Helmut Schmidt, Published October 13 2013
Juggling act: All Fargo elementary schools to stay open; more to be builtFARGO – The Fargo School Board is keeping all of the School District’s elementary schools open.
And it’s preparing to build more.
The question popping up now is: How to pay for those decisions?
It appears the board is getting a running start on its next 10-year facilities plan. If preliminary decisions are finalized, the School District will spend $24 million to $31 million on construction in the next few years, including:
- Retrofitting six elementary schools with air conditioning: an estimated $10 million.
- Building an elementary school in Ed Clapp Park: $14 million, not including land or fit-up costs.
- Possibly expanding the Eagles Center into an elementary school: $7 million, though this is less certain. (More on that later.)
On Tuesday, the school board signed off on having staff nail down a purchase price for a school site on park district land in Ed Clapp Park, south of Interstate 94 in the Bluemont Lakes subdivision.
Board members also gave administrators the go-head to continue working with an architect on designs and to meet with nearby residents about the school.
“If we are going to open a school by 2015, we need to get going on this. We can’t wait,” Superintendent Jeff Schatz told the board.
The board also voted to have engineers do design studies on the six schools that need air conditioning – Clara Barton, Lewis and Clark, Roosevelt, Horace Mann, Madison and McKinley – to determine how much work can be done in the coming year.
Check the checkbook
Board member Rick Steen and Business Manager Broc Lietz say finance options - still being studied – come down to using the district’s available cash, issuing new debt with voter approval, restructuring current debt, or a combination of those possibilities.
The general fund’s ending balance is expected to have $24 million at the end of the 2013-14 school year, and the building fund will have nearly $6 million, Lietz said.
At first blush, the cash looks like it covers a new school and air conditioning, and leaves cash to spare.
But the school board aims to keep that general fund balance at a minimum of 15 percent of the district’s budget – it’s now 18 percent – to maintain cash flow and to show fiscal prudence and maintain the district’s bond rating, Lietz said.
The district could also take on new debt and pay it back with new taxes, if voters approve
One method is to create a sinking and interest levy. Depending on how much is financed – $10 million to $24 million – that would raise the district’s overall mill levy 2.5 to 8 mills, Lietz said.
The board could decide to increase the number of mills levied for the building fund. It could decide to raise the general fund levy.
Or, the district can try to restructure its debt so existing building fund tax revenues can help pay for new projects. Lietz said.
Board President Dinah Goldenberg agrees the group has a lot of balls to juggle.
“I guess that’s sort of what we expected. There were a lot of pieces to the puzzle, and the board has come a long way,” she said.
“There has been new information all the time, and that’s caused a little bit of forward and backward. And ‘Should we do this or should we do that?’ But I really think we made some good decisions,” Goldenberg said.
Cool has a price
The cost of induction displacement air cooling systems for Clara Barton, McKinley, Horace Mann, Madison, Roosevelt and Lewis and Clark elementary has been pegged at $10 million, Lietz said.
By school, the preliminary estimates are: Clara Barton, $1.9 million; Lewis and Clark, $2.4 million; Roosevelt, $1 million; Horace Mann, $1.8 million; Madison, $1.3 million; and McKinley, $1.4 million.
Those aren’t the only costs those schools will see in the next decade.
The district’s overall operational maintenance expenses are pegged at $24.2 million from 2014 to 2023, documents show.
That includes everything from replacing doors, lights and carpet to repairing roofs, tuck-pointing brick and replacing concrete and asphalt at all of the district’s buildings.
For just the six schools being retrofitted to get air conditioning, district documents show general maintenance costs through 2023 are about $5.6 million:
Clara Barton: $1,116,000.
Horace Mann: $885,600.
Lewis and Clark: $552,120.
Combining the air conditioning costs with upkeep for those schools through 2023, the price tag rises to:
Clara Barton: $3,016,000.
Horace Mann: $2,685,600.
Lewis and Clark: $2,952,120.
An early estimate to turn the Eagles Center into a five-classrooms-per-grade elementary school is $7 million.
But that option could face snags that make building the “pocket” elementary less palatable.
Schatz told board members Tuesday that the building may face additional requirements in the flood plain in terms of elevation requirements for new construction, and additional red tape through federal agencies.
That could make the cost prohibitively expensive, he said.
The elephant in the room in terms of having tax revenues keep pace with enrollment growth in the district is the excess mill levy vote set in March.
A law passed by the Legislature in 2009 requires a vote by Dec. 31, 2015, to approve a mill levy of more than 110 mills.
The district’s budget for 2013-14 calls for levying 139 general fund mills, Lietz said.
If voters reject the excess mill levy, tax revenue the district brings in from existing properties is frozen until, over time, the dollars collected are equivalent to 110 mills, Lietz said.
It means the district would lose out on millions of dollars a year in property tax revenue annually, he said.
Goldenberg is confident the public will agree to the excess mill levy, as long as they get clear and comprehensive information.
“There is, I think, a vocal, interested community out there, and we’re delivering on a lot of things that they are asking for,” Goldenberg said. “My hope is that (voters) will understand that we’re listening to the public. But at the same time, you also have to support us so we can carry out these things financially.”
Readers can reach Forum reporter Helmut Schmidt at (701) 241-5583