Shhheeeee...YAH! A 'LITTLE" more than that? Folks, the budget documents in the annual meeting booklet show--very clearly--that as of July 1, 2009, there was a skosh over EIGHT MILLION DOLLARS in fund balance for fund 10, the "General" fund alone! And we say "alone" because--newsflash--the school district budget consists of more than just the "general fund".
District Administration (and the school board) would prefer you stay focused on JUST the general fund, since the property tax levy comes from the general fund and the debt service fund. So..let's take a look at what money is available in all these wonderful funds.
Oh, the board and administration will tell you all kinds of reasons why they can't use fund balance. Let's just stick a few pins into these myths.
Myth #1. We can't use fund balance because it lowers our credit rating!
Reality: Certainly, if one makes a habit of spending down their rainy day fund, it likely would affect the district credit rating. But...newsflash....we are DONE borrowing money, right? We've borrowed all we need to complete the high school and upper middle school. We just finished the 7th elementary school. Oh...they'll tell you (if you ask) that they are THINKING about an eighth elementary school. But that's down the road.
Bottom Line: If we use some of fund balance--no one is suggesting to drain it dry--to lower the mill rate, we will be just fine.
Myth #2. If we use fund balance it will raise the interest rate we have to pay when we need to borrow money.
Reality: For the most part, see Myth #1. Yes, this is potentially true as well. But the board and administration like to use these fear tactics without telling you how big the threat really is. Dropping one "bond rating" classification level might potentially cost us a few hundredths to a few tenths of a percentage point on the interest rate...but that's it. Like as in instead of borrowing at 4.5%, we might have to borrow at 4.55 or 4.6%.
Let's just say, for the sake of argument, that in 5 years we do need a new school and we have to borrow $20M. Let's say the interest rate is 4.5% for those with an "A" credit rating and we've dropped to a "B" rating. Let's say that a "B" rating earns us a higher interest rate of 4.75%...much higher than actually would be the case. In this scenario, the increased cost (interest paid), over 20 years, would be about $650,000 TOTAL....or about $32,000 per year in additional debt levy.
Bottom Line: Isn't it worth that much to lower the mill rate in tough times for the taxpayers that pay for all this spending?
Myth #3: We might need that money.
Reality: Sure. We might need that money. But just as surely, we might not. We can talk about "maybes" until we are all blue in the face. We have a simple cold hard reality here. This country has been in a deep recession, people are out of work, suffered wage cuts, lost investments, and are struggling to keep their homes. Since these are the fine people that voted to allow us to build these fine schools...isn't it time for the board and the district to help them out?
Bottom Line: We need that money to reduce the mill rate NOW.
Myth#4: We can't use the "fund balance" from other funds.
Reality: All of the other funds are part of the WHOLE school district portfolio. Extra money (positive fund balance) CAN be transferred from one fund to another. In fact, that's one of the powers that a school board has. Of course, they'd rather have you not know that. That way they can shrug their shoulders and say., "I don't think we can do that...those are separate accounts". Many of you folks have separate accounts, too. And you can transfer money from one account into another...right? If they are joint accounts, of course, you may need approval of your significant other account holder.
Bottom Line. Poppycock! The board has the authority to move money from one fund to another . They may need a 2/3 majority to do so. But hey...they always vote in sync anyway. Hell, if synchronized voting were a sport, Vegas odds would have them the favorite to win the gold.
Myth #1. We can't use fund balance because it lowers our credit rating!
Reality: Certainly, if one makes a habit of spending down their rainy day fund, it likely would affect the district credit rating. But...newsflash....we are DONE borrowing money, right? We've borrowed all we need to complete the high school and upper middle school. We just finished the 7th elementary school. Oh...they'll tell you (if you ask) that they are THINKING about an eighth elementary school. But that's down the road.
Bottom Line: If we use some of fund balance--no one is suggesting to drain it dry--to lower the mill rate, we will be just fine.
Myth #2. If we use fund balance it will raise the interest rate we have to pay when we need to borrow money.
Reality: For the most part, see Myth #1. Yes, this is potentially true as well. But the board and administration like to use these fear tactics without telling you how big the threat really is. Dropping one "bond rating" classification level might potentially cost us a few hundredths to a few tenths of a percentage point on the interest rate...but that's it. Like as in instead of borrowing at 4.5%, we might have to borrow at 4.55 or 4.6%.
Let's just say, for the sake of argument, that in 5 years we do need a new school and we have to borrow $20M. Let's say the interest rate is 4.5% for those with an "A" credit rating and we've dropped to a "B" rating. Let's say that a "B" rating earns us a higher interest rate of 4.75%...much higher than actually would be the case. In this scenario, the increased cost (interest paid), over 20 years, would be about $650,000 TOTAL....or about $32,000 per year in additional debt levy.
Bottom Line: Isn't it worth that much to lower the mill rate in tough times for the taxpayers that pay for all this spending?
Myth #3: We might need that money.
Reality: Sure. We might need that money. But just as surely, we might not. We can talk about "maybes" until we are all blue in the face. We have a simple cold hard reality here. This country has been in a deep recession, people are out of work, suffered wage cuts, lost investments, and are struggling to keep their homes. Since these are the fine people that voted to allow us to build these fine schools...isn't it time for the board and the district to help them out?
Bottom Line: We need that money to reduce the mill rate NOW.
Myth#4: We can't use the "fund balance" from other funds.
Reality: All of the other funds are part of the WHOLE school district portfolio. Extra money (positive fund balance) CAN be transferred from one fund to another. In fact, that's one of the powers that a school board has. Of course, they'd rather have you not know that. That way they can shrug their shoulders and say., "I don't think we can do that...those are separate accounts". Many of you folks have separate accounts, too. And you can transfer money from one account into another...right? If they are joint accounts, of course, you may need approval of your significant other account holder.
Bottom Line. Poppycock! The board has the authority to move money from one fund to another . They may need a 2/3 majority to do so. But hey...they always vote in sync anyway. Hell, if synchronized voting were a sport, Vegas odds would have them the favorite to win the gold.
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