"But if it is believed that these elementary schools will be better managed by...any other general authority of the government, than by the parents within each ward [district], it is a belief against all experience." --Thomas Jefferson

Thursday, May 19, 2011

The Bond Dilemma and Board Meeting 5/17/11

As you probably know, Alpine School District will, most likely, be asking you to approve a $210M bond in November.  Before you continue reading, I hope you will take the time to watch the online bond presentation, if you didn't attend one of the meetings.  This way, I know you will have all the basic information and assumptions: the whys, the hows, and the how much.   The bond is divided into growth, renovations/additions, seismic retrofitting, and additional projects.  The additional projects will probably take a back seat to everything else. 

New Lehi High

The biggest change from the original draft proposal is a new high school for Lehi at the "Micron property" that the district already owns.  The estimated cost is $56M, but construction won't begin until 2014 at the earliest.  In that period of time, Lehi High will grow to almost 2500 students.  Part of the reason for the delay is the overall cost.  The bonds will be issued in phases to take advantage of the amount of current debt being paid off every year.  We attempt to keep our debt pretty much level; so as we pay off some debt, we don't go into so much more debt that it spikes both the debt ratio and the taxes.

Seismic Issues

In 2006, Reaveley Engineering did a very in-depth study of seismic issues in the district.  From that report, the district has been going down a path of seismic retrofitting.  The 2006 study didn't include some additional items that the district has included like high, unreinforced chimneys (all of which have been replaced).  Also, at the time of the study, there were projects already in process, and they were simply completed.  This is why some projects of a lower priority were done prior to others.  Also, our experience with having corrected some of the seismic issues is that the overall $54M price tag was way too low.  For example, Reaveley estimated the cost to fix Orem HS at $8M.  When we had actual bids from two different firms, they said the amount was closer to $16M.  It was the $16M price tag that encouraged the district to tear Orem down and rebuild a new school on the same site.  Before the final bond decision in August, the board should have additional information on the most "problematic" areas with better estimates from the companies that would actually be hired to do the retrofitting.  My personal thought is we are responsible to correct seismic (and any other obvious safety issues) in our schools before worrying about additional things like multi-purpose rooms, weight rooms, or the space center.  One of my colleagues clarified that having too many kids in a weight room can pose a safety risk as well.  Additionally, the difficulty with seismic issues is they are so dependent on so many unknowns.  I applaud the district for commissioning this study five years ago, and for embarking on a long journey to correct these issues across the district.  If there were a way to correct all the major seismic issues throughout the district on this bond, I'd be happy to do that.

Renovations and Additions

Some of the renovations and additions patrons discussed during the bond meetings were additional classrooms, weight rooms, PE rooms, tennis courts, etc.  An interesting comment at one meeting about how great Lone Peak's weight room isand how other schools in the district couldn't compete with them.  Then, at another meeting, people commented how Lone Peak's weight room needed improvements.  As one person put it, the process is really like a moving jigsaw puzzle.  We need to keep in mind that with limited resources, everyone can't have everything all at once.  And by the time one area is improved, another is going to need it.

Eagle Mountain Junior High

Another bond project is building a new junior high in the Eagle Mountain area.  Westlake High will be growing to 4000 students by about 2016 if they continue to house 9th - 12th grades.  The plan is to open a new junior high in Eagle Mountain by Fall 2013, taking students from Vista Heights and bringing the 9th grade back there from Westlake.  The district is hoping to secure property this summer and have the architechtural work and builders all set to begin work by Feb. 2012.  Before the property is purchased, the terms of the purchase will be made public, and the board will approve the purchase in an open board meeting. 

Other Thoughts on the Bond

As someone who is very concerned with additional debt, I would love to find a way to pay off our existing debt and finance these new buildings and improvements with cash.  And if it couldn't be done with this bond (because of the immediate needs), maybe we could put something in place to start down the road of pay-as-you-go for the next set of projects in five years.  However, it seems that most people are fine with the way things are.  About every 5 years, the district will go out for another bond, and build new schools, as well as renovate older schools.  The debt level will remain roughly the same, and the bonds will be aggressively financed for 15 years or less.  In order to do something other than "the way it's always been done", the changes would need to be very dramatic, very "outside the box".  Those ideas could be: modifications to the school year/calendar/attendance time, more online/distance learning classes, additional credits allowed for private lessons (e.g. music credits for private music lessons), a change in scope of the state core and graduation requirements, building smaller schools with less amenities, etc.  One of the concerns about building smaller, less fancy schools is they are also to double as community centers.  If one community gets all the bells and whistles, the other communities are concerned that they helped fund bells and whistles for someone else but didn't get any at their own schools. 

Another consideration, that has been absent in these discussions, is the impact of the Vineyard URA.  As I write, the URA is still going forward.  SB70 was passed this last legislative session, and it changes the vote on something like Vineyard from a 2/3 majority to a simple majority.  In effect, the school districts will be required to go along with every URA without a chance at stopping them.  Since the districts, on average, make up about 65-70% of the tax revenue collected from an area, there is no reason for any other taxing entity (city, county, etc) to not vote to support URA's.  The districts will make up the majority of the tax deferral, and the local community will benefit.  The schools and taxpayers throughout the district will be taken along for the ride by financing the bulk of these developments.  So, having said that, the URA, absent something dramatic to stop it, will impact you whether or not there is a bond.  Your property taxes will be increased, and it will look as if the district increased them.  So, when we talk about the property taxes going up $12 the first year and as much as $36 the fourth or fifth year, that is just the impact of the bond.  Vineyard will impact you the full $36 or more starting this first year. 

In short, I am very uncomfortable with debt, and incurring more is doubly difficult for me.  The district currently has $389M in debt, being paid off at the rate of $30M+ in principal and $15M in interest every year.  If there were a good way of eliminating our debt and applying that $15M in interest toward future projects, that is how I'd like to see things done.  However, as is, the debt is phased in, and its level is maintained.  If we must have debt, I think we are doing a good job at maintaining fiscal discipline on that front.  Additionally, we are obligated to the families in our district to provide a good, safe learning environment for the kids in our schools.  To delay addressing current growth and safety concerns just exacerbates the problem.  The current method is to bond every five years to fund the seismic/safety retrofitting, as well as new schools for population growth.  It is not my preferred method of operation, but until there is a better alternative, this is the system we have.


  1. How much of the bond would go towards seismic retrofitting?

  2. @Buffy: This is still undetermined. The board will finalize the projects associated with the bond by Aug. 9. If you have input on this, please send an email to the board.

  3. Wendy, thank you for this analysis. I'd love to see a brainstorming session where the goal is to "think outside the credit card."

  4. So ASD spends $15M/yr on interest on the debt? WOW.

    I also like the idea of funding new schools (for new neighbors) with a cash reserve, rather than with debt. After being used to build new schools for new neighbors, the reserve would be replenished by the expanded base of taxpayers.

    How cool would it be, to be one of the first districts in the nation to be debt-free and living within our means.

  5. @JaredC: Yes, it would be great to be one of the first districts to be debt-free! I'm on board!