At a regular meeting of the Board of Education for the Clearwater R-I School District conducted on August 14, 2017 several long range planning matters concerning the debt service fund levy to repay the existing $3,805,000 general obligation bonds of the District and support periodic facilities needs in the future for the District were discussed at length. The District’s Fiscal Year 2017-18 assessed valuation of $66,688,280, which is below the amount of three years ago for Fiscal Year 2014-15 of $66,695,865, has caused the 35 Cent levy to be insufficient to repay the existing debt based upon the projections of the District’s municipal bond underwriter L.J. Hart & Company of St. Louis, Missouri. The Company reviewed several projected growth assumptions for the District’s assessed valuation and Larry J. Hart, President/CEO of the firm, explained the associated debt service fund levies necessary to accommodate each hypothetical situation.
Mr. Hart emphasized the $116,306 of savings from the $2,220,000 of refunding bonds issued during the 2016-17 school year was helpful to position the District to meet future facilities needs, but that the current 35 Cent levy cannot support the remaining payments on the District’s general obligation debt. According to Mr. Hart the growth rate at the time of the Series 2015 General Obligation Bond issue was assumed to be 1.00%. “If the Clearwater R-I School District had continued to experience an annual growth in assessed valuation of one (1.00%) since 2014-15, which was conservative at the time based upon the previous five years average annual growth rate of 1.30% and a seventeen year average of 6.67%, the District would be in a much better position to repay its bonds all within the current 35 Cent levy. It was also expected to that the District could resume its facilities rehabilitation efforts with another no tax increase building proposal in the next ten years,” Mr. Hart stated.
Part of the preparation each year for the tax rate hearing is to complete the Missouri State Auditor’s Form C Debt Service Levy Computation in order to avoid having fund balances in that account become too low. This calculation for Fiscal Year 2017-18 produces a recommendation by the Missouri State Auditor that the debt service levy be set at 48.20 Cents per one hundred dollars of assessed valuation. If no adjustment is made, the District’s fund balance in the debt service account becomes much too low as soon as Fiscal Year 2026-27 and actually goes negative by Fiscal Year 2030-31. Mr. Hart recommends that the debt service levy be set at 40 Cents per one hundred dollars of assessed valuation to correct the situation. Many other school districts facing reduced growth rates have resolved the manner in a similar way. The five cent increase represents a cost of $9.50 per year for a home with a fair market value (appraised value) of $100,000.
The decline in revenue received from the Federal Government for the property also dropped, from a level of $14,526 in Fiscal Year 2014-15 to $2,065 in Fiscal Year 2016-17 for the debt service fund. “With these two factors hampering our revenues, and the inevitability of the District’s facilities continuing to age, I believe we need to give some careful thought as to what the best course of action might be for establishing the debt service fund levy at 40 Cents per one hundred dollars of assessed valuation at the August 2017 tax rate hearing,” stated the board president, Robert Gayle.