District changes school bond schedule

A $10 to $12 million shortfall in the Medford School District's budget for repair and upgrades to 18 schools prompted the School Board on Tuesday to alter its bond-issue schedule with hopes of saving about $3 million.

The drawback, however, is that the alteration will come at an additional cost to the public.

When the district's $189-million bond measure passed in November of 2006, the board assured the public that property taxes to support the bond would not rise above a rate of $2 per $1,000 of assessed value. By moving up the issue structure, bonds will generate more interest for the school district and save it a couple of million dollars.

But, for two years out of the bonds' 26-year lifespan, the property tax rate could climb as high as $2.08.

School Board Chairman Mike Moran was quick to offer his approval of the suggested alterations to the bond schedule during an afternoon study session.

"We did say we'd try to keep it under $2 per $1,000," Moran said after the board's evening meeting. "The trade-off here is that we have the ability to squeeze over $3 million more out of this through intelligent bond management. The downside of the extra $3 million is that for a short, two-year span, we'll go up over the $2 per $1,000 limit."

The original bond structure had the board issuing bonds in four increments. The first $40 million issue took place in January of 2007. Subsequent issuances of $70 million were scheduled for January 2008 and 2009, followed by a final issue of just under $9 million in January 2010.

Under the newly approved issue structure, $40 million has already been issued, with the next release, valued between $90 and $100 million, scheduled for November of 2007. A third and final issue of $48.9 million will take place in January 2009.

This became necessary, not only because of the more than $10 million shortfall in the budget, but also because the school district has aggressively began its construction projects, said District Business Director Kent Stephens.

"The sooner we sell those bonds the sooner we can invest them so we make more money," Stephens said. "We're moving through our projects quicker than we thought we would."

Board members Larry Nicholson and Robin Stroh said they were hesitant to alter the issue structure because they had told the public the tax rate would not exceed $2.

Stephens said he would not have offered such an assurance, citing unpredictability in the stock market, among other reasons.

"Right now we're thinking it could be right at the $2 limit," Stephens said. "But we're trying to maximize the funds we have available for the project."

A major reason behind the budget's shortfall is that Jackson and Roosevelt Elementary schools have been deemed uninhabitable. When the school district asked for the bond measure, it did not anticipate the need to completely rebuild those two schools.

Even after the alteration of the issue schedule, the school district will still be in a $7 to $9 million deficit for the projects. To complete all of the work outlined in the bond measure, within its budget, the board approved the creation of a Bond Projects Task force, made up of the seven board members and seven members of the community.

Conceivably, the task force could recommend that Jackson and Roosevelt not be rebuilt, or that other projects within the measure are not executed or get scaled back. The bond measure that was passed can be altered, as long as new projects are not taken on, said Superintendent Phil Long.

"What we heard from the bond council is that the resolution we put before the voters does give the board the authority to adjust projects," Long said. "Even within the current language it would allow the board to attune to the issues at Jackson and Roosevelt if the scope meant that we had to substantially replace much of the buildings."

The task force, which includes citizens that are involved in the community but not directly involved with any of the projects, will meet twice in September before making a recommendation to the board in October.

A decision by the School Board on how to proceed with the projects will be made during a meeting Nov. 2.

"The issue before the task force is are there the resources to do everything within the scope of the bond measure?" Long said. "How do we pay for all the projects that we have when our needs outweigh the resources by $10-plus million."

Added Moran, "That's why we're elected, so we get to make the hard decisions."

Reach intern Bob Albrecht at 776-8791 or e-mail intern1@mailtribune.com.

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