One of the top items on the ballot for the Nov. 7 election is a bond issue for Newton USD 373. The Board of Education chose to place the issue on the ballot, seeking funds to renovate and improve school buildings in Newton USD 373. If approved, the bond would pay for renovations and improvements to Newton High School, renovations to the Walton Rural Life Center and safety and security upgrades to other buildings.
The bond would increase property taxes throughout USD 373 an estimated 8.4 mills.
Here is a numerical breakdown of the bond issue on the Nov. 7 election.
$61.295 million — The total not-to-exceed amount of bonds to be issued with approval. This amount is the project fund, costs of bonding and capitalized interest to keep the initial mill levy at the stated rate in the first year.
This is perhaps the most confusing part of the issue to understand. With interest rates being beneficially low, the District will want to market bonds in December or January to lock in the low rates for the financing. The timing of the Election does not allow a tax levy to be established to pay any interest on the bonds in 2018. To solve this challenge, the bond issue sizing includes $1.642 million (called capitalized interest) to pay the interest bill for 2018 with bond proceeds. Without this, the first mill rate, with approximately 21 month’s interest, would be much higher than the 8.43 mill net increase.
With bond approval, local taxpayers will not see the tax increase until fall of 2018 for 2019 taxes.
$1.5 million — Safety, security, technology, and storm shelter upgrades to South Breeze, Sunset, Slate Creek, Northridge and Cooper Early Education Center.
$2 million — Classroom furniture for elementary schools.
$11.7 million — Renovation of Walton Rural Life Center. The school would be expanded from a two section kindergarten through fourth-grade center to a two-section kindergarten through fifth-grade center.
$500,000 — Safety, security and technology upgrades for Santa Fe, which will become a middle school rather than a 5/6 center.
$500,000 — Safety, security and technology upgrades for Chisholm Middle School.
$561,000 — Addition of a storm shelter at Chisholm Middle School.
$32 million — Renovations to Newton High School, including the heating and air systems, kitchen, classroom space and a new storm shelter/gymnasium.
8.43 mills — The estimated net mill levy increase that taxpayers will see if the bond issue is approved. USD 373 has existing bonds outstanding that are scheduled to be paid off in 2026 and require a mill levy of approximately 11.08 mills in the current budget. If the new bonds are approved, the mill levy required to pay all bonds is estimated at 19.5 mills — a net increase of 8.43 mills as compared to this year’s levy. For each $100,000 of home value, this equates to an increase of $96.92 per year (or $8.08 per month). For a $100,000 commercial property, the increase is estimated at $210.75. The increase on farm ground ranges from about $84 to $135 for 160 Acre plots.
19.5 Mills —The estimated total mill levy in the future to amortize existing and proposed bonds if the 2017 bond issue is approved.
$59,361,000 — The portion of the bond issue to be deposited in a project fund to pay project costs, architect’s fees, engineering, furnishings and equipment.
9 Years — The plan of finance is referred to as a “wrap” structure. The plan is to structure the proposed new bonds around the existing indebtedness with a goal to create a financing where one consistent mill levy rate will retire all bonds. The current bonded indebtedness is scheduled to be retired in 2026 — nine years from now. The plan calls for the district to pay basically interest only in the early years and start paying principal in 2026 — the same year the old debt is retired. All bonds will be retired in 2039.
28 percent — This is the percentage of state aid reimbursement for the proposed construction and interest on the bonds. Every year when the district prepares its budget, the state provides a percentage of state aid. The percentage is based on district wealth per pupil compared to all other districts in Kansas and can change in future years based on these factors. At the current 28 percent state aid factor, tax monies from throughout the state of Kansas would provide approximately $27.2 million to help retire the new bonds. Our old bonds are actually getting 52 percent in state aid.