Interest rates looking good as bond sales near
Favorable interest rates could translate into a substantial savings to taxpayers as USD 257 prepares to build new facilities. Depending on how the bidding process goes, the district might be able to set a lower tax rate and save about $5.57 million compared to earlier projections.
Representatives from George K. Baum & Company helped school board members on Monday to start the process of selling bonds to build a new elementary school, new science and technology building at Iola High School and new heating, ventilation and cooling systems for Iola Middle School. Voters approved the bond issues in April, authorizing the district to spend up to $35.43 million for the three projects.
The board also decided to begin a process to hire a contractor to oversee the construction process and work with SJCF Architects through the design phase.
EARLY ESTIMATES for the school bond project predicted the district would lock in interest rates around 4.5 percent, Steve Shogren of George K. Baum told board members. Those cost estimates were provided to voters to help them decide the school bond issue. Shogren said previously he used a very conservative figure, expecting the interest rate might be more favorable when the bonds were actually sold.
Financial analysts expected the Federal Reserve to raise interest rates in the fall of 2018 but instead the Fed suspended those plans and left rates unchanged.
Shogren now estimates the district will lock in a rate of about 3.75 percent, though the bidding process will take about a month and rates could change in the meantime.
But if his estimates hold, the district could save about $5.57 million over the course of the 30-year bonds. The mill levy, or taxing rate, could drop from 21.72 mills to less than 20 mills. That means taxpayers will pay slightly less than originally projected.
Bids for the bonds will be opened June 10.
Shogren also asked school board members to decide whether to ask local banks to take deposits or reinvest some of the accounts. The board will receive about $700,000 when the bids are approved, with the remaining balance released later that month. The district will need to invest the money until it’s needed to pay for construction, design, land purchases or other needs.
The board also needs to decide how they might handle regulatory requirements and special offers like amortizable bond premiums, sometimes up to $5 million, that can be used to help pay the interest over the life of the bond. If such an offer is made, the district would need to decide whether to lower the amount of the bond (which would lower the mill levy) or keep the bond the same and use the premium as contingency funds.
“Our primary responsibility is to make sure we provide the lowest mill rate for your taxpayers,” Shogren told the board. “If you want to keep some of the premium as a contingency, I don’t think that’s a problem as long as we don’t endanger the mill levy.”
Board members said they would make those decisions at their next meeting, rescheduled because of Memorial Day to 6 p.m. Tuesday, May 28.
SJCF Architects President Shannon Ferguson-Bohm talks to USD 257 Board of Education members about hiring a general contractor for the school bond project.
SJCF Architects asked board members to select a general contractor for the facilities projects as soon as possible. SJCF President Shannon Ferguson-Bohm recommended a process that would allow a general contractor to work alongside her firm as it begins the design phase. The process offers several benefits, she said.
SJCF will work with the contractor to set a budget and continuously review the project to stay within that budget. Decisions can be made more quickly if the two entities work together from the beginning, she said.
For example, the contractor and designer can work together when designing a storm shelter. They’ll consider what type of structure, such as steel joists or concrete, might work best for the project.
Those things typically result in savings, she said.
The project also can be divided into phases to save time and money, such as doing site grading and utility work while architects finish the building design process. That could be essential for the HVAC work at the middle school, Ferguson-Bohm said. The project is expected to be completed during the summer of 2020. Equipment can be ordered earlier, as other work is being done, in order to make sure it arrives in time.
Separating the project into smaller phases also allows local contractors to bid parts of the work, Ferguson-Bohm said. Local contractors may not be prepared for large jobs like flooring of an entire elementary school, but could be able to install floors in a smaller section of the building.
“Having a contractor on board early will help us plan for that,” Ferguson-Bohm said. “Definitely, time is money.”
Hiring a contractor at this point still takes months, so she recommended the board start as early as possible. The board voted to start the process. A selection committee will be appointed, and could include board members as well as others from the community and school district. SJCF will serve as advisers throughout the selection process.
School-based mental health
Southeast Kansas Mental Health provides counseling services at local schools as part of a new program started at the Humboldt school district. Those who provide mental health services at Iola schools gave a short presentation to the board.
About 50 students have received counseling services at the Iola schools this year, Janalin Taylor, school-based therapist for Iola and Marmaton Valley schools, told the board.
“The hope was, we would be available for the kids. They would miss less school and more kids would access the service if they needed it,” Taylor said.
The program still faces challenges in getting parents involved, she said, but she expects about 40 students will be able to continue to receive counseling services over the summer.
School administrators, including Superintendent Stacey Fager, expressed support for the program. Jefferson Elementary School Principal Tiffany Koehn asked the board to make sure they include space for mental health services when they design the new elementary school.
After the success of the program at Humboldt and other area schools, SEK Mental Health plans to expand its services at more schools. Yates Center started this year; Colony and Garnett schools will start next year as will other districts in the region.
They also plan to introduce training opportunities, like offering “lunch and learn” programs to train staff on issues like test anxiety.
IN OTHER news, the board:
• Agreed to purchase a new academic screening program for preschool through 12th grade. The screening process will replace two existing programs and better allow staff to track a student’s progress as they age. Tests will take less time. They’ll show a student’s grade-level achievement on math and reading, as well as social-emotional skills. The social-emotional component is important and part of new state requirements. The new screening process also is less expensive, at a cost of about $7.50 per student compared to $8.50 per student from kindergarten to fourth grade, and $12.50 per student from fifth through 12th grade using the current testing programs.
• Approved a list of summer maintenance projects to include new doors that meet requirements through the Americans With Disabilities Act, new carpet and tile at the middle and high schools, concrete work at the high school, new lockers in the boys locker room at the middle school, a new dishwasher at the middle school and a new van.