Aug 2 Election: Ferndale Schools Sinking Fund Millage

Kramer_TOP_02Aug 2 Election: Ferndale twsted_tavern_AD_more textSchools Sinking Fund Millage

(Crystal A. Proxmire, April 20, 2016)

Ferndale, MI – Voters in the Ferndale School District will be asked to approve a 1.3 mil sinking fund millage to pay for repairs in the District’s buildings.  The information below was taken directly from a Q&A on the Ferndale Schools website at http://www.ferndaleschools.org/district/facilities/sinking-fund/….

Ferndale Sinking Fund Executive Summary

What is a sinking fund?

A Sinking Fund millage is a limited property tax, considered a “pay-as-you-go” method for funding building maintenance and infrastructure projects. No debt or interest expense is Judy_Palmer30yearsincurred with a Sinking Fund. The tax is levied each year and the revenue generated from this levy is designated to building upgrades or repair. Sinking Fund expenses are audited by the Michigan Department of Treasury for compliance annually. The Sinking Fund revenues cannot be used for general fund expenditures (i.e.., to keep schools open).

Why do we need a Sinking Fund if we just passed a bond in 2012?

Over the past decade, there have been severe cuts to the state’s per pupil allocation compounded by shifting enrollment trends, which is the primary source of funding for the district’s ongoing operations. The only additional means to fund the district is by asking voters for approval to levy mills for debt (i.e. purchase of land for future building projects) and blumz01sinking funds (i.e. capital outlay to build or renovate facilities). The original amount of work identified in 2012 was over $30 million, but the law on bond funds prohibited going out for that amount. Without the Sinking Fund millage, major repairs would need to be paid for with operating funds that would otherwise be used to support educational needs of the district.

The District has identified $13,000,000 worth of projects over the next 15 years that are critical school safety or building and site repair/improvements (see below). Suspending these facility repairs would result in more expensive emergency repairs in the future. The Sinking Fund would allow the district to systematically respond to these maintenance needs, ultimately reducing the total cost while prioritizing student safety.

Items

Estimated Cost

Roofs

$3,075,559

Exteriors

$2,888,516

Interior Improvements/Energy Efficient Lighting

$2,944,764

HVAC & Energy Efficiency

$3,261,100

Electrical

$1,063.320

Total

$13,233,319

What is the difference between a sinking fund and a bond?dinos02sidelogo3

Most school construction and improvements are paid for with bonds, which is really borrowing money. We have to pay that money back with interest and fees, and have a special tax dedicated to paying off each bond. Because it’s complicated, schools usually only use bonds for major projects every 10 to 20 years. That makes sense for new structures and additions, but not so much for things like roof replacement or heating system upgrades. The sinking fund allows schools to pay for these kinds of smaller renovations as we go, without having to borrow money or pay interest. It also means that we’re not letting our schools deteriorate for ten or fifteen years while we wait for a new bond project.

What is the school district asking of residents?

We are asking for an increase of 1.3 mills ($1.30 per $1,000 of taxable value of your property -approximately 50% lower than your market value) for 15 years. This would raise about $850,000 per year for facility improvements or about $13,000,000 in fifteen years. Below is the impact on your property taxes.

Home Market
Value

Home Taxable
Value

Annual
Increase

Monthly
Cost

$100,000

$50,000

$65

$5.41

$150,000

$75,000

$130

$10.83

$200,000

$100,000

$195

$16.25

$250,000

$125,000

$260

$21.67

Please review the following documents.Schrock2015_SmilingFace_ad

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