Bond & Sinking Fund Proposal Info. (pre-election)

What is a bond?

Most school construction and major renovations projects, as well as technology and safety needs, are paid for with bonds.  Upon voter approval, a district borrows a lump-sum dollar amount, which is paid back by taxpayers over a set period of years with interest and fees.  A special unlimited tax is set up to pay off each bond.  Depending on the interest rate environment, bonds can be refinanced in later years to save the school district and taxpayer’s money.

Allowable uses of bond proceeds:  Constructing new school buildings, construction additions to existing school buildings, remodeling existing school buildings, energy conservation improvements, asbestos abatement, land purchase, site development and improvements, athletic and physical education facility developments and improvements, playground development and improvements,  direct bond program costs such as professional fees, election fees, issuance costs, qualification fees, insurance fees, final audit costs, school bus purchases, loose furnishing and equipment purchasing, technology purchases limited to hardware and communication devices that transmit, receive or compute information for pupil instructional purposes only, and operating software or customized application software application software accompanying the purchase of hardware and communication devices.

Unallowable uses of bond proceeds:  Repairs, maintenance, or maintenance agreements.  Supplies, salaries, service contracts, lease payments, installment purchase contracts, automobiles, trucks, or vans.  Portable classroom purchased for temporary use.  Uniforms or textbooks. Upgrades to an existing computer operation system or non-customized application software.  Computer training, computer consulting, or computer maintenance contracts.  

What is a sinking fund?

A sinking fund millage is a limited property tax to fund major repairs and renovations to school buildings.  The tax is levied each year and the revenue generated is used to address building improvement identified by a school district.  State law allows a district to levy a sinking fund millage of up to three mills for 10 years.

Using a sinking fund, the school district accesses the money on-hand to pay for projects as they are completed.  Since the school district has not borrowed money for the projects, no debt is incurred and it does not pay interest on the money used.  

Funds generated through a sinking fund can only be used for construction, renovations and repairs of buildings – not for operating expenses, salaries, benefits or routine maintenance.  In addition, this money cannot be used for bus replacement.

Why are we asking for both? – bridging the gap!

We have a $2.6 Million gap that needs to be filled between the proposed bond proceeds of $28,280,000 and the overall district facility needs.  By asking voters for a  .75 mill/year sinking fund it will provide OCS with approximately $4 million in additional revenue over a five year period that will allow us to accomplish all of the current district needs.  The sinking fund will also provide $1.4 million in technology for instructional technology and building security.