Post by Chris_Wendt on May 18, 2015 10:25:06 GMT -5
Two of my neighbors came over yesterday wondering what Proposition 2 was all about, and whether they should vote for it, or against it.
We voters approved the creation of a Capital Reserve Fund into which the School District can accumulate as much as $5 Million which can only be used for capital expenditures, and only with the approval of voters for each such expenditure. This is a very good deal, because is safeguards the money from frivolous spending or from being "raided" and used for purposes not intended when the voters approved the creation of the Fund.
There are three ways a school district can finance capital projects:
Option one, spend money out of the Capital Reserve Fund, avoids all the expenses associated with floating a bond (underwriting and selling the bonds), and saves the District interest payments over the life of the bond (7-20 years depending on the nature of the expenditures); there is no present or future impact on School Taxes.
Option two, floating a bond, also requires voter approval but involves considerable additional expense to the District, which will have future impact on School Taxes, and potentially also on the net assets and financial (credit) rating of the district. This has been the "traditional" method of financing capital projects in Wantagh for the past 125 years.
Option three, paying for the project out of operating funds, is a last-ditch method, used for serious capital projects which cannot be delayed, but for which voters declined to approve a bond or spending down a Capital Reserve Fund. This kind of spending impacts School Taxes, and takes away funding from educational program items, and potentially can cause conflict with the Tax Levy Cap. Wantagh has used this method of funding occasionally in the past.
As you can see, Option One, spending money from the Capital Reserve Fund is generally the best, most cost-effective way to finance capital projects. I recommend voting Yes on Proposition Two, tomorrow.
Sincerely,
Chris Wendt
We voters approved the creation of a Capital Reserve Fund into which the School District can accumulate as much as $5 Million which can only be used for capital expenditures, and only with the approval of voters for each such expenditure. This is a very good deal, because is safeguards the money from frivolous spending or from being "raided" and used for purposes not intended when the voters approved the creation of the Fund.
There are three ways a school district can finance capital projects:
- Pay for them with funds out of a Capital Reserve Fund
- Pay for them by floating a Capital Bond proposition
- Pay for them out of operating funds through the general fund
Option one, spend money out of the Capital Reserve Fund, avoids all the expenses associated with floating a bond (underwriting and selling the bonds), and saves the District interest payments over the life of the bond (7-20 years depending on the nature of the expenditures); there is no present or future impact on School Taxes.
Option two, floating a bond, also requires voter approval but involves considerable additional expense to the District, which will have future impact on School Taxes, and potentially also on the net assets and financial (credit) rating of the district. This has been the "traditional" method of financing capital projects in Wantagh for the past 125 years.
Option three, paying for the project out of operating funds, is a last-ditch method, used for serious capital projects which cannot be delayed, but for which voters declined to approve a bond or spending down a Capital Reserve Fund. This kind of spending impacts School Taxes, and takes away funding from educational program items, and potentially can cause conflict with the Tax Levy Cap. Wantagh has used this method of funding occasionally in the past.
As you can see, Option One, spending money from the Capital Reserve Fund is generally the best, most cost-effective way to finance capital projects. I recommend voting Yes on Proposition Two, tomorrow.
Sincerely,
Chris Wendt