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On Dec. 8, the Finance Committee of the District 65 School Board decided by a two-to-one vote to recommend that the Board adopt a resolution of intent to issue an additional $20 million in bonds to finance building projects and technology. Keith Terry and Mary Erickson voted in favor of making the recommendation. Mary Rita Luecke voted no.

If the Board approves the resolution, the District plans to issue the bonds without a referendum unless, within 30 days, a petition is signed by 4,292 registered voters in the District requesting a referendum on the issue.

The administration is recommending that the bonds be issued in two steps; $10 million in Feb. 2009 and $10 million in Jan. 2010.

Ms. Luecke said she would support a resolution to issue $10 million in bonds, but opposed a resolution to issue $20 million. She thought the Board should consider a resolution to issue the second $10 million when the District needed the funds.

Mr. Terry and Ms. Erickson said adopting a resolution of intent to issue the full $20 million now would alleviate the need of adopting a second resolution next year; and they said the Board would still have to approve the actual issuance of the bonds.

Ms. Erickson added, “I am satisfied with the architectural and financial planning that has gone into this.”

The Building Projects

Mary Brown, chief financial officer for the District, said the District’s architects, OWPP, completed a survey of the District’s buildings in August 2006 and identified work that was either “required” or “recommended,” at a total estimated cost of $15.9 million.

At the Board’s request, OWPP also met with the principals of each school to identify additional infrastructure or facilities planning projects that could be done while other work was being done in the buildings. These projects (the ones identified by the principals) have not been approved by the Board and are not included in the original $15.9 million estimate.

Dr. Brown said, “The first priority of work that was identified for completion was the required work and the boiler work, primarily because the boiler work would present the District with cost savings and hopefully less money spent on repair and maintenance of old boilers.”

Dr. Brown said that about 30 percent of the work included in the $15.9 million OWPP estimate has been completed or is being completed. She added, “Most of the work done is required and boiler work.”

In addition, Dr. Brown said additional work beyond that included in the $15.9 million estimate was done, including infrastructure work at Dewey and Park schools, and the installation of air conditioning in the auditoriums of nine schools and on the fourth floor of Nichols (a portion of which was funded by a $1 million state grant).

Dr. Brown presented an itemized list of the work proposed for each school during each of the next three years. During that time, the administration is recommending building work at a total cost of about $14.3 million, including the work required and recommended by OWPP, as well as additional infrastructure work.

School Board member Andrew Pigozzi, an architect with experience in school buildings, said, “I hope that everyone is in agreement that the work that’s scoped out here is necessary.”

Technology

Paul Brinson, chief information officer for the District, summarized expenditures made under the District’s technology plan adopted by the Board last May. He said the District has spent (or committed) $2.5 million under that plan on equipment and improvements, including the purchase of 764 computers, 134 Promethean boards, 206 wall mounted projectors and 265 document cameras.

Going forward, Mr. Brinson said costs were projected at $2.5 million for the spring of 2009, and a total of $7.7 million over the next five years.

The Original $20 Million in Bonds

The District issued $20 million in bonds during fiscal years 2007 and 2008 to pay for building projects and technology. Of that amount, Dr. Brown said the District has already spent $5.5 million on technology and has set aside $2 million for purchases of technology in the spring of 2009. She said the remaining $12.5 million will all go toward the building projects that have been completed or are underway.

The Proposed Additional $20 Million in Bonds

The Finance Committee is recommending that the Board adopt a Resolution declaring its intent to issue an additional $20 million in bonds. A memorandum prepared by Dr. Brown recommends that $10 million of the bonds be issued in February 2009 and $10 million in January 2010. She said the bond proceeds would be used to fund about $14.3 million in building projects through the summer of 2011 and to fund about $5.1 million in technology projects through the spring of 2012.

Dr. Brown said additional bond sales will be needed to fund future building projects for the summer of 2012 and beyond and future technology for the spring of 2013 and beyond.

Issuing the Bonds Without a Referendum

The District is planning to issue the bonds without a referendum under Section 19-8 of the School Code, which states that a school district may issue bonds for the purpose of “the payment of claims against any such district.” Before the District may issue the bonds under this provision, it must adopt a resolution describing in detail the claims, and stating its intent to issue bonds to pay the claims.

The District must then publish a notice of its intent to issue the bonds in a newspaper of general circulation, and advise that if 10 percent of the registered voters in the district sign a petition requesting that the matter be voted upon in a referendum, then the matter will be submitted to the voters in a referendum. If no such petition is signed, the district may issue the bonds without a referendum.

The proposed Resolution recommended by the Finance Committee states that the District is authorized under Section 19-8 of the School Code to issue bonds to pay “claims constituting the costs of funding school fire prevention, life safety, security, air quality, software, internal communications, special needs accessibility and related projects of the District.”

The Resolution also states the claims “are hereby found, determined and declared to be presently outstanding and unpaid, were authorized and allowed for proper school district purposes and constitute valid and binding obligations of the District.”

When asked if this procedure could be used to issue bonds to pay for anticipated work that was not yet contracted for and not yet performed, Dr. Brown told the RoundTable that the District’s attorney said this procedure could be used to issue bonds to pay for future expenses if a school district had a plan in place to make building improvements or to purchase technology and there was an identified need to incur the expenses.

In order to trigger a referendum vote on whether to issue the bonds, a petition would have to be signed by not less than 4,292 voters (10 percent of the registered voters) in the District within 30 days of the publication of the notice.

Impact on Property Taxes

Dr. Brown said District 65 may issue bonds under this procedure only to the extent the annual debt service of such bonds does not exceed $4.8 million per year, which is the District’s debt service extension base.

She said the District currently has about $41 million in outstanding bonds, which includes about $19 million in referendum bonds (from the 1999 referendum) and about $22 million in non-referendum bonds, on which the cumulative annual debt service is about $11 million per year. She said those referendum bonds would be paid off as part of the 2010 property tax levy, and after that the levy for debt service on non-referendum bonds would be limited to $4.8 million per year.

According to a schedule presented by Dr. Brown, the cost to the average property owner to pay the District’s debt service this year is $424. After the referendum debt is paid off as part of the 2010 levy, the average cost will drop to $184.

The full Board is expected to vote on the Resolution at its Dec. 15 meeting.