BELLE FOURCHE –– The Belle Fourche School Board held extensive discussions related to its 2021-2022 capital outlay budget and long-range facilities plans during its Feb. 8 meeting, narrowing the district’s educational vision with future capital planning.
During the meeting, the district held a first reading for its long-range facilities plan and discussed its capital outlay fund, getting a jump start on the 2021-2022 budget, which typically goes before the board for approval at its May meeting.
Susan Proefrock, the district’s business manager, began the presentation with the revenue arm of the capital outlay preliminary budget. Local tax dollars make up the bulk the district’s capital outlay revenue, but Proefrock said there is a chance the district could still get some federal funding to bolster the fund.
The district’s current assessed valuation, based on its property tax base, is approximately $600 million, which generates roughly $1.8 million in taxes, Proefrock said. The district imposes a $3 per $1,000 of taxable valuation on the property owners within the district’s purview. That is the maximum allowed by state law.
For the 2021-2022 capital outlay revenue, the tax revenue totals $1,876,000.
“And then we have fund balance designated to finance,” she said. “And what that means is that’s money that’s in our capital outlay fund balance that we’re carrying over into the next fiscal year to help fund certain line items in our budget.”
Proefrock explained that it is common practice for the district to build pots of money to fund upcoming projects that it wouldn’t otherwise be able to finance in one year’s budget.
And with the addition of $1,551,000 worth of fund balance, that brings the district’s total means of finance for next school year’s capital outlay budget to $3,427,000. And that proposed total could change in the coming weeks, as Proefrock said the district has a handful of projects currently out for bid and it is difficult to predict where those bids will come in, financially speaking.
“I want you to be aware that the money is there in the capital outlay to fund these projects,” she said.
In addition to improvement projects, another aspect related to the capital outlay budget is debt. For the 2021-2022 school year, the district is obligated to pay $544,721 worth of debt service payments.
To finance facility improvements, school districts can issue bonds that allow them to borrow money for capital projects. Districts repay the principal and interest, known as “debt service,” typically over a 20-year period.
A district’s capital outlay fund is a kitty intended by state law to meet expenditures of which result in the acquisition of or lease of or additions to real property, plant, or equipment. Such an expenditure is required to be for land, existing facilities, improvement of grounds, construction of facilities, additions to facilities, remodeling of facilities, or for the purchase or lease of equipment. It may also be used for installment or lease-purchase payments for the purchase of the above items, which have a contracted terminal date not more than 20 years from the date of the installment contract or lease-purchase and for the payment of the principal of and interest on capital outlay certificates issued pursuant to state law.
Teachers and school staff are paid through the district’s general fund and state law limits how capital outlay money is transferred to the general fund.
The district currently has a capital outlay certificate series called “Series 2017,” which is a combination of refunding debts obtained for renovations at its middle and high schools and in the construction of the career and technical education (CTE) facility, just north of the high school. The combined Series 2017 series debt payment amounts to $389,599 from the upcoming year’s budget.
Additionally, a $90,000 payment is scheduled toward a USDA loan procured for the CTE building.
“And that goes out for 10 years, so the last payment on that will be 2028,” Proefrock said.
Lastly, the district has a 2007 Qualified Zone Academy Bond payment of $16,667, and a combined $48,455 for two 2010 Qualified School Construction bonds.
“And those were for North Park and South Park projects,” Proefrock said. “It’s a tax credit, so I apply twice a year to get refunded from the IRS for the interest portion of that qualified school construction bond.”
A Qualified Zone Academy Bond is one of several types of tax credit bonds which allow a credit to investors that hold such bond on one or more of the quarterly credit allowance dates. The bond may be issued to rehabilitate or repair a public-school facility, or to provide equipment for, develop educational course materials for, and to train teachers and other school personnel at a facility.
A Qualified School Construction Bond is intended to be used to construct, rehabilitate, or repair a public-school facility or to acquire land upon which a district intends to construct a facility.
“So, we generate … about $1.8 million in capital outlay (revenue), and about $550,000 or so of it goes towards debt payments,” Proefrock said.
Next Proefrock walked board members through how the preliminary budget is currently laid out for the coming school year and what expenditure are contained within it.
Among the disbursements are: $216,000 for technology and associated licensing, which Proefrock said will primarily go toward computers; $125,000 for the building of a greenhouse down the block from the CTE building where in 2018, the district purchased property with the intent of expanding its CTE offerings; $55,000, approximately half the cost of repairing the roof of the high school library, slated to occur in two years; $650,000 to remodel upgrade the heating system in the district’s central office; $300,000 for HVAC upgrades at South Park Elementary; and $350,000 toward a kitty to build six new classrooms at South Park.
The potential remodel of the central office was of specific interest to the board members. Superintendent Dr. Steve Willard said the office, which was built in 1984, is due for some upgrades ranging from making the bathrooms ADA (Americans with Disabilities Act) accessible, upgrading the heating system, and replacing the aging windows.
“What we’re looking at and what was proposed by our architect was to get a construction manager; hire somebody to go get … estimates close to what the costs will be …,” he said, adding the $650,000 price tag is merely an educated guess. “So that’s why it would probably be a good idea to get a construction manager hired that could put all this stuff together, go out and put estimates together … so you’d have an idea what everything would cost.”
Board member Mike Tyndall inquired about the possibility of seeking the hiring of a local contractor in the effort of spending tax dollars locally.
Willard agreed with the idea.
“I’d love to keep things local instead of having to go out to a bigger construction company,” he said.
Board member Scott Reder asked the necessity of the remodel project, specifically questioning whether the money could be better spent on something that would more directly benefit district students.
“Because it’s a big number,” he said, adding that members of the community regularly question board members about expenditures of this magnitude. “I just want to know that what we’re doing is absolutely necessary ...”
Willard said the project has been on the district’s agenda for several years and that the proposed funds have not been subtracted from another project on the horizon. Additionally, he said that the district may be able to utilize some of the federal CARES Act funds to offset the project’s costs.
“But a percentage could be able to be paid for through those funds,” Willard said, adding that any unused funds are required to be sent back to the federal government. “We don’t have another viable project that we’re not addressing right now.”
The board gave Willard permission to seek construction manager proposals to begin initial considerations for the central office project.
Combining the debt service payments with the proposed expenditures brough the preliminary capital outlay budget total to $3.427 million.
The long-range facilities plan was also examined by the board. The plan, which is separated into two categories, arranging improvements and additions to district facilities over one to five years and five to ten years, is continually modified and updated by the board on an annual basis.
Some of the projects included within the one-to-five-year plan are: the addition of lockers to the third- and fourth-grade wings of South Park Elementary, security camera upgrades at both North and South Park Elementary, complete plans for the redesign and remodel of the central office, upgrade the middle school football and soccer complex, begin replacement of 17 boilers at the middle school, recrowning of the high school football field, and building the greenhouse north of the high school.
The five-to-10-year plan includes the renovation of the south end of South Park Elementary and develop plans for the addition of six classroom areas; the hiring of an architect for designing addition to gym to include locker rooms, storage, and an auditorium; finishing the remodel of the second and third floors at the high school; and acquiring land for future expansion.
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