January 25, 2012 - In a letter to the editor this week, Independence Township resident Michael Powell is concerned the proposed non-qualified school bond would provide a blank check to Clarkston schools.
Superintendent Dr. Rod Rock said it won't.
"At the Feb. 13 meeting, administration will ask the board to adopt a resolution stating the 2012 bond will not exceed one mill for the duration of the bond," Rock said. "Any time a new person is elected to the board, administration will ask the board to re-adopt this resolution."
The bond allows Clarkston schools the flexibiliy of adjusting the amount of second and third bonds up or down, depending on property values, Rock said.
"A standard bond, wherein the district receives all of the money in a single payment, would not allow this flexibility," Rock said. "This is the reason that this bond is a safe, sound, and flexible option for taxpayers."
The proposal is based on district bond counsel's estimate of property values for the next several years, he said.
"In the unlikely event that property values trend downward from these conservative and informed estimates, the district will adjust the amount of money in the second and third series of the bond in order to maintain the one mill increase," he said. "The district resolves, pending the board's adoption of the resolution, to maintain a one mill increase through the entire duration of the bond, which is paid in full in 2029."
Powell remains unconvinced.
"Voters who passed Economics 101 know that the only way 'to maintain a one mill increase' when 'property values trend downward' is to raise taxes above one mill," Powell said. "When the public knows this can be done 'through the entire duration of the bond' I doubt they'll be happy."
Administration considered and rejected a standard-state bond and a sinking fund before deciding on the non-qualified loan, Rock said.
A standard state bond would require the district to use a five-year average of property values, multiplied out for the life of the bond. The district would then raise millage rates accordingly on current debt, he said.
"Thus, through a standard state bond, CCS would have to increase our current seven mills to 11 or 12 and then add one additional mill to cover the 2012 issue," Rock said. "The district would never consider such a hardship on our community; therefore, a standard-state bond is absolutely implausible."
Sinking funds can only be used for capital improvements, not technology, he said.
"Since technology is a very high priority for our district and each of the students we serve, and because of the aforementioned increase in millage requirements, a sinking fund is implausible," Rock said.
One advantage of a qualified bond is use of the state credit rating of AA-, High Grade, one step above Upper Medium Grade. Clarkston has a Standard and Poor's rating of A with a negative outlook, Rock said.
"This is two levels below the state's rating of AA-," he said. "The next lower credit rating for the district is A-, which remains in the safe range for buyers of bonds."
Addition of the $20 million bond would maintain the district's Moderate status, he said.
"The district's bond counsel and legal counsel are carefully, thoroughly, and critically scrutinizing our capital needs list to ensure that all items on the list fit within the legal limits of bonds," Rock said. "These entities will accordingly craft bond language, which the board will discuss and decide upon in February. These processes ensure that the district will utilize each bond dollar according to all laws, regulations and the promises made to the community."
• About 32 districts in Michigan are using this currently utilize this type of bond, and the district is still using Fast Forward in all buildings.
• The bond will be subject to laws guiding use of all bond dollars. The ballot language will specify use of these dollars. "Ones" and "twos" on the needs list specify exactly how the district will use the bond money.
"Our bond counsel and legal counsel are carefully scrutinizing the needs list to ensure that all items on the list meet within bonding laws and guidelines," Rock said.
"The focus of this bond is on kids and learning," he said. "It is about preparing every single Clarkston Community Schools' student for whatever future he/she chooses and encounters."
What do you think? Let us know at Clarkstonnews@gmail.com or 248-625-3370.
Phil is editor for The Clarkston News. He is a veteran of the first Iraq war, having served in the U.S. Army.