Superintendent explains ballot language in the Huron Schools bond proposal

Huron Schools Supt. Donovan Rowe.


By Scott Bolthouse | The Huron Hub
 
ScottBolthouse@HuronHub.com

Published April 26, 2019

On May 7, the Huron Township community will vote on the Huron Schools bond proposal.

If the proposal passes, it would allow the Huron School District to make much needed facility improvements — including safety and security at district buildings — and upgrade heating and electricity.

The bond will also fund a young five’s program at Sunnyside Center.

The bond, according to the district, would generate $49,075,000 without increasing the tax rate or mill rate from the previous year.

It would maintain the current school debt millage rate of 7.0 mills.

With the wording on the ballot pertaining to the tax rate being a bit confusing to read, I reached out to Donovan Rowe, superintendent of Huron Schools, and asked if he would explain the ballot language.

I’ll share the ballot language first, and then Rowe’s explanation about how the bond’s passage will not raise taxes.

Language on the May 7 ballot:

Shall Huron School District, Wayne and Monroe County, Michigan, borrow the sum of not to exceed Forty-Nine Million Seventy-Five Thousand Dollars ($49,075,000) and issue its general obligation unlimited tax bonds therefor, for the purpose of:

remodeling, including security improvements for, erecting additions to, furnishing and refinishing and equipping and re-equipping existing school buildings; erecting, furnishing and equipping a new school building; acquiring and installing instructional technology and instructional technology equipment for school buildings; equipping, developing and improving athletic fields and facilities, playgrounds, driveways, parking areas, and sites?

The following is for informational purposes only:

The estimated millage that will be levied for the proposed bonds in 2019, under current law, is 1.34 mills (1.34 on each $1000 of taxable valuation) for a -0- mill net increase over the prior year’s levy. The maximum number of years the bonds may be outstanding, exclusive of any refunding, is thirty (30) years. The estimated simple annual millage anticipated to be required to retire this bond debt is 3.97 mills ($3.97 on each $1000 of taxable valuation).

The school district expects to borrow from the State School Bond Qualification and Loan Program to pay debt service on these bonds. The estimate total principal amount of that borrowing is $4,099,796 and the estimated total interest to be paid thereon is $2,206,613. The estimated duration of the millage levy associated with that borrowing is 13 years and the estimated imputed millage rate for such levy is 7 mills. The estimated millage rate may change based on changes in certain circumstances.

The total amount of qualified bonds currently outstanding is $13,280,000. The total amount of qualified loans currently outstanding is approximately $794,008.

(Pursuant to State law, expenditure of bond proceeds must be audited, and the proceeds cannot be used for repair or maintenance costs, teacher, administrator or employee salaries, or other operating expenses.)

Below is an email from Rowe to The Huron Hub about the bond language.

I would appreciate the opportunity to clear up any misunderstanding pertaining to the language. Believe it or not, misunderstanding the language is fairly common, because the state of Michigan requires certain financial information to be included on the ballot, and that language is almost always confusing for voters. Specifically, the confusion relates to the “for informational purposes only” section of the ballot.

First, let me start by saying that it is true when we say that there is a 0% tax rate increase/mill increase over the millage rate paid last year.

The confusion usually relates to the “simple annual millage anticipated to be required to retire this bond debt… 3.97 mills ($3.97 on each $1000 of taxable valuation).”

The best way I can explain this is that the District is currently levying 7 Mills, and with this new bond, we will continue to levy 7 Mills. The scheduled amount of repayment for the bond issue varies each year over the 30 year life of the debt. Therefore, each year the allocation of the 7 Mills varies to meet the needs of each of our bond debt issues. The first year of this new bond issue we would allocate 1.34 Mills toward it and 5.66 for our previous debt. Next year, and each year after, the allocation will vary, with the “average” for this bond issue being 3.97 Mills over the life of the debt. The tax rate of 7 mills to the taxpayer will remain the same, it is only our allocation to each of our bond debt issues that changes. So the tax payers will not see a tax rate increase/mill increase, because we will continue to levy 7 mills.

Think of it like a check that you receive. Let’s say that the check is for $7000. If you have a house payment, a car payment, college tuition, and a boat payment that all equal $7000, you will use the entire check to pay for your debt. If you pay off the car payment, and you want to continue paying $7000 toward the other debt, you may allocate more money to the boat, house payment, and college tuition, but it is not going to cost you more money per month, since you are still paying $7000. This concept is similar to what we are talking about with this ballot language. The first year of allocation to this proposed bond issue is for 1.34 mills, and as other debts are paid off by the district, we will allocate more mills to pay off this debt, but that will not increase the tax rate for the taxpayers. They will continue to pay the same amount that they are currently paying.

It is important to remember that this Bond Issue will be financed for 30 years. The State of Michigan, Department of Treasury, assigns a proposed debt payment schedule that the district will use to pay back the debt. This language related to “3.97 Mills” directly pertains to the way funds are allocated in order for the district to pay back the debt. This language is not meant to imply a tax rate increase at a later time – that will not happen. It also does not relate to a mill increase at a later time. This language only relates to the proposed debt schedule and the way the debt is repaid.

Donovan Rowe
Superintendent of Schools
Huron School District


 

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