for an allocation in the amount of $5,830,000. What makes these bonds special is the fact that they are very low interest, allowing the district to save lots of money in interest charges over the life of the bond.
With the district continuing to face the challenge of a shortage of available classroom space, the board has spent months gathering information and weighing their options for solving the dilemma. While no detailed plans have been decided upon yet, knowing low-interest financing is available for such a project is a huge step in the right direction.
This is how these school construction bonds are able to save the district interest money. A reimbursement rate is offered on the interest, in this case 5.26 percent. That amount is reimbursed to the district. For example, if the current bank loan interest rate was 6.26 percent, the district would only be required to pay a 1 percent interest rate on its bond after the reimbursement. Spearman estimates that over a 15-year bond life this would save the district more than $2 million in additional interest charges.
“On a $5 million project, this money changes the scope of our project by about 20 percent by not having to pay those interest charges,” noted board member Ken Myers.
The board emphasized the fact that no project is currently in the works for the district, however there is a stipulation associated with these bonds in that they must be issued by the end of the calendar year or they will be lost to the district.
Questions were raised concerning the timing of a vote of the people should the board decide to move forward with a bond election. Because of how taxes are levied and the time frame in which the bonds must be issued it was noted that September would likely be the time for a special election.
“If a vote is taken after September, it could potentially cost the district an additional $24,000 for issuance,” Spearman noted.
The board basically has two options for the Qualified School Construction Bonds:
1) The board could vote to issue the bonds within the maximum 5.2 cent levy for 15 years. However, this option would generate only approximately $3 million.
2) Take the vote to the people. A 15-year $5.8 million QSCB will save the district about $2 million in interest, giving the district 20 percent more capital to work with on a project.
The information was presented at Monday’s meeting for informational purposes only - no action was taken.
Other action items addressed by the board were:
y The resignation of long-time elementary teacher Carol Reichenberg was accepted, with regret.
y The 2011-12 academic calendar was approved. It was noted that an elementary conference was added during the second semester, as requested by a number of parents.
y The Broken Bow Education Association was recognized as the official bargaining unit for staff.
y Lunchtime Solutions was given approval on a contract as the district’s food service company. Two bids were received this year, with Lunchtime Solutions having the low bid.
The next regular meeting of the board will be April 18 at 7 p.m. at the high school.