Archive for Wednesday, July 29, 2015

USD 204 reviews budget, bond refinancing

July 29, 2015

The 2015-16 budget and a proposed refunding plan of current school bonds were the major topics of conversation at the Bonner Springs-Edwardsville USD 204 Board of Education meeting Monday.

The board learned Monday that the state legislature’s block grant school funding plan would supposedly give the district a slight increase in funding this year, district staff was still wary of cutbacks from the state. On the bright side, the board learned the district would likely save more than $2 million by refinancing outstanding bonds.

Due to the budget crisis in Kansas, as well as the new block grant formula used to determine school funding for the upcoming school year, USD 204 is feeling the pinch just like all other schools across the state.

Eric Hansen, director of business and human resources, addressed the board’s upcoming school budget and discussed some misnomers that he wanted to make sure the board fully understands.

“There are so many fallacies about school budgets and spending, and my goal tonight was to help the board see the clear picture and cut through the fog,” Hansen said.

One continuing issue is a new concept adapted last year, the block grant formula for education. The block grant formula that is currently being used does not take into account a rise or fall in school enrollment. Last year USD 204 saw a 4 percent increase in enrollment with 85 more students, and district staff anticipates another 40 new students added to their roster this school year. Regardless of the number of new students the district gains, the state aid will not increase under the block grant formula. Educational resources like teachers and lunch programs will be stretched even more thinly.

While strictly looking at the figures, it may appear that the general fund budget will receive an increase of $134,777 from the state this year. According to Hansen, the money that is collected in Bonner Springs goes to the state and the state gives it back to USD 204 and considers that money as “state aid.” The state can then say that they are giving more money to schools when in fact they are simply giving the money back to the home district where the money originated, making actual enrollment numbers irrelevant.

“Under the new formula all state aid for the supplemental general fund, the capital outlay fund, the special education fund and the KPERS fund is now being laundered through our general fund. In the past, only the special education state aid passed through the fund,” Hansen said. “I have further reservations about whether or not we’ll even realize this minor increase in funding when all is said and done in light of the fact that our legislature and governor have yet to balance the budget for 2015-16.”

A public hearing will be held at 7 p.m. Aug. 17 at Delaware Ridge Elementary School to discuss the upcoming budget. By Aug. 21, an approved budget must be filed with the county clerk. The entire school budget will be published in this newspaper.

The board received some better news regarding bond refinancing.

David Arteberry, a financial advisor from George K. Baum & Company, presented details of a refunding plan and refinancing plan. When combined, these two things will potentially save the school district over $2.3 million. This would include an early payoff of $2.85 million to retire some of the 2005 bonds that were issued.

“The benefit of repaying the previous bond is to eliminate approximately $1.3 million in interest alone,” Arteberry said.

In addition, he is recommending refinancing another portion of those bonds to a lower interest rate. The current interest rate being paid is 4.75 percent. The lower rate would add another $1 million to savings.

The school district, which currently has an A1 bond rating, will be putting bond bids out on Aug. 17. They are expecting several interested companies to make offers.


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