A school district’s budget can be complicated, with about eight separate funds designed to cover specific operational or facility needs. Within those funds are often several “sub-funds” that are even more restrictive.
The fund that operates the hot lunch program, for instance, includes money that can only be used for food services. There are dozens of other examples of these mechanisms, which serve to prevent a district from taking money from one fund and using it for another aspect of its operations.
It’s our responsibility to ensure that, when making a spending decision for the district, the expenditures are accrued to the appropriate fund.
Our largest fund is the general fund. Sometimes referred to as the operating fund, it’s used to manage the district’s day-to-day operations.
When it comes to infrastructure and capital improvement projects, Iowa public school districts have three funding options outside the general operating fund. These funds cannot be used for general operating expenses. Likewise, using the general fund for large capital infrastructure projects is not a viable option, in most cases.
Over the last several months, we have focused on what are known as general obligation (GO) bonds, a funding mechanism specific to infrastructure. Accessing this funding stream requires at least 60 percent voter approval. It’s a high threshold in place to ensure school districts are doing their due diligence prior to bringing a bond issue before their voters.
Why? Because of the property tax implications. In our case, we are asking the voters to approve a $2.70 levy that will enable the district to sell $11.65 million in GO bonds. The proceeds of those bonds will be used to pay for the infrastructure and capital improvement projects that have been recommended by the task force, assembled last January.
The district also collects statewide sales tax revenue that can be used for capital improvement projects. Known by its more common acronym, SAVE, the district collected approximately $723,187.89 through the program during the last fiscal year. Of that, we used $580,939.60 as a payment for our revenue bond. (Our community may recall that we sold revenue bonds of roughly $5.1 million a few years back to pay for our K-8 renovations and addition.)
While the SAVE funding stream is not composed of property tax, it does permit and require the voters of the district to weigh in on how these funds are allocated. When you go to the polls on September 13, you will also be asked to approve what is known as a Revenue Purpose Statement (RPS). This lengthy document outlines all the different purposes acceptable for use of this fund. The RPS that we are seeking affirmation on is designed in a way to maximize the options available for infrastructure projects.
The third leg of this infrastructure stool is known as the Physical Plant and Equipment Levy (PPEL). While it can also be used for capital improvement projects, it serves as a great source of revenue for purchasing school buses. For the fiscal year that began July 1, we anticipate revenue collections in PPEL of roughly $436,415. During the last fiscal year, we purchased a school bus at a cost of $97,753 and an accessible van for $26,988.
While the $1.34 levy has been in place in Hudson for decades, it does require voter reauthorization every 10 years. Renewal of the PPEL is not a tax increase, but rather a continuation of a levy that has been a mainstay of our capital improvement strategy for decades. Voters will decide on renewing the PPEL on September 13, as well.
The remainder of both the SAVE (after paying the bond) and the PPEL (after purchasing school buses) continue to serve important purposes for the district. For example, these funds are used to maintain our computers in the district. We budget $216,000 in capital outlays for such items as computers and non-instructional software. Classroom furniture routinely needs to be replaced, and these revenue streams are an appropriate funding mechanism for that.
And, of course, we must be prepared for a wide range of emergencies that could arise. For this, we budget $100,000.
All three of these funding streams work in tandem to ensure we have top-notch facilities, stay up to date with current technology, and ensure our buses are safe and well maintained. Without these resources, the district would be forced to make difficult choices and reorder our priorities.
If you have questions about any of these resources, you are encouraged to reach out! If you would like to submit a question regarding our upcoming referendum, please submit it to our website at www.hudsonschoolbond.org.
Don't forget to vote on September 13!
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