BG school board piecing together puzzle of levy funding

BG Superintendent Francis Scruci, school board president Ginny Stewart, and board member Jill Carr listen during special meeting on Saturday.

By JAN LARSON McLAUGHLIN

BG Independent News

The Bowling Green Board of Education is faced with a complicated jigsaw puzzle – with the pieces changing as time passes.

If the board proceeds as in the past, the district voters will see 20 tax issues in the next 25 years. If the board tries to combine issues and stretch them to continuing periods of time, the number of tax issues could be cut to seven in 25 years. And it would mean the end of the district having to ask for the same money over and over.

However, Bowling Green voters have traditionally supported levy renewals – so trying to make the district’s finances more secure could backfire and result in putting them at risk.

Meanwhile, the board was just given its marching orders from the school task force groups. So the board needs to win support for a ballot issue for buildings – at the same time the district has to renew two ongoing levies before they expire.

“It’s gut check time,” David Conley, financial consultant to the district from Rockmill Financial, told the board during its special meeting on Saturday.

Here are some of the puzzle pieces the district has in play.

Recommendations from task forces

Though the building recommendations aren’t exactly clear, it appears the task force will be suggesting the board work toward two new elementaries at the Conneaut and Kenwood sites, and renovations plus expansion at the Crim site.

The finance task force recommendations were more crystal clear. The members want the board to use a combined property tax and income tax to raise $40 million for the elementaries. In an effort to reduce long-term interest costs, the task force suggested the levy duration be 30 rather than 37 years.

The task force also asked that the board put the building issue on the ballot this November, since delaying the efforts will inevitably increase the construction costs.

Setting aside money for big-dollar maintenance costs

The suggested combined issue of a 1.76-mill property tax with a 0.25 percent income tax will result in a surplus of about $325,000 a year. The finance task force stressed that  those funds be put toward ongoing major capital repairs on the new facilities – or be used to pay off the project early.

“It also gives us some breathing room in case of a recession,” Conley said.

But this piece of the puzzle was questioned by one board member, Norm Geer, who asked if it might be better to cut the amount of the requested property tax. That would result in having less for long-term maintenance.

Board member Bill Clifford objected to the idea that major maintenance funds were “fluff.”

“We will need it,” Clifford said.

Superintendent Francis Scruci agreed.

“We don’t want to be in the same place we are now,” with not enough to cover big repair expenses, Scruci said.

Conley said it can cost a district up to $1 million to replace the roof of a school building.

But Geer continued asking that the property tax and income tax more reflect the actual cost of the school construction, with the property tax portion being lowered.

“Do we need all that from the maintenance perspective,” Geer asked.

“We’re still going to have future needs,” Clifford responded, saying that not having ongoing maintenance funding would “hamstring” future school boards for the district.

Conley said there is a reason for the extra. The state recognizes that – requiring districts to have even more on hand for maintenance if they are given state funding for buildings.

“It’s just good financial sense,” Conley said. “We know your income tax is susceptible to economic downturn,” he said, pointing to charts that showed big drops in income tax collection during recessions.

Timing is everything

The financial task force recommended that the combined property-income tax go on the ballot this November.

Conley showed the board the history of Bowling Green school issues on the ballot.The best results have been in May, followed by November.

Voters have consistently voted to support renewal levies (100 percent). New money issues have received support 60 percent of the time.

“You’ve had really good support in the past,” Conley said.

Geer suggested that the board put the building issue on the ballot in November, since construction costs continue to escalate.

“The sooner the better, because of the cost,” he said.

Board president Ginny Stewart agreed.

“The longer we wait on the facilities, the more expensive it gets,” she said.

But the board also has two tax issues nearing expiration that are hanging over their heads. If those are not renewed by the end of 2020, that money is gone.

It would be possible, Conley said, for the building issue and two existing levies to all go on the ballot this November.

“But do you end up losing all three if you try them all,” he said.

Both Stewart and Geer suggested the best route may be to put the building issue on the November ballot, and then put the two existing levies on the ballot in March of 2020.

The delays from the last two bond issues for buildings have already cost the district, Conley said.

“The delay in this process has probably cost your taxpayers millions of dollars,” he said. “There’s no going back. That money is not going to buy you as much 10 years from now.”

So many options, so many moving pieces

The finance task force has narrowed the options for the building issue, suggesting that the weight be shared between a property and an income tax.

“Many people felt this was a more equitable divide of taxing,” Conley said. “Without being unduly burdensome” on one population.

The proposal calls for $20 million to be raised through property tax, and the other $20 million through income tax. That would cost the average household – with a median home value of $161,300, and an average household income of $66,215 – about $265 a year or $22 a month.

The property tax actually costs the average household less than the income tax, since the property taxes also include businesses and the income taxes only cover residents.

“We’re all aware that property taxes are the lower cost,” Conley said.

The task force recommended that the property tax and income tax appear on the ballot as one issue.

“One’s no good without the other,” Conley said.

Planning ahead for the possibility of state funding

The financial task force asked that the district apply for the Expedited Local Partnership Program from the state school facilities program. The ELPP allows districts to go ahead with building projects, with the possibility of state reimbursement in the future.

The ELPP program has some funding available – but not nearly enough to meet the demands, Conley said.

Currently, the state can afford to help about 30 districts every two years. But Bowling Green “is outside that window,” he said. The number of districts getting funding continues to get smaller, since the same money doesn’t go as far.

Because the state considers Bowling Green to be a wealthy district, the state formula puts Bowling Green far down the list for funding at 17 percent of the construction costs.

Though participation in the ELPP requires the district to build according to state standards, Conley said that the district could go beyond those standards for particular parts of the projects, then pay for those portions on its own.

“From my perspective, I don’t see any reason not to apply for it,” Conley said.

Clifford agreed, though expressed some reservations about counting on the state’s help.

“I don’t want to bank on it, but it doesn’t mean we shouldn’t apply,” he said.

Other levies looming …

The board continued to weigh the options of keeping two existing levies on the five-year rotation – or try them as continuing levies so the district doesn’t have to keep going back to voters. The option of combining the issues has also been discussed.

“You’re faced with the decision of trying to clean up the repeated return to the voters,” Conley said.

But there are downsides.

First, some voters like the district having to come back every five years for their approval.

Second, the existing emergency levy can’t become “continuing” unless it becomes a “substitute” levy. The rollback for taxpayers would be preserved, but the required ballot wording is very confusing – even for people who work with school finances for a living, like Conley.

There are upsides with turning the five-year levies into continuing levies.

First, the district could reduce the number of times it has to ask voters for the same money.

Second, having continuing levy support would help the district’s five-year forecast. Since that income would then be guaranteed, the district could get by with lower reserves. Right now, without continuing levy support, the district should not allow its balance to go below $8 million, Conley said.

Third, having continuing levies would allow for more precise long-term planning, according to Conley.

“It’s very difficult for him to do long-term planning,” Conley said of Scruci. “It’s much more difficult to manage the district” without knowing the money will be there.

Other benefits to the district of continuing levies include higher bond ratings, and the ability to capture tax revenue on new development in the district.

“We’ll always need those monies, so why not make them continuing,” Clifford asked. “You can’t collect money just for today. It’s not something we’re sitting on – it’s something we are planning to use.”

But board member Paul Walker expressed concern about the voters rejecting the board’s efforts to turn the five-year levies to continuing.

“I’d rather get the money,” then put more planning into the continuing effort, Walker said.

However, others said while it may be easier for the board to go ahead with repeated five-year levies – in the long run, it’s not as good for the district.

“The board will be right back where we are five years from now,” Stewart said.

But Clifford also expressed concerns about voters backing a change to continuing issues.

“It’s only wonderful if the community supports it,” he said.

How to convince the voters …

The board of education has serious concerns about “voter fatigue” since the district faces the potential of so many issues on ballot in the next few years.

“Will we be able to inform the public,” Stewart asked. “Are they just going to look at that total cost and say, ‘they are looking for new money again.’”

Geer said the public should realize the district needs to renew the existing levies.

“People should recognize that it’s not new money,” he said.

But Stewart wasn’t as confident that the public listens to the intricate details.

“What percentage of the voting base is going to be well-informed,” she asked.

Geer said the district needs to treat the election like a true campaign.

“We did that before,” with countless public meetings held, Stewart said.

But Geer said the board needs more publicity – with billboards and signs.

The district has gone 10 years now without a new levy. However, the voters have to keep voting on the same issues.

Without changing the taxing structure, the district will face 20 ballots over the next 25 years, Conley said.

“It’s the renewals coming back,” he said.

If the board converted them to continuing issues, that 20 could be cut to seven.

What’s next? More meetings …

The board of education will hold its regular meeting on Tuesday, March 19, at 5:30 p.m., in the lobby of the Performing Arts Center. The board will meet to formally hear the recommendations of the facilities and financial task forces on March 26, at 6:30 p.m.

The board will then hold a special meeting to continue discussions about its levy issues on March 30 at 9 a.m., in the district administrative offices on Clough Street.

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