BUILDING AND SITE SINKING FUNDMILLAGE ELECTION TUESDAY, NOVEMBER 3, 2015 QUESTION AND ANSWER In the upcoming election, voters of the Charlotte Public School District will be asked to vote on a new Building and Site Sinking Fund for construction and repair of school buildings and facilities. This would be a similar request to that approved by voters in Charlotte the mid‐1980s for building maintenance. Q: What will the ballot on November 3 say? A: Shall the limitation on the amount of taxes which may be assessed against all property in Charlotte Public Schools, Eaton County, Michigan, be increased by and the board of education be authorized to levy not to exceed 1 mill ($1.00 on each $1,000 of taxable valuation) for a period of 10 years, 2015 to 2024, inclusive, to create a sinking fund for the repair or construction of school buildings and all other purposes authorized by law; the estimate of the revenue the school district will collect if the millage is approved and levied in 2015 is approximately $535,000? Q: What will the building and site sinking fund provide for Charlotte Public Schools? A: If Charlotte voters approve the proposed annual levy of 1.00 mills for a 10‐year period, about $535,000 would be set aside each year to keep school facilities in good repair. The building and site sinking fund would allow the district to invest money annually to repair and renovate its buildings and sites in order to ensure future generations of students are provided for and that the community’s gracious investment in our current facilities is protected. A building and site sinking fund is used on a “pay as you go” basis and all monies collected are utilized to directly benefit the district. The building and site sinking fund would provide longer‐term planning and funding for major facility upgrades. Relieving this burden on the general funds would allow more dollars to be directed specifically to educational programs for our students. Q: What is the district doing with the Owens Brockway payment? A: A portion of the Owens Brockway payment received from the City of Charlotte ORIOLES
was used to pay down debt principal and interest from the previous bond projects. This will allow for an acceleration in the repayment schedule resulting in less taxes for the community at the end of the debt. We felt this was the most responsible thing to do for our taxpayers. The remaining portion of the payment is being held in a restricted account until the District has a decision from the State Attorney General’s office on whether or not the funds must be returned to the State of Michigan. Updated 8.24.2015 Q: Why does Charlotte Public Schools need a building and site sinking fund? A: With schools averaging over 50 years in age, continuous renovations and repairs are essential in order to preserve the rich heritage of education we have in Charlotte. A proposed building and site sinking fund would allow Charlotte Public Schools to keep its schools in good repair and maintained appropriately for students, staff, and community members in years to come. The proposal will also ensure that general fund dollars are kept in the classroom for the benefit of our students, as the state per pupil funding calculation does not take into account the financial needs of districts to maintain physical assets such as major building renovations, HVAC improvements, and parking lot improvements, which naturally need significant investments over time. Q: Is there a long term plan in place that outlines the facility needs of the District? A: During the 2014‐2015 school year, Charlotte Public Schools commissioned a complete facility study by Granger Construction. The study outlines facility improvement needs over the next 10‐20 years. The study includes projected costs for items like parking lots, roofs, HVAC, and plumbing, among others. The complete report can be reviewed at www.charlottenet.org/facilities. Q: Has Charlotte Public Schools ever had a building and site sinking fund in the past? A: Yes, the community of Charlotte supported a building and site sinking fund in the early‐
mid 1980’s prior to the passage of Proposal A. The community of Charlotte has been very supportive of the District’s facility needs, approving capital project requests in excess of $90 million over the past 20 years. This building and site sinking fund will protect that investment for years to come. Q: What does a yes or no vote mean? A: A “Yes” vote means you approve the ballot question that would allow the Charlotte Public School district to levy 1.00 mills for a dedicated Building and Site Sinking Fund to generate about $535,000 each year for a 10‐
year period for necessary repair of school buildings. A “No” vote would turn down the proposal and mean that the future costs of repairs to Charlotte Public School buildings must come from the district’s general fund budget, which also covers students’ instructional needs. Q: Is a building and site sinking fund held to any special auditing standards? A: Section 1212 of Public Act 451 of 1976, the Revised School Code, requires a school district that levies a sinking fund tax to have an independent audit, using generally accepted accounting principles, of its sinking fund conducted annually, including a review of the uses of the sinking fund. The school district shall submit the audit report to the Department of Treasury. Furthermore, the District is committed to providing the community with updated reporting on our website. Updated 8.24.2015 Q: What can a building and site sinking fund be used for? A: See Section 1212 of Public Act 451 of 1976. Proceeds from a building and site sinking fund may be used for the construction or repair of and purchase of real estate for site for, school buildings. The Department of Treasury does not issue preapproval or opinion letters as to permissible sinking fund use so as not to compromise its statutory role to determine from the audit report that the sinking fund was used for the purpose authorized under the law. If the Department of Treasury determines from the audit report that the sinking fund has been used for a purpose other than those authorized by Section 1212, the school district shall repay the misused funds to the sinking fund from the school district's operating funds and shall not levy a sinking fund tax under this section after the date the Department of Treasury makes that determination. Q: What are building and site sinking funds NOT able to be used for? A: The Michigan Department of Treasury has ruled that building and site sinking funds cannot currently be used for the following: technology equipment, buses, classroom/office supplies, classroom/office furnishings, salaries, or employee benefits. Additional information can be found at: http://www.msbo.org/sinking‐fund Q: What is Charlotte Public Schools’ current credit rating? A: Standard & Poor’s Ratings Services affirmed its ‘A+’ underlying rating for credit program on Charlotte Public Schools previously rated general obligation bonds on May 6, 2015. They further stated that the financial outlook for the District is stable. They cited the District’s “maintenance of strong available general fund reserves and good financial management policies” as contributing factors to the strong rating. Q: Has Charlotte Public Schools taken advantage of programs that reduce the tax burden to the Charlotte community and its taxpayers? A: Yes, Charlotte Public Schools has taken advantage of several opportunities to save the taxpayers of Charlotte. Charlotte Public Schools has refunded (similar to refinancing your home mortgage) the voter approved capital project bonds 5 times over the last 10 years, saving taxpayers over $7.1 million over the life of the bonds. Furthermore, Charlotte Public Schools continues to take advantage of federal interest subsidies relating to the 2010 Capital Project bonds which saves an additional $15 million. Q: Aren’t we already paying taxes toward funding operations of Charlotte Public Schools? A: The Charlotte community has been very gracious and has supported our many requests for projects that exceed the general operating of our K‐12 educational programs. The graph below shows the exceptional support that we have received to provide the best educational opportunities for our students. Capital Projects: 7.59 mills are currently being levied to repay principal & interest associated with the major capital projects approved by voters, including: performing arts center, middle school, aquatic center, high school and elementary school renovations and additions. Playground & Rec: 0.50 mill is currently being levied to support the operations of the youth recreation program and aquatic center. Voters approved this millage for a period of 5 years. The millage will be up for a renewal request in 2016. Updated 8.24.2015 Continued next page…. Operating Millage: Michigan schools are funded under a structure created when Proposal A was approved statewide by Michigan electors in 1994. Under the plan, Michigan schools are funded with a total of 24 mills on non‐homesteads. This is made up of a state‐wide millage rate of 6 mills on all property and 18 mills on non‐homestead property when approved by local voters. The Operational Millage passed most recently by voters in Charlotte allows the District to maintain the 18 mills on non‐homestead property. This millage allows the district to receive the full foundation allowance per student for district operational costs including employee wages & benefits, utilities, classroom supplies, transportation, athletics, custodial services, etc. Q: Aren’t there grants through the State of Michigan that school districts can apply for instead of taxing citizens? A: No, the State of Michigan does not currently have a grant available to assist our district with these type of maintenance and repairs of school facilities or grounds. Q: Will administrators receive a bonus if this millage is passed? A: No, as mentioned previously, salaries and benefits are unallowable expenses. It is the job of the administration to make sure that our district facilities and grounds are held to the highest standards. Finding a funding source to make sure this task is feasible is a component of the job. There will be no bonuses, pay raises, or stipends associated with the passage of this millage request. Q: Have other communities passed a Building/Site Sinking Fund for their school district? A. Yes, several communities have elected to support their local school district in this manner. The State average is 1.3717 mills. Below is an excerpt of the complete list which can be found on our website (referenced below). Grand Ledge 0.8000 Potterville 4.9905 Mason 1.0000 Coldwater 0.9744 Owosso 3.0000 Williamston 1.0000 Marshall 1.0000 State Average 1.3717 Hanover Horton 1.0000 Q: Is Eaton RESA (Regional Educational Services Agency) a part of Charlotte Public Schools? A: No. Eaton RESA is a separate entity, governed by a separate board, under separate leadership, and operating under different state mandates than a local school district. The recent circumstances at Eaton RESA are completely unrelated to Charlotte Public Schools. The Board and administration of Charlotte Public Schools continues to be deeply concerned and is monitoring the situation closely. The interim superintendent referenced in recent press releases is associated with Eaton RESA…not Charlotte Public Schools. Q: Can’t you cut administrative costs from the budget and use those funds for this work? A: Charlotte Public Schools has reduced administration over several years of budget reductions and is operating as one of the most efficient school districts in the State of Michigan. Charlotte Public Schools is ranked in the top 25% in the state. Within the last three years we have reduced two central office administrators, one program administrator, and one building administrator…these following several years of administrative reductions. Q: It seems like the majority of the facility plan is only related to athletics. A: In fact, only a very small portion of the facility audit (full report can be found at the website listed below) is related to athletic facilities. Only 3% of the total maintenance/repair projects listed in the report are related specifically to athletics. *Please note that the items on page 24 of the report are items for future bond issue consideration. They are not items that can or will be accommodated by this millage request. Updated 8.24.2015 Q: Can’t you just reallocate other budget items to cover these expenses? A: The majority of our budget is spent directly in support of students. Reducing these budget lines in order to accommodate major facility repairs would mean less services to students. As an example: Repairing or replacing only 25% of the roof at Parkview Elementary costs approximately the same as two teachers for one year. Q: How can we be sure that funds will be used properly? A: The funds associated with a building and site sinking fund are very restrictive. These funds will be kept in a separate restricted fund and will be audited by an external CPA firm as required by the State of Michigan on an annual basis. The report will be published on our transparency web site by November 30th of each year. Q: What if I have more questions? A: More information can be found on our website: www.charlottenet.org/sinking_fund or by calling the Superintendent’s Office at (517) 541‐5102. Like our Facebook page and keep an eye on our website home page for updated information. Also, watch our website and social media pages for information on upcoming community forums. Updated 8.24.2015