Superintendent stresses financial responsibility of $45 million bond issue
Editor's note: Continuing this week, The Eudora News will run a series of stories examining different aspects of Eudora USD 491's proposed $45 million bond issue.
Eudora USD 491 Superintendent Marty Kobza makes sure to cover certain points when explaining the financial logic behind a $45 million bond referendum to be put before voters Nov.6.
"I think the key is that we don't want to mislead people and say this is free or doesn't cost any money," Kobza said. "It does obviously cost. It's just when we're talking about a zero-mill increase, we're talking about from what the district is going to assess from one year to the next would be the same amount of money."
The timing for the bond is especially important to the district because of several internal and external factors, Kobza said.
One factor is that the bond that used to pay for what is now Eudora Middle School is scheduled to be paid off and no longer require an annual assessment.
"We use those mills that were being used to pay for that building, and we use them to pay for the new bond issue," Kobza said.
The district gained further room by paying off the middle school early, Kobza said.
The municipal bond market also is in the district's favor, Kobza said.
When designing the bond issue, architects assumed a bond interest of about 5 percent. Current municipal bond rates are selling at about 4.25 percent, Kobza said.
In addition to low bonded interest rates, the district also would use state aid for capital improvements. The aid would cover 38 percent of the total bond cost, Kobza said.
"It was to help property-poor districts and give them at least the ability to build new facilities where before it was unaffordable to raise all the income," Kobza said.
When projecting the bond's overall cost, officials also took into account a 5 percent growth in assessed valuation.
"We feel comfortable with that being a conservative number," Kobza said.
Without any other adjustments, the additional payments to retire the $45 million dollar bond would lead to an overall mill increase of about 1.3 mills, Kobza said.
To keep the overall mill rate even, the USD 491 Board of Education would adjust mills levied for capital outlay.
"The capital outlay mills are a contingency plan should something unforeseen happen with the interest rate or the assessed evaluation in Eudora," Kobza said.
The board has the ability to levy up to 8 mills in its capital outlay fund.
Although the district is currently at the max, it would have room to adjust because some projects currently paid for with capital outlay funds are rolled up into the bond, and covered by the 38 percent state aid.
"The reality is that it will not take a lot of internal adjustments in order to keep the mill rate flat," Kobza said.
Kobza has found challenges in explaining the finances of the bond.
"I think the biggest piece is that scenario where it's almost too good to be true and people are skeptical that the board could hold the mill rate steady for one year to the next and bring on a $45 million bond issue," Kobza said.
It's been an issue to sit down with as many people as possible to walk them through the aspects of the bond, Kobza said.