Voting on Bonds vs Tax increase for School Repairs

christineApril 3, 2009

The school district I live in is having a referrendum for new funds for school repairs and restoration. In the past funds have come from tax increases or (municipal?) bonds. This time they did a phone poll and determined 1) people are in favor of the repairs but 2) people are not in favor of raising taxes in this economy. I know very little about bonds, but it is my understanding that regular municipal bonds start paying out immediately for a period of time, 20 years for example.

So they have determined they want to issue bonds again. But not the same kind. These bonds will not start paying for 20 years. At which time, I can only presume, taxes would have to be increased. Issuing these bonds would also max out the district's credit line for the next 17 years. (There are other bonds expiring prior to these which would release some of the credit.)

I think people will vote yes on this because it is a 'free' school upgrade with no tax increase. I do not think most people realize the impact of the type of bonds that are being suggested.

Am I missing something here or is this just a way to put off today's debt until tomorrow? Which, isn't that HOW we got into this awful situation this country is in right now? Of course none of this is being pointed out in the propaganda being distributed.

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patser

Municipal bond deals can be structured in different ways. Some, like you say, are issued and then mature annually starting right away. There are others, though, where the investment advisory firm contracts with the municipality to issue an option today so that the muni can have the right to issue at a later day. In this case, an option premium is paid by the muni up front. Deals can be structured in lots of different ways. In addition, there are accounting rules that define how the municipality needs to accrue the obligation for repaying. Without additional info, it's not possible to say if your s/d is trying to pull one over.

I'm also in greater Chicago and have worked with bonds for my entire career. What s/d are you referring to? I may be able to find out more of the specifics of the deal you are referring to.

    Bookmark   April 3, 2009 at 8:14PM
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christine

D303. I read that it is a CAB, not sure if that automatically makes it a postponed payment. I think I tossed the original literature that stated all these details. :(

A big argument by the people who oppose this is that all this does is upgrade buildings, and apparently our test scores have rapidly been falling, so focusing on quality education over aesthetically pleasing buildings should be the priority, which I 100% agree with.

Here are a few sites, which may or may not be worth looking at, I didn't find the info I was interested in there other than some stats on how it will ultimately increase our taxes and how badly our test scores have fallen.

http://www.suburbanchicagonews.com/beaconnews/news/elections/1508838,District-303-referendum_el040209.article

http://www.dailyherald.com/story/?id=283331

http://www.kcchronicle.com/articles/2009/03/16/r_9f3wbsuesnt4ysuilrfw/index.xml

This is the site for citizens against this bill. I believe what they state may be out of date, however. They do state that voting the measure down allows our taxes to go down, while voting the measure in ensures it will not go down and in fact there is no guarantee it won't go up due to these bonds (but this could be based on one of the old recommendations that isn't the one actually on the referendum since the site is out of date), . The download PPT has a lot of information on it I am not sure I totally understand, but maybe you would.

http://www.cfar303.org/

I would really like to better understand what exactly is happening with these bonds if you can find anything out. I really appreciate the offer!

    Bookmark   April 6, 2009 at 12:15AM
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joyfulguy

On a radio program on Sunday morning discussing the potential future for our economy and society, one of the important statements that caught my ear was that, since the future depends on innovative people, that we should cherish our teachers, especially the investigative, curious ones that are innovative, especially that kind who teach our youngest kids.

Those kids need to develop various aspects of their minds to their full extent, for they will be the ones who keep our society innovative and on the edge of discoveries in future - and they are happening at an increasing rate.

Remember - it's our 5 year olds who teach us how to operate the new electronic toys!

So - let's cherish our teachers.

And equip our kids well.

So that they can be at work at higher profile work than flipping hamburgers when they become adults.

So that they can fund your pensions ... at 80, I'll be out of the game within a few short years.

Do you figure that there may be unemployment in heaven?

How about one group being able to arrange things so that they can bully others?

If we figure that it won't work in heaven - why do we do it here?

ole joyful

    Bookmark   April 6, 2009 at 1:53AM
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patser

If you google "schedule of outstanding bonds d 303 st charles", you'll get a series of hits.

This one, which I can't copy a url to, is a power point presentation by the financial advisor PMA Securities Inc about what's going on. Start by taking a look at this.
[PPT]
Presentation to
File Format: Microsoft Powerpoint - View as HTML
Jan 20, 2009 ... St. Charles Community Unit School District 303 ... All of the DistrictÂs outstanding debt are current interest bonds. ...
www.d303.org/Portals/0/summit303/docs/012009_St_Charles_303_Board_Meeting2.ppt - Similar pages

Here's the 2008-2009 operating budget for your district...
http://www.d303.org/LinkClick.aspx?fileticket=K9iabzkzfDc%3d&tabid=83&mid=3952

I'll do more digging later today.

    Bookmark   April 6, 2009 at 6:32AM
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