R-3 SD discusses future debt service options

Wednesday, May 30, 2012

During the regular meeting of the Wheaton R-3 School District's Board of Education in May, members discussed raising the district's tax levy to meet the growing financial needs of school operations.

The board discussed several long range planning matters based on information provided by the district's municipal bond underwriter, L.J. Hart and Company, of St. Louis.

According to the information presented by L.J. Hart and Company, the district's projected debt service fund balances will decline at the current growth rate of 1 percent and are anticipated to become negative by fiscal year 2016-17. The 2007 issued bond anticipated growth of 3.5 percent.

"An additional complication that results whenever the debt service fund balances are less than the fiscal year payments is that it becomes necessary for the district to postpone the reimbursements to the operating fund of the monthly intercepts under the State of Missouri Direct Deposit Program until after the tax receipts become available in January and February," said Dr. Lance D. Massey, superintendent of Wheaton R-3 School District.

"Participating in the direct deposit program benefits the district by producing an AA+ rating on the general obligation bonds and thereby reduces the interest rates," Massey said. "However, the inability to reimburse the incidental fund for several months may create future cash flow difficulties. If the balance problems are not appropriately resolved, the district will continue to borrow money from the operating fund every year."

When the service levy calculations are completed, the tax levy could be set as high as $1.0765, a 24.65-cent increase.

The recommendation from L.J. Hart and Company was to set the levy at 83-cents from its current 68 cents, a 15-cent per $100 of assessed valuation increase. That move would prevent potential cash flow difficulties in future years.

The 15-cent increase would cost $28.50 annually for a home with a market value of $100,000.

"This rate would prevent future balance problems and would eliminate the need for Classroom Trust Fund deposits going into the debt service fund," Massey said.

The Classroom Trust Fund revenue is gaming money that Missouri school districts receive on a monthly basis and is best suited for the capital projects fund to help with building maintenance and capital needs of the education program.

"This revenue can be used at the district's discretion and placed in any fund," Massey said. "Due to the variance in state funding since 2008, it is not practical for the district to rely heavily on Classroom Trust Funds to make the debt service payments."

Several board members asked what would happen if the corrective action was postponed.

"I would advise against that," Massey said. "Changes would need to be larger if low growth continues. We can always re-adjust our debt service levy back to lower levels if the growth rate returns to 3.5 percent."

The board opted to take the matter under advisement until more accurate figures become available for the district's fiscal year 2012-13 assessed valuation.

In other business, the board:

* Hired Jamie Harmon as a certified teacher for the upcoming school year.

* Accepted the resignation of Jaymi Bellah, elementary teacher.

* Reviewed the district's science, social studies, family and consumer sciences and library programs.

* Accepted a bid from Ozark Sealing and Striping, in the amount of $8,802, for resealing and striping at the main campus and pre-school facilities.

* Accepted an offer from Ridgley Baptist Church to replace the steps in front of the high school. The school will provide the materials for the project and the church will supply the labor.

* Approved a health insurance bid with Southwest Missouri Educators' Groups (SMEG) II, which reflects a 10 percent increase for the 2012-13 school year.

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