Hi, everyone, I'm Dan Garrett and running for Geneva 304 School Board in April 2013.
I have an interest in the finances and bond debt of the schools, since that is my field of expertise. I'm concerned about our debt structure and debt service payment increases, the recent hikes in our tax rates, our budget process and reserve balances. I've reviewed the annual financial disclosures we make to the market, and these are the numbers and my priority issues / thoughts that come to mind.
First, the total levies requested has risen 33% while enrollment has been flat: Why and what can we do? The total levies extended has grown from $60M to $80M (33%) over the past six years, when enrollment remains at 6,000 students. Only $4 million of that $20 million jump is due to more bonds added in 2007, the remaining $16 M jump seems high compared when balanced against no growth in number of students. I say "seems" because I need details and some history, but on the surface, my neighbors and I are asking "how can this be?"
Second, even with no new debt, our debt service will rise 66%. Our unusual bond structure has our payments growing from $15M in 2010 to nearly $24M in 2017. This means our tax levy request must go up another $9 million by 2017 just for existing debt promises. We are at our borrowing legal limits, and most of debt cannot be refinanced at lower rates —so we have few financing options from what I can see. We have seen abatement using reserves to try to ease the pain, but that is just taking from one budget pocket to pay another budget expense.
Third, the tax base is stable to shrinking in ability to pay. The absorption of that extra $20 million in budget the past six years, plus the unavoidable stepping up to a $9 million increase in debt service, has been/will be borne by the same number of houses and slightly lower sales taxes than we had in 2006. Construction permits were running near $30 million in 2006-2008, from 2009 to 2012 new Geneva construction has be around $1 million annually. Estimated Valuations used for tax rate calculations have also been declining, no news for those selling or trying to refinance at current appraised values. Unemployment rates for Geneva were 3% in 2006-2007, The past 3 years are closer to 8%. Incomes have been flat or declining on average. Most homes in Geneva are worth between $200,000 and $500,000, so on average your taxes have been climbing roughly $300-500/year as values and income have dropped. Part of the reason values are dropping, is that the property tax hikes discourage buyers by reducing affordability.
Altogether, our house values are down, sales tax revenue is down, state funding is down, incomes are down, our school debt payments are rising, unemployment has doubled, our school budget requests keep rising (up 33% from six years ago), and our tax bills are up about 35% roughly $1,500 to $3,000 per house in 5 years. This trend cannot continue, so my goal is to review our debt, our finances, and explore what other board members have considered then offer cost-effective solutions that maintain the exceptional education our kids achieve, but at a cost we can afford for the long term.
Whomever we elect to the school board come April, pray for wisdom and insight.