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HomeMy WebLinkAbout01-07-2015 Minutes Work SessionDr. Charles J. Shackett, Superintendent 3497 North Ammon Road, Idaho Falls, Idaho, 83401  (208) 525-4400  Fax (208) 529-0104  www.d93schools.org Board of Trustees  Annette Winchester  Kip Nelson  Amy Landers  Brian McBride  Jeff Bird Bonneville Joint School District No. 93 is an Equal Opportunity Employer Marjean McConnell, Deputy Superintendent Work Session of the Board of Trustees Woodland Hills Elementary School January 7, 2015 11:30 AM I. Call to Order Chairperson Winchester called the meeting to order at 11:39 a.m. II. Roll Call Those Board members in attendance were Chairperson Annette Winchester, Vice-chairperson Kip Nelson, Treasurer Amy Landers, Trustee Brian McBride., and Trustee Jeff Bird. Others in attendance were, Superintendent Chuck Shackett, Deputy Superintendent Marjean McConnell, Director of School Improvement and Technology Scott Woolstenhulme, Chief Financial/Operations Officer April Burton, Director of Human Resources Shalene French, Community Relations and Communications Liaison Phillip Campbell, Plant Facility and Purchasing Director Roger Hill, Director of Safe Schools John Pymm, Principal Oliver Roberts, and Board Clerk Valerie Messick. III. Welcome Visitors and Delegations Chairperson Winchester welcomed the following: Eric Heringer, (Piper Jaffray) and Nick Miller, bond attorney via telephone, Mark Bird, Stephanie Gifford, Karla Harris, JoAnn Nef, Renee cook, Troy Clayton, and Chad Dance. IV. Items for Discussion A. Second Survey Results - Scott Woolstenhulme Chairperson Winchester asked Mr. Woolstenhulme to talk to the Board about the second survey results. The administration felt that it was important to reach out to community again as they discussed what to include in the high school and get their support. Patron Insights did another multipart survey. There was very little variation between the online survey results and telephone survey. We look at the phone survey as the one that is most reliable and accurate because it is a random sampling of our registered voters. There were 400 people divided into to three geographic zones in the District to get good representation between the south, north and middle. The following choices were given: Favor, strongly favor, oppose, strongly oppose, or don’t know. The questions or options were presented to the respondents in a random order so there wasn’t an order bias. The three options to include with the high school were (1) a 900-seat auditorium, similar to the Performing Arts Center at Hillcrest that would add $6,700,000 to the cost of the high school. This one had 58% in favor or strongly in favor. (2) a complete athletic complex that would include tennis courts, and finished softball, baseball, and soccer fields at the cost of approximately $1,700,000. This had the most support with 67% favoring or strongly favoring. (3) Build a track and football stadium for approximately $3,000,000 additional cost. This had the least amount of support with only 53% either favoring or strongly favoring. The next questions had to do with financing the project. They decided to talk about the increase to the tax levy rate instead of the overall cost. They also talked about the monthly increase per $100,000 of taxable value. They presented a 20 year option and a 15 year option. For the 20 year option, 45% supported and 43% opposed it. The 15 year bond had the most support with 55% supporting it with 30% opposed. There were questions about the online survey regarding numbers that didn’t add up. That is because of the bonds and levies that will drop off over time. We need to talk about the increase as well as the total overall cost as we go forward. The average costs are all based on assumptions based on market values. There was a difference in response to time of funding in this survey and the last one. The difference is probably due to the fact that hard numbers were presented rather than using higher or lower for the two options. The actual difference is $5 per month. People had more specific information on which to base their responses. Part of the difference might be that when you hear 15 years, people might think that it will be paid off shortly after their kids have graduated. There was a weighted ranking of the options by asking people to name their first, second and third choices. They gave three (3) points to the first choice, two (2) to the second choice and one (1) to the third choice. The choice that got the highest was building a high school that has my preferred options. (61% had track and football field, 74% had the athletic complex, and 67% had the performing arts center as their preferred options). In second place was the basic high school with an athletic complex available. Then a comprehensive high school with everything added came in last. It appears that most people are in support of a basic high school with the athletic complex for practice fields. There are 15% to 20% of the people that are just opposed. We need to be careful with the need for the elementary school additions. We have a need at the elementary schools as well but maybe people are just not aware because we have been talking about the high school for a long time. However, we can’t go out again for elementary additions without raising the levy rate. The levy rate is based on our certified market value. Patrons are not voting on the levy rate. They are voting on the amount of the bond and authorizing the debt. We were considering additions to three elementary schools. The raise in payment is only based on the high school. The Board can raise the certified levy rate based on the needs. Voters approve that the District can go out and get a general obligation bond. If the Board needs to increase the levy rate because the market value didn’t support the levy payments the Board could raise the levy rate or manage our other levies such that the full amount of those levies would not be levied in order to keep the rate constant. The monthly payments quoted in the survey were based on $62.5 million for a comprehensive high school. Ken from Patron Insights joined on speaker phone at 1:09 p.m. The community was a high school that demonstrates fairness that is as inexpensive as possible without frills. The previous survey was more hypothetical and the current survey narrowed their focus by speaking specifically regarding what the increased costs will be. They said they wanted to save five years in interest. The community needs to know what it is going to cost them as an individual. The District needs to communicate that to them. That shows the District’s responsiveness to the patrons. Then it becomes their choice as to whether being frugal means saving interest in the long run or only monthly payments. B. Site Plan - Chuck Shackett Chairperson Winchester asked Dr. Shackett to report on the progress of the site plan committee. Drew Smith and Craig Simpson are the chairmen of this committee. Wednesday the 21st is the first meeting at 7:00 p.m. at Cloverdale. Then the architects will draw up what the committee decides and will come to a follow-up meeting on the 29th at Iona. C. Timeline for Finance Committee Recommendation - April Burton, Mark Bird Chairperson Winchester asked Mrs. Burton and Mr. Bird to talk to the Board about the Finance Committee recommendation. Mr. Bird, Actuary, introduced Chad Dance, Senior Vice President at Bank of Commerce, and Troy Clayton, CPA, as members of the committee. He stated that they are not ready to make a recommendation yet. They will be ready once they know what will be included in the high school. For now they are presenting some considerations. Then in the next few days they will be ready to make a recommendation. He showed where we stand currently relative to other districts in the state. Total levy rate slide shows a comparative group in the state regarding bond rates as well as the portion of levies that are used for bonds, plant levy, and supplemental levies. There are about 1/3 of the districts that don’t have a bond levy at all. He talked about the building costs. We have Rigby and Madison in our area to compare to. Mr. Bird took the actual costs and inflated that to 2016 using a 4% annual rate. We need to also look at what is included and size relative to ours and make adjustments for that. They will look at the impact of different bond length options. There will be three key variables that will impact what the levy rate increase will need to be. He explained sensitivity analysis. We can change each of those variables slightly and see the result with regard to the assumptions and then decide which the most important assumptions are. They asked for three different numbers on building costs ($62.5 for a comprehensive high school, $51.1 is the number for subtracting off the three numbers from the survey, and $68.5 is the comprehensive high school plus the $6 million for the elementary additions). They also asked for numbers for three different bond lengths. The committee has been talking about 15, 18, and 20 year bond lengths. That gives nine scenarios that could be used. The interest paid column is net the bond equalization amount. All scenarios are based on 0 market growth. They compared the different levy rate increases that come out of the different building costs, the difference in net interest paid, and monthly impact of the different bond lengths Adding on to the elementaries would increase the levy rate as well as the interest paid. The Market value growth is another variable that is the most critical and sensitive. He talked about the different bond lengths and the amount it would cost in taxes. You need to compare that to the interest savings. Shorter term allows us more flexibility to build more borrowing capacity for future needs as they come along. The levy rate changes dramatically as the market values moves even small amounts. All of our assumptions have included a 0% market growth. It is not a fair assumption that the population will grow and the market value will not grow as well. We have more population growth than market value growth. The market growth has averaged 17.5% over the last 10 years. For the last six years that average has been about .5% growth. We had a lot of years of double digit growth. Just having a 2% market growth would could cut the levy rate. We have still averaged just over 2% growth in the last 10 year period. Using 2% is still conservative and safe. We need to go into something knowing the risk and whether it is worth taking. In marketing this bond to public we need to be as realistic as we can. We need to make sure the levy rate is sustainable for the near future. We have tried to be conservative in our assumptions and allow for actual growth to create the capacity for the next funding proposal. The District has kept a stable tax rate for 10 plus years. The notion of a sustainable rate is what has helped the District over time. We need a minimum amount of growth so we don’t put our other levies at risk or having to increase the tax rate above the level communicated. The additional growth creates the capacity for the next bonding proposal and adds more flexibility. The levy rate needs to be sustainable for the near future and that provides a way to do the other projects that will be needed without additional increases. Mr. Bird favors shorter bonds if it is without increasing levy rate if it is possible to pass it. Going to a 15 year term saves $10 million in interest instead of a 20 year term. It is a savings that will eventually be in our hands for additional projects without having to raise the levy rate. Bonding at a lower levy rate for a 20 year bond is more likely to pass. The committee’s recommendation depends on information yet to come. There is one last consideration. What if we don’t need all the money right away could we sell the bonds at different times and realize some savings? There is a concern for possible interest rate increases if the District were to do that. Investment earnings are in a low rate environment and are not offsetting the cost at this time. We need to discuss the risks and rewards of assuming market value growth. The rewards are that the increase could be smaller. It is much more likely to pass. The risk is that we may not be able to pay the bond if we are not growing as expected and we may need to increase the levy rate. That would mean that what we promised won’t hold true. We could adjust the Plant and Supplemental Levies to make up the difference. We could get more from the levy equalization subsidy because of the way those calculations are done. If we are conservative in our assumptions, we should be ok. Communication will be the key. The finance committee is willing to help with this. They will put together financial exhibits that may help in communicatin g with the public. We need to let people know that we have addressed the concerns raised with the last bond. It is critical that this bond gets passed. We need to educate our community. The community is saying don’t include the PAC and the Completed Stadium. We need to go with that information. The benchmark to monitor is the 10 year interest rates. The committee will construct the best financial package to present to the public. We need to determine the right cost and the right term. Then we need to communicate why it is the best solution and why it is different than what we came up with last time. Interest rates will go up. It is just a matter of when. So, we need to get this done this year. Chairperson Winchester thanked those on the committee for their time, opinions, and expertise. The numbers we are talking about have been floating around for a long time. The District wants to increase the high school to an 1800 – 2000 core. So it could be slightly different then the $51.1M. Chairperson Winchester feels that the elementary additions are important but is concerned that those additions may undermine the bond and defeat the possibility of building a new high school. We can ask two questions at the same election. They must be completely separate and not dependent on each other. The risk is people may chose the lesser of the two debts and we still do not have funding for the high school. If we do the three elementary additions, it delays the need to build a new elementary for six to eight years. That is really sellable. By doing additions, the classrooms are place where the need is and not changing the boundaries. D. Work on Bond Resolution - April Burton Chairperson Winchester asked Mrs. Burton to guide the Board through composing the Bond Resolution. The Board needs to decide what projects they want to put on the bond. Then we will approve that we have the accurate cost and then we will work on the wording of the resolution. Chairperson Winchester polled the Board members regarding what should be included in the bond. The Board directed Mrs. Burton to include a basic high school with practice fields and to take the recommendation of the committee with regard to the term of the bond. They asked that the language allow upgrades to existing schools. They will then look at bonding for a middle school and additions to elementaries at a later time. E. Attendance at ISBA Day on the Hill - Valerie Messick Chairperson Winchester asked the Board Members to let Mrs. Messick know who will attend the ISBA Day on the Hill in Boise. Chairperson Winchester asked if any Board Member would like to add any agenda item to an upcoming meeting. V. Call for Agenda Items for Upcoming Meetings A. Regular Meeting - Wednesday, January 14, 2015 - 7:00 p.m. B. Work Session - Wednesday, January 28, 2015 - Iona Elementary - 11:30 a.m. - 1:00 p.m. C. Regular Meeting - Wednesday, February 11, 2015 - 7:00 p.m. D. ISBA Day on the Hill - Monday February 16 - Tuesday February 17, 2015 - Boise, Idaho E. Work Session - Wednesday, February 25, 2015 - Mountain Valley Elementary - 11:30 a.m. - 1:00 p.m. F. Regular Meeting - Wednesday, March 11, 2015 - 7:00 p.m. VI. Adjournment Chairperson Winchester asked for a motion to Adjourn at 2:24 p.m. MOTION: Brian McBride made the motion to adjourn. Jeff Bird seconded. The vote was 4 in favor with 0 opposed and 0 abstentions. Motion was carried. APPROVED: __________________________ Chairperson ATTESTED: __________________________ Clerk Date: _________________________