One big responsibility for a school district board of education and administration is taking care of the school district facilities. They must ensure that the facilities not only provide safe and comfortable conditions for learning; but that they create an environment that enhances student learning. In addition, having nice facilities also improves the public image of the district along with the community and is part of what draws new families into town. Taking care of the district facilities is a large task that requires a lot of time and planning.
For many years, the Arcola School District was limited in the number of facility-related improvements that could be completed because of financial constraints. But once the 1% sales tax for facility improvements passed in 2013, the number of projects greatly increased. Since the start of the tax (revenue started flowing to the district in April of 2014), the district gets around $500,000 annually in sales tax revenue.
1% Sales Tax for Facility Improvements
As many of you know, the 1% sales tax has made a tremendous impact on the Arcola School District. Revenue from this tax can only be used in two ways: for facility improvements or to pay off debt generated from building projects. Over the past several years, the district has completed a variety of capital improvement projects using sales tax funds. Some projects that have been completed using sales tax funds include: installation of new fire alarm/mass communication system; renovation of both playgrounds; installation of entire new heating and air conditioning system in the 1917 building; elementary gym renovation; two roof replacements; new tile in the entire high school addition; track resurfacing; new football lights; installation of maintenance shed, etc.
Many of these projects were designed to create a safe and comfortable environment, but many were also done to enhance student learning. You may ask how does building a new maintenance shed enhance learning? On the surface, it may not be obvious. The new shed allowed the district maintenance staff to remove all equipment being stored in the agriculture classroom and this, in turn, allowed the agriculture shop to be renovated to include a new classroom area for the Project Lead the Way Engineering courses being offered in 19-20. The impact on student learning becomes more obvious when all the details are understood. This is also a great example of the forward thinking, planning process the staff and board engage in with regard to facility improvements.
1% Sales Tax for Paying Off Debt
In addition to building projects, the district has used some of the sales tax proceeds annually to abate (pay off) part of the district bond payments; thereby lowering the property tax burden to taxpayers. This was especially true when the district refinanced the building bonds from the high school addition in 2014. The district front loaded the principal payments for two years and used over $200,000 a year of sales tax revenue to abate part of the bond portion of the tax levy. In all, the bond refinancing saved district taxpayers over $460,000 in interest and shortened the length of the payoff from ten years down to seven. This savings was made possible because of the ability to pay off a portion of the bond principal with sales tax proceeds.
Long Term Facility Planning
About a year ago, the Arcola School Board requested that the district superintendent, with support from the building and grounds director, develop a long-term plan for facility improvements. After engaging staff in the process, the long-term plan was presented to the school board building committee in January of 2019. The building committee worked with district administration to complete several tasks including: (1) determining which projects can be completed by district staff and which projects must be outsourced; (2) determining estimated completion dates for various projects; (3) determining estimated project costs; (4) determining which larger scale projects should take priority; and (5) researching the possibility of selling alternative revenue bonds to complete larger scale projects now rather than waiting for the district to save enough money to be able to complete the project.
Building Committee Recommendation
Based on that work, the superintendent and building committee made the following recommendations:
1. Continue using a portion of annual sales tax proceeds to pay off a portion of the building bond payment annually until the full bond is paid off. The last building bond payment is November 2020 during the 2020-2021 school year.
2. Spend between $100,000 - $200,000 of sales tax revenue annually on smaller scale projects that are outlined in the long-term capital improvement plan.
3. Ensure that there is a sufficient capital fund balance (of around $400,000 - $500,000) in case of an unforeseen building emergency.
4. Move forward with significant upgrades to Arcola Elementary School, which will include a new front entrance/office/classroom space and renovation of hallways. This will be explained in more detail in a later section.
5. Fund the elementary project through selling alternate revenue bonds or debt certificates that will be paid off annually with sales tax revenue. This will NOT IMPACT DISTRICT PROPERTY TAXES. This will also be explained in more detail in a following section
Elementary Building Project
Of all the larger scale building projects discussed, upgrading the elementary was chosen to be the priority. A portion of the elementary school was built in 1955 and another section was built in 1960. The hallway flooring and wall finishes are still the original design. The proposed construction/renovation would include:
1. Construction of a new front elementary entrance extending to the north from current entrance. This will include a new reception/waiting area designed with security in mind. It will also include expanding the width of the hallway
2. Construction of new main office, several offices for staff, a conference room, and two smaller classroom spaces.
3. Renovation of current elementary library.
4. Renovation of current office into a larger, more functional area for the nurse.
5. Replacement of asphalt by newly renovated preschool playground.
6. Floor and ceiling tile replacement in all elementary hallways and current cafeteria area
7. Renovation of all hallway wall finishes.
The proposed timeline for the project includes the following:
1. Further staff discussion/input on proposed project (May – September, 2019)
2. Community Input on project (June – July, 2019)
3. Board decision on final scope of project (August 9, 2019)
4. Staff involvement in final specifications (August 9 – October, 2019)
5. Architect finalize specifications, drawings and bid documents (August – December, 2019)
6. Board approves project for Bid (December 2019/January 2020)
7. Board approves project bid (February 2020)
8. Project begins (May 2020)
9. Hallway and inside renovation completed (August 2020)
10. New construction completed (December 2020)
Financing the Project
The estimated cost for the entire proposed project is around $2,000,000. If the board decides to move forward with the project, the plan will be to sell alternate revenue bonds or debt certificates and pay the annual bond principal and interest payment with sales tax revenue. Again, this will not increase or even impact the district taxpayers’ property taxes.
The board has discussed not going over an annual payment of $250,000 a year. That means, the district would be looking at a 10-year payment schedule. Remember, the district gets around $500,000 annually in sales tax revenue so this will take about half of that revenue. The remaining revenue will go towards bond abatement (until 2020 when the building bond is paid off) and for other annual capital improvement projects on the long-term plan.
If the timeline above is followed, the first payment will not be due until November 2020. The 2020-2021 school year is the only year the district would have both a building bond abatement and the payment for the new bonds. Starting in the 2021-2022 school year, the district will have around $250,000 annually to complete other capital improvement projects.