Irresponsible Tax Bill Impacts Public Education

We all know public education has been at the receiving end of recent policy changes from the Secretary of Education’s office as well as years of federal and state legislation intended to “reform” public education, and designed to defund and dismantle it.

In this December 3, 2017 publication, The GOP’s War on Learning –

Republican tax bills are a disaster for public education, and what’s happening at the state level isn’t much better

By Jeff Bryant / Education Opportunity Network https://www.alternet.org/gops-war-learning

Bryant explores how the GOP tax bill passed by the Senate late last week and the House’s proposed version, along with what many individual states have imposed is hurting public education. No surprise to any of us. This truly comes home when we can see how in this section, in particular, it could have an impact on our own Jeffco School board’s recent decision and actually end up costing the district and its taxpayers millions of dollars.

In his article, Bryant writes:

“Another feature of the House bill would increase how much schools pay for long-term debt by eliminating a tax exemption school districts get when they refinance their debts at lower interest rates using certain types of bonds.”

“… Taking away any ability to write off some of that interest as a tax exemption would decrease money districts have to pay for teachers and student learning opportunities.”

At the November 16, 2017 Jeffco School board meeting, the board heard from Brian Kelso, managing director of Public Finance, Robert Baird & Co. to discuss the district’s opportunity to take advantage of this exact tool the House bill would eliminate, thus eliminating an opportunity for present value savings to the district’s taxpayers of over $3 million. To be exact: $3,387,553.

As posted on the district’s webpage:

https://www.boarddocs.com/co/jeffco/Board.nsf/files/ASXT3F74F2D4/$file/Jeffco%20Schools%20Board%20Workshop%20Presentation%20Bond%20Refunding%2020171116.pdf

The board was hearing from Kelso:

“…to receive market information on ratings and interest rates for refunding existing general obligations bonds that would yield a net present value savings for the school district …”

“The district’s finance team monitors interest rate conditions in an ongoing basis to evaluate opportunities for refinancing all or a portion of the district’s outstanding general obligation bonds.  A favorable interest rate environment was exhibited in 2017 which initiated discussion among the finance team and investment bankers. After analysis, it was determined that a portion of the district’s maturities of the Series 2012 Bonds can be refinanced to realize a significant savings for the outstanding term of the bonds.

“Assuming estimated current market interest rates and a closing on January 17, 2018, present value savings are $3,387,553 or approximately 5.66% of the refunded par.”

Additionally, the district’s independent Financial Oversight Committee wrote their own recommendation to move on this opportunity – also posted on the district’s website:

https://www.boarddocs.com/co/jeffco/Board.nsf/files/ASY2RE0367A4/$file/2017%2011%2007%20FOC%20Conclusions%20Recommendations.pdf

“Bond Refunding Opportunity

  • R.W. Baird presented information on the municipal market environment that supports a bond refunding opportunity to save the district money.
  • Savings from the potential bond refunding is estimated at 5.6 percent which is above the 3 percent minimum that complies with the district’s debt policy.
  • The refunding does not present additional financial risk for the district.
  • Due to pending proposed tax legislation changes that could eliminate advance bond refunding, as well as current favorable interest rates, timing of the bond refunding opportunity requires immediate consideration.”
  • This is a tool the district has used to save its taxpayers dollars over the years, and one of the reasons the district has been able to maintain such a high rating.

“THE DISTRICT’S HIGH QUALITY CREDIT POSITION … AA2 RATING SLIGHTLY EXCEEDS THE MEDIAN RATING OF AA3 FOR U.S. SCHOOL DISTRICTS. NOTABLE FACTORS FOR THE FAVORABLE REPORT INCLUDE THE DISTRICT’S ROBUST FINANCIAL POSITION, EXPANSIVE TAX BASE, STRONG SOCIOECONOMIC PROFILE, OUTSIZED PENSION BURDEN WITH AN EXTREMELY SMALL DEBT LIABILITY, AND SURPLUS OPERATING MARGINS DEMONSTRATING STRONG FINANCIAL MANAGEMENT.”

http://www.supportjeffcokids.org/jeffco-restored/

In short, this is just one of many reasons public education supporters need to contact their representatives in Washington about the proposed House Tax Bill.

Call your representative and senator in Washington, D.C. right now:

Sen. Michael Bennet: 202-224-5852

Sen. Cory Gardner: 202-224-5941

Rep. Jared Polis, D-Boulder: 202-225-2161

Rep. Ken Buck, R-Greeley: 202-225-4676

Rep. Ed Perlmutter, D-Jefferson County: 202-225-2645

Rep. Scott Tipton, R-Cortez: 202-225-4761

Rep. Mike Coffman, R-Aurora: 202-225-7882

Rep. Doug Lamborn, R-Colorado Springs: 202- 225-4422

Rep. Diana DeGette, D-Denver: 202-225-4431

And, while you’re at it, include funding CHIP and authorizing a Deferred Action for Childhood Arrivals (DACA) program to protect children.

Also, feel free to call the other Colorado legislators if you’re willing to work to support them or against them in the future, based on their actions.