The 2017 Bond Election includes two propositions. Proposition 1, which includes projects that the district believes are the highest need and priority, consists of $168.8 million that results in NO bond mill rate increase where Proposition 2 includes additions consisting of $19.805 million worth of projects that would result in a 2.3 mill rate increase. The mill rate increase on a $100,000 home would be 2.3 mills - $26.45 per year, just over $2 per month.
As the improvements for Proposition 1 are deemed to be the highest need and priority, the Board of Education has stated that if Proposition 2 is approved but Proposition 1 is not, no bonds will be issued. Voters’ choices are to support Proposition 1 alone, both Propositions 1 and 2, or neither Proposition. The Board believes that both questions are needed, but that the projects in Proposition 1 are the highest priority.
The proposed bond election is for a 17-year bond that will be paid off in 2034. Interest rates are estimated at 3.5 percent which are near historically low levels for the past 50 years. Current legislation says the state will pay 24 percent of the principal and interest of the bond issue, totaling $45,312,000.
Today’s interest rates, estimated at 3.5%, are near their lowest levels of the past 50 years. Low-interest rates make the cost of repayment of the bond issue more affordable. Andover USD 385 has previously issued bonds outstanding that mature in 2019 and require a bond and interest levy in the current budget of 26.08 mills. The Plan of Finance is to “wrap” the proposed new bonds around the existing debt with one consistent mill levy to retire all bonds (both existing and proposed). With the use of capitalized interest in year one and the refunding and restructuring of some bonds set to mature in 2019, the bond issue can be structured to result in no increase in bond mill rates with approval of Proposition 1. If both Proposition 1 and 2 are approved, the required bond and interest mill levy would be an estimated 28.38 mills—a net increase of 2.3 mills. The Plan is that all bonds will be retired by 2034 (17 years).
Andover USD 385 has a growing tax base. The District’s assessed valuation (not including motor vehicles) in 1997 was $77,203,773. Its current assessed valuation is $312,405,552. Average annual growth since 1997 has exceeded 7.7 percent for this growing District. To be conservative in the Plan of Finance, we have assumed tax base growth of 3 percent for the next decade and 1.5 percent thereafter. Continued growth above these assumptions, should result in a lessened mill rate to retire the bonds.
Under current Kansas law, USD 385 is eligible for additional state aid at 24 percent to pay both project and interest cost on a voted and approved bond. On Proposition 1, the state aid benefit (principal only) is an estimated $40,512,000. On Proposition 2, the state aid benefit (principal only) is an estimated $4,753,200. Approval of both questions would bring additional state aid in an estimated amount of more than $45 million. In addition, the 24 percent also applies to the interest on the bonds. These are tax monies collected from throughout Kansas that can be brought back to Andover USD 385 from Topeka for the benefit of our children and community.
With today’s low-interest rates, and 24% state aid to help retire the bonds, the cost of improving facilities and education in Andover Schools may never be more affordable!
Below is a preview of how the bond election would affect Andover USD 385 property taxes: