BY CHUCK VANDENBERG
FORT MADISON – In very preliminary discussions, the Fort Madison Community School District is listening to other options for funding a new elementary school.
Voters in the school district have repeatedly voted down bond referendums to build new schools in Fort Madison. The first was a referendum to build the middle school in 2008 and the last three were to build a new elementary school on the campus by the middle school at 48th Street and Bluff Road.
At a Monday night’s workshop, the district heard a presentation from Piper Jaffray Managing Director Tim Oswald, who said with the state extending the SAVE (Secure an Advanced Vision for Education) program through 2050, the district would have some funding available there. Piper Jaffray is a financial consultant for the district.
Lee County voters approved the 1% tax option in August of 1999 and it went into effect on Jan. 1, 2000. At the time the tax was called a Local Option Sales Tax, or a LOST tax. The Iowa legislature changed the name to SAVE later.
At the time of that approval, the state had no sunset on it, and legislators decided to put one in for Dec. 31, 2029. Legislators have since extended that date to Dec. 31, 2050.
Oswald said the biggest take away from the discussion was that the board understand the school doesn’t have one more dollar today than they had before the legislative session extended the SAVE tax.
“When the board decided 10 years ago to build the middle school, they borrowed the money against the majority of that tax through 2029. So there isn’t a lot of play money until 2029,” he said.
“I want everybody to understand legislature added 20 years to the schedule but it starts in 2030. You borrowed through 2029 so what you picked up starts in 2030.”
Oswald said the formula is enrollment multiplied by revenue per student. Revenue per student is now statewide with all counties getting $1,059 estimated in the current budget year.
Enrollment at FMCSD as of Friday was 2,109 students. He said the math results in $2,233,000 per year. The funds from the SAVE tax are allocated specifically for infrastructure needs and property tax relief. Oswald said the district spends about $660,000 per year on those costs outside of the middle school debt service, which would give the district about $1.6 million per year.
“If you want to have any facilities discussion that involves using sales tax to pay for a new facility or improvements, the tax you’re using would be after 2031, you need to vote. It’s a 50% yes vote plus 1. I would encourage you to get on the ballot at the next available date which would be in March,” he said.
“After you voted, you could borrow money if you wanted to. You need to have a project and a program and it needs paid for and you probably wouldn’t be ready that fast, but you could, in theory, borrow money after that.”
He said the SAVE tax also requires a public hearing and a 10-day notice for the hearing. The hearing would have to come after the vote on the revenue purpose statement.
Only SAVE tax can be used to pay the bonds. Other school revenues cannot be used to pay off the bonds.
The district voters could also approve what’s called a Voted Physical Plant and Equipment Levy. The district already levies a 33-cent PPEL levy as provided by state law, but the Voted PPEL is voter approved and would also need a 50% plus one majority approval of district voters.
PPEL funds are specific to school facility or grounds improvement or to pay debt incurred by those improvements. They can also be used for equipment and technology leases or purchases.
According to the Iowa Department of Education, the voters may authorize a Voted Physical Plant and Equipment Levy (VPPEL) for a period not exceeding ten years and in an amount not exceeding $1.34 per thousand dollars of assessed valuation. The VPPEL revenues may be used for the same purposes as the PPEL revenues. In addition, the board may obtain loans against future VPPEL revenues and may repay that debt with interest from the VPPEL.
Regionally, schools such as Burlington, Keokuk, and Mt. Pleasant all have Voted PPELs in place. Burlington and Mt. Pleasant have a 67-cent voted PPEL, while Keokuk has a full $1.34.
Oswald said the Voted PPEL can either be property or income tax or a combination.
“If you levy it as property tax you can borrow against it. So you could advance forward 5, 6, 8, or even 10 years of the PPEL to spend it up front if you wanted to,” Oswald said.
“Sandy and I are both of the agreement that if you do that you will free up SAVE money that will then allow the SAVE money to be used to pay off the middle school.”
He said $1.34 per 1,000 would generate about $1 million a year. He said $1.34 PPEL would only raise the tax about 50 cents next year.
“I know that makes absolutely no sense, but there are factors inside the budget that are causing the levy rates to come down. The general fund levy rate next year will be lower than this year, outside of some surprise,” he said.
“You would be capturing the reduction so you can get the full $1.34 PPEL with a much more modest increase than the $1.34.”
Oswald said a five-year projection isn’t complete so he wanted to finalize those numbers with Elmore and would bring back a firmer number.
Board member Carol Ross said she would be interested in what a 20-year project would look like with the Voted PPEL and the SAVE and what the totals would look like.
Oswald said he was trying to keep the two separate in conversations about the facility. He said contractors will want to know what the top dollar for the project is before putting together bids.