District on track to pay off bonds early, opening discussion about use of interest revenue
The specifics of this strategy are very complicated, but the summary is as follows: We are on track to pay off the elementary and high school bonds early. In the 2008 and 2018 elections, our voters approved tax collections at an amount greater than what is needed for the annual bond payments. Thus, the balance of those accounts has grown over the past few years. As the account balances grow, the interest revenue generated from the account balance also grows. Currently, we are generating over $400,000 per year in interest revenue from these accounts.
We are considering use of the interest revenue to address other capital needs in the school district. Doing so will not jeopardize our ability to pay off the bonds early, will not require an election, and does not change the current taxes levied by the school district. Use of the interest funds in this manner is also consistent with the ballot language in both the 2008 and 2018 elections because the ballot language stated that any facility needs could be addressed once specific projects were completed. Furthermore, use of interest funds in this way is philosophically similar to how specific ownership fees, particular to bond elections, are distributed to schools.
Even though the generosity of our community has allowed the Meeker School District to significantly upgrade our facilities, we still have facility needs that must be addressed. These needs include, but are not limited to;
• Upgrading intercoms and cooling at Meeker Elementary (for safety and comfort),
• Replacing a railroad tie retaining wall, windows, and installing irrigation at Barone Middle School,
• Performing preventative maintenance on HVAC systems and asphalt across district facilities,
• Upgrading visitor bleachers and lighting at Starbuck Stadium,
• Repairing sidewalks, flooring, windows, and doors at the Administration Building,
• And addressing various smaller maintenance needs.
Without the interest revenue from the bond redemption funds, the district would either have to ask voters for a tax increase or use general fund dollars to address the needs listed above. Taking money from our general fund limits our ability to purchase student supplies, provide competitive salaries and benefits, and offer beneficial professional development for school staff.
There are legal and philosophical counterarguments to this strategy. Some would argue that interest revenue earned from bond redemption funds should only be used for the same purpose as the original bond principal. Nonetheless, there are school districts in Colorado who use this strategy with the blessing of their community, financial auditors, and legal counsel. Although Colorado law seems to clearly allow flexible use of such interest, a 2006 opinion from the Colorado Attorney General argues otherwise. It is important to note that this is only an opinion, it is not legally binding, and it appears to be in opposition to state law. It is also important to note that this issue has never been heard in a court, so there is no definitive legal ruling.
Through consultation with our legal counsel, and given the above information, our school district believes this could be a responsible and creative use of funds that will positively and directly impact our school district. However, we know it is complicated and holds the potential for disagreement. We look forward to transparent engagement with our community on this topic.
By CHRIS SELLE,
SUPERINTENDENT