Looking for any avenues possible to meet the various needs of Unified School District 373, the Newton Board of Education heard about another potential financing option at its meeting on Monday.
In line with previous options reviewed such as a capital outlay bond or increasing the district's local option budget authority, Bret Shogren, of Stifel, Nicolaus and Company, presented to the school board Monday on what performance contracting would look like.
Centered on energy conservation, a performance contract (or energy conservation measure) establishes a lease purchase agreement as long as a school district can prove that its energy savings over a 30-year period will outweigh the cost of the equipment in question, per state statute.
Before entering into such a lease purchase agreement, Shogren noted districts seeking such a deal must receive an energy report/audit from a licensed Kansas engineer.
Lease purchase agreements are typically considered riskier compared to general obligation bonds, Shogren noted, and come with a higher interest rate. On top of that, the weight of responsibility over the exact details falls on the school district in such an arrangement.
"If you're looking into an energy conservation performance contract, I suggest asking lots of questions to your engineering firm," Shogren said. "Make sure you ask a lot of questions because there's a lot of stipulations."
Energy conservation measure contracts can often come in large packages, Shogren said, including work on lighting, HVAC, etc. Such an agreement can also be financed for as long as 30 years, though 10- to 15-year agreements are more typical.
USD 373 Superintendent Deb Hamm noted that, typically, performance contract lease purchases were more frequent a decade ago. Now, Shogren noted capital outlay bonds are more the trend — having assisted Goddard, South Barber, Cunningham and more with such bonds recently.
"We've done those more often than the leases," Shogren said. "Capital outlay bonds are much more cost-efficient. The interest rate's lower. It is limited to five years."
Regarding board member Angela Becker's question on how much an audit would cost, Hamm said it was around $7,000 to $8,000 the last time a similar report was created. However, it was also noted that USD 373 maintenance director Chris Schaefer would prefer a different financing option. No action was taken on Monday.
In other business, the Newton BOE:
• Approved the 2020-21 capital outlay plan as presented with no changes, totaling $2,135,936 in expenditures for technology upgrades, building maintenance, bus fleet replacement, etc.
• Finalized a superintendent interview schedule as drafted by board clerk Joni Jantz.
• Accepted a state clean diesel grant application to help offset the cost of a bus purchase.
• Approved the recommended applicant for funding through the Grow Your Own Teacher program.
• Approved gift requests of $500 from MKC to Walton Rural Life Center for resources, a 1993 Nissan Sentra ($1,200 value) from Jody Davis to the Newton High School auto department, $5,000 from Play-Mor Lanes to NHS for bowling needs, $500 from the Society of Mechanical Engineers to NHS RaileRobotics for supplies/travel expenses, $200 from Budde Enterprises to RaileRobotics for supplies/expenses and $400 from Heartland Credit Union to Opportunity Academy for a project-based learning grant.
• Gave administration direction to draft a letter to representatives calling for action to protect at-risk funding.
• Discussed protocol for adding items to the board agenda, with it being suggested to put forth potential agenda items during board comments time for consideration.
• Received a draft of the 2020-21 USD 373 calendar.
• Extended condolences to the family of the Brooklyn Boegel, a former kindergarten student at Walton Rural Life Center who recently died.