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Jun 28, 2017
Charlton Heights Elementary SchoolPashley Elementary SchoolStevens Elementary SchoolO'Rourke Middle SchoolBH-BL High School

Building Our 2nd Century: Renovations Referendum

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Where will the money come from for the Proposed $34.2 million Renovations Referendum? 

Tax levy would increase by less than 1 percent

 

On October 22, the Board of Education is seeking the voters’ approval to pay up to $34,172,000 for the 33 projects in the district’s next five-year renovations cycle.

In today’s economy, school districts have to plan very carefully not only which renovations projects are the most important to do, but also how best to pay for them with the least impact on local property taxes. Here is a summary of the funding plan for this referendum and why we estimate these projects can be completed over the coming five years with less than a 1 percent tax levy increase.

The property tax impact will be modest because:

  • The projects were chosen and designed in ways that will maximize the state building aid BH-BL can receive to pay for them. Almost all of the 33 projects in the referendum meet State Education Department criteria to be “state aidable,” meaning that 74 percent of the cost of those projects (both principal and interest) will be reimbursed to us in annual aid payments from the state. (Note: 74 percent is BH-BL’s “building aid ratio,” which is based on a complex formula. Basically, less wealthy school districts have a greater state aid ratio, while more wealthy districts have a lower state aid ratio.)
  • In 2009, knowing that the district offices needed to be moved to a new location other than the deteriorating Hostetter Building, the Board of Education intentionally set aside $1,600,000 from the insurance settlement for the 2008 Hostetter Building flood. That revenue has been sitting in a reserve (and earning interest) for use in the next renovations cycle.
  • To minimize the referendum’s tax levy impact, the school board also plans to offset referendum costs with $1,100,000 in revenue from the district fund balance, reserves and the sale of the Hostetter Building. Moving the district offices out of the Hostetter Building may also help sell this former elementary school and the 38.8 acres of land it sits on in Glenville since potential buyers could then take possession quickly.

 

Here are the estimated numbers:

 

Total Referendum

$34,172,000

 

Revenue from the Hostetter insurance settlement

- $1,600,000

 

Revenue from sale of the Hostetter Building, fund balance & reserves

- $1,100,000

 

          Portion of referendum to be bonded:

$31,472,000

Note: there is no reason for the district to bond (i.e., borrow) the $31,472,000 before it is needed. So the plan is to borrow one-third of this each year for three years starting in 2014-15 as renovations projects get underway, which means that a delay in selling the Hostetter Building — if that occurs — would not be a problem.

 

How would bonding $31,472,000 impact school property taxes?

Bonding $31.5 million is estimated to increase the cost of annual debt service payments in the BH-BL operating budget by 2017-18 by $2,506,310. Revenue sources to pay this are projected as follows:

 

$1,936,350

State building aid, which would cover 77 percent of the annual cost

 

$215,000

Repurposing of annual capital expense in the operating budget due to completion of 2009 referendum projects

 

$354,960

Property tax levy, which represents a less than 1 percent increase in the current annual tax levy of $35,953,659.

 

$2,506,310

Total annual cost

What does a 1 percent tax increase mean to homeowners?

Assistant superintendent Chris Abdoo estimates that for a BH-BL resident with a home with a market value of $200,000, the referendum will mean an average tax increase of $40. Senior citizens with an Enhanced STAR exemption would pay even less.

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