Ways to pay for new schools

GRAND JUNCTION — Colorado law gives school districts five basic options to specifically fund new school construction.

One of the methods is meant for small, cash-strapped school districts.

Another would raise taxes quickly for little pay-off.

Two more options take money from limited existing funds in a school district.

The fifth option will appear on this year’s general election ballot.

Mesa County Valley School District 51 will ask voters Nov. 4 to approve a $185 million bond issue and a $6 million Taxpayer Bill of Rights override. The bonds will pay for two high schools, two elementary schools, a middle school, land, repairs and a switch to full-day kindergarten district-wide. The override is for the expense of operating the new schools.

It will take 25 years to pay off the bonds with a property tax increase. Based on the school district’s current assessed value, the bonds will increase taxes by $55 a year for every $100,000 on a person’s home and $200.39 a year for every $100,000 on a person’s business or vacant land. The override will cost people less every year as property values increase, but starting out, property tax per $100,000 will increase by $29.56 for homes and $107.68 for businesses because of the override.

Mesa County residents living in District 51 boundaries will keep paying off 1996 and 2004 bond issues and TABOR overrides until 2016, and keep paying on 2004 bonds and an override until 2024.

Local schools are filling with students — 591 new kids showed up to the first day of school this year, bringing the district to nearly 22,000 students. District leaders decided to try to build new schools with bond money because it seemed the best route, said District 51 Executive Director of Support Services Melissa Callahan DeVita. A 14-year-old school financing formula that barely acknowledges population growth keeps District 51 one of the 11 lowest-funded school districts in the state. And other methods for getting construction dollars weren’t an option or enough, Callahan DeVita said.

The first place the district may have looked for money is in its budget. The 2008-2009 budget includes plans to spend $215.7 million. Of that, $6.3 million is in the capital reserve fund, which pays for purchasing land, buildings, equipment, furnishings, leases, school buses, software licensing agreements, repairs and construction of new schools.

More than $120 million goes to teacher and district employee pay, utilities, text books, supplies and transportation; debt service for past bonds gets $11 million; food service gets $7 million; insurance gets $14 million; student activities get $6 million; and the rest goes to various grants and programs.

The district can only shuffle $5 million from one fund to another. And even then, that’s for emergencies, said District 51 spokesman Jeff Kirtland. The capital reserve fund has paid $1 million a year for a four-year lease agreement with Dell for computers since last year. So that leaves $5.3 million for other capital needs like repairs and new schools. It takes $14.5 million to build an elementary school, $26 million to build a middle school and $42 million to build a high school. The district could shore up all of its capital reserve funds and build as they went, but they’d have to cut out all repairs, land, equipment and lease purchases in the meantime.

The school district has two other options for gathering school construction funds that require voter approval. The Special Building and Technology Fund allows a district to levy up to 10 mills for up to three years. The money can be spent on land, construction or installing security, information or instructional technology systems in a school. The fund would raise taxes higher — although for a shorter time period — than a bond issue, to $79.60 a year on a $100,000 home and $290 a year for a business of the same value. But since the tax would last up to three years instead of 25 like the bond, District 51 Budget Director Vi Crawford doesn’t think it would bring in enough money to build the projects the school district wants.

“It’s still a (tax) levy. We’ve never gone there,” Crawford said.

That leaves another ballot option, the loan program for capital improvements in “growth districts.” The problem with that is the school district doesn’t qualify as a growth district. A school has to have a certain amount of growth three years in a row to qualify, and the district took a dip last year. Callahan DeVita blames the dip on the opening of state charter school Caprock Academy last summer and a tight housing market.

The final alternative is for the school district to apply for up to $1 billion through the Building Excellent Schools Today (BEST) program. BEST is a lease-purchase agreement between the state treasury and a school district to build and remodel schools. But District 51 is too big for this option. The program, which became Colorado law three months ago, was designed for school districts with too few students and too little money to raise dollars in other ways.

“If we applied, they’d reject us,” Callahan DeVita said.

There are other methods out there for getting money. The school district is applying for a full-day kindergarten grant, for example, that could pay for part of the $2.5 million to $4 million expense of converting all District 51 elementary schools to full-day kindergarten. Ten schools already have full-day programs, but all are required by law to have full-day kindergarten in the next five years. If the district gets the grant, that could cut a small piece out of the bond issue needs.

Growth is also contributing to school funds. The district collects $750 for every new lot or home in Grand Junction, Fruita and Palisade. Still, even if every one of those 591 new kids had his or her own home, that only brings in $443,250 — just 3 percent of the cost of an elementary school that would be more than full with that many students.

School district leaders looked at using severance tax dollars on minerals extracted from state land, but the money usually goes to community project grants, said Callahan DeVita, such as the one that helped renovate the old Riverside School. The mill levy freeze isn’t any help because the increase in money generated locally just lessens the state’s contribution to education funding.

There is the option of buying short-term certificates of participation. Certificates paid for Redlands Middle School. It took $1.3 million a year, though, so that system, which borrows from the state and pays it back through existing district funds, works best for one school at a time, said Callahan DeVita.

“I’m not sure it’s a very smart way to go,” she said.

Reach Emily Anderson at eanderson@gjfreepress.com.