3A 3B Myths and Truths

Jeffco Schools is a public entity with buildings intended for use by the entire community. This means our buildings endure more than just student and staff traffic, but various community groups and organizations use our facilities for social and sports activities, as well – year round.

More than 115,000 people use the facilities of Jeffco Schools EVERY DAY (176 total buildings.)

Think about that kind of wear and tear!

 

The National PTA “believes the school environment significantly impacts students’ academic achievement…

…affirms that adequate school facilities are not only crucial to the success of our nation’s public schools, but they are also a reflection of and resource for the communities in which they are located.  Since school facilities are a capital asset constituting a large investment of public funds, the National PTA desires that all school facilities encourage community utilization and involvement…”

http://www.pta.org/advocacy/content.cfm?ItemNumber=1277&navItemNumber=4616

 

A handout from another organization is going around that contains a lot of inaccuracies, myths, outright lies, and misleading information. We find it unbelievable and unethical that there are people who spread this kind of misinformation when they know that it impacts more than 86,000 kids. That’s the bottom line. 3A and 3B are about our kids, supporting public education and our future. We are here to correct this information so you have the facts.

 

Myth: The Bond is a “Buy Now, Pay Later” Scheme

Truth: The bond structure is intended to mitigate tax impact.

All one level debt = a level mill levy

This allows for the required consistency in payment amounts, just like mortgages. (When we sign those final papers on our home loan, we like knowing the amount we pay in month one is the same amount we will pay in month 18, month 36, etc.)

Since ’92 this has been a common business practice for public entities, which cannot function on a cash base structure, i.e., Fire Departments, Police Departments, City of Arvada, City of Lakewood, Jefferson County, State of Colorado, etc.

Interest rates are at an all time low. From the Wall Street Journal, American Paradox: It’s Never Been Cheaper for Cities and States to Borrow Money…

“Plunging global interest rates have made borrowing cheaper than ever…

New government-bond issues have dropped to levels not seen in the past 20 years.”

 

Myth: The billion dollar bond, if paid in equal installments over 20 years would cost about $30 million a year but our children and grandchildren will pay over $70 million a year.

Our children and grandchildren will pay over $200 million more in interest payments than necessary because of the payoff scheme.

Truth:  If we use that math, we would pay 2 ½ times more.

Thankfully, we have highly qualified staff with extreme expertise who understand debt structure and finance models and can save tax-payer dollars.

Finances can be complicated for some people to understand. The creator of these myths just doesn’t understand the big picture or finance. This is not a game to be played when real students are at stake.

 

Myth: This will be a 25 year bond, not a 20 year bond, lengthening the repayments 20% more than what was discussed in the community.

Truth: This is just an untrue statement intended to mislead the public. State law allows up to a 25 year term.

Think of your home mortgage. Most home buyers finance their home mortgages over 15, 25 or 30 years to keep their monthly payments lower because they have other financial responsibilities. So do school districts! We also know that school funding is a statewide issue and know there won’t be additional money anytime soon. In fact, there may be another decrease in 2018 due to TABOR.

25 year loan on a mortgage= smaller monthly payment with interest paid over the life of the mortgage loan.

10 year loan on a mortgage= almost twice the size of the monthly payment on the 25 year loan also with interest paid on the mortgage loan.

 

Myth: Less than Half of the Bond Funds are going to fix facilities

Truth: The district’s true facility needs are in excess of $1.2 billion:

$800 million needs comes from the FCI (Facility Condition Index) analysis:

    • $550 million in current needs
    • $250 million in Education and/or Technical upgrades
    • Does NOT include any new or additional construction

 

Myth: Over 20% of the Bond Proceeds are for Wall Street fees and cost overruns

Truth: Less than 7/10 of 1% in fees and cost.

Not to Wall Street, but a local business.

 

Myth: 22% not allocated at this point

Truth: 78% of what is allocated is “hard cost” (brick & mortar)

22% is designated for engineering, architectural designs to meet needs based on soil, space, etc.

Note: The district does not get to select the land provided them by the developer for the school site.   Law requires the developer provide the plot of land for schools; sadly, the developers do not often designate land that allows a school to be built easily. Often, it is the land with the least value and most need for additional work, which includes these additional soft costs.  

 

Turf fields and gymnasiums:

Myth: Over $30 million of the proposed bond will go toward building 2nd gyms and turf fields.

Truth: It’s a matter of safety as well as educational equity! (Jefferson Academy was able to finance their own athletic field from private donations.) Field conditions can and have impacted the safety of our students.

Our fields are used year round for more sport teams than ever before. This is extreme wear and tear on turf that used to be able to “rest” during an off season. There is no longer an off season for our fields, they are used year round, consistently.

Anyone who has participated in sports will tell you that falling on rock or packed soil with no turf results in some very painful injuries beyond falling on turf. Why would we not try to protect our student athletes from severe injury?