Imlay City Schools SINKING FUND MILLAGE INFORMATION September 2016 Frequently Asked Questions Q: What are the details of the sinking fund millage proposal? A: Residents of the Imlay City School District will be asked to consider a sinking fund millage proposal of 1.25 mills for 4 years on Tuesday, November 8, 2016. If approved by voters, this millage will raise approximately $1,930,000 over 4 years (approximately $482,500 annually) to make major repairs to sidewalks and parking lots, replace fire panels, provide utility hook-ups for sewer, water and electrical to facilities as needed, replace windows and doors in buildings as needed, replace the middle school cafeteria flooring, renovate restrooms, concessions facilities, and replace fencing at the football field, and build concessions, team rooms and a community pavilion at the athletic complex on Blacks Corners Rd. Q: How many mills will be levied? A: One and one-quarter mills (1.25) Q: How many years will the mill be levied? A: Four years Q: Why is the school district asking for only one and one-quarter (1.25) mills? A: One and one-quarter mills (1.25) will cover the cost of facility needs for the next 4 years. Q: What is a sinking fund? A: A sinking fund millage is a limited property tax, considered a "pay-as-you-go" method, to fund major repairs and renovations (as well as for the construction of school buildings and the purchase of real estate). State law allows a school district to levy a sinking fund millage of up to five mills and for no longer than 20 years as approved by voters. The tax is levied each year and the revenue generated from this levy is used to make the most urgent and major repairs and improvements identified by the school district. The school district can access the money on-hand to pay for projects as they are completed, but because the school district hasn't borrowed for the projects, the school district does not have to pay interest on the money used. Q: Why does the school district need a sinking fund? A: Over the past ten years, severe cuts in state funding for public schools have delayed necessary repairs to buildings as the school district has worked hard to protect the learning Page 1 of 5
that takes place in the classroom. A sinking fund will help keep general fund dollars in the classroom. Without the millage, any major facility repairs will be paid for with operating funds that would otherwise go to support educational programs for students. Q: How will the sinking fund millage benefit students and the community? A: If approved, the money raised through the sinking fund millage will: Enable Imlay City students to learn and grow in a more safe, secure and healthy environment. Ensure the school district s limited operating funds are available to support student learning. Protect the community s investment in the school district s buildings and facilities. Provide facilities that can be utilized by the entire community. Q: What is the difference between a bond and a sinking fund millage? A: Generally, most school construction and improvements are paid for with bonds, which requires borrowing money. The school district has to pay that money back with interest and fees as well as set up a special tax to pay off each bond. A sinking fund allows a school district to pay for major repairs and renovations without having to borrow money or pay interest. A sinking fund generates revenue, but does not need to be paid back to a third party with interest like a bond. There is no interest; no selling of bonds. It also means that the district is not letting the schools deteriorate for ten or fifteen years while waiting for a new bond project. The school district passed a $7.4 million bond in 2003 to add classrooms in each of the buildings, renovate offices/entryways to improve security, install new security systems, improve roofs and parking lots, and conduct other site work/improvements. At this time, technology and bus purchases are not currently allowable under the terms of a sinking fund millage. Q: How much money will the sinking fund millage cost homeowners? A: With a 1.25 millage, there would be a tax of $1.25 per every $1,000 in taxable value of a home. For example, the owner of a home with a market value of $100,000 and a taxable value of $50,000 would be taxed $63 annually (or $5.25 monthly) for 4 years. See the chart below for additional detail. Impact of 1.25 Mill Increase on Annual Property Tax Bills Market Value Taxable Value Annual Tax Increase $50,000 $25,000 $32 $100,000 $50,000 $63 $150,000 $75,000 $94 $200,000 $100,000 $125 $250,000 $125,000 $157 $300,000 $150,000 $188 Page 2 of 5
Q: Can the money from the sinking fund be used to pay employee salaries, wages and benefits? A: No. The sinking fund is a specific and restricted fund that can only be used for construction, renovation and major repair not salaries, benefits or even routine maintenance. School districts are not allowed to use sinking fund dollars for operating expenses such as teacher, administrator or employee salaries or benefits. Sinking funds must be kept separate from the district s operating funds. Additionally, money raised through a sinking fund millage cannot be used for operating expenses such as textbooks, technology software or equipment updates, or replacement buses. Q: How can taxpayers be assured the money will be spent as promised? A: By law, the State of Michigan has requirements and restrictions for public school districts that fund capital enhancements and facility repairs through sinking fund millage levies. The law is very specific about what is considered an allowable use and what reporting and audit requirements are expected. Not following these legal requirements have strong penalties as well. If it is found that the funds from a sinking fund millage were not used in accordance with the requirements outlined in the law, a school district would have to replace those funds from the operating fund, and could forfeit any additional millage revenues from the sinking fund levy and could not be allowed to levy that sinking fund millage again. A school district that levies a sinking fund tax is required to conduct an independent audit of its sinking fund on an annual basis, including a review of the uses of the sinking fund, and is required to submit the audit report to the Department of Treasury. If the Department of Treasury determines from the audit report that the sinking fund has been used for a purpose other than those authorized for the sinking fund, the school district is required to repay the misused funds to the sinking fund from the school district's operating funds and may not be allowed to levy a sinking fund tax after the date the Department of Treasury makes that determination. Q: How many mills does the school district currently levy for sinking funds? A: Imlay City Schools does not currently levy any mills for sinking funds. Q: How will the money be used? A: Money raised from the sinking fund millage will fund projects in the following areas: o Highest Priority Items Sidewalk replacement Sidewalks and curbing at Weston, Borland, the Middle School and High School are damaged or failing, and pose safety risks. Parking lot lighting at the athletic complex The athletic complex parking lot and walkways have no existing lighting, which is needed to ensure the safety of the students and school community during facility use. Middle School cafeteria flooring Page 3 of 5
The current tile flooring at the Middle School, is lifting, and in need of replacement. Concession area renovations and fencing at the football field, including new sewer extensions The concessions area, restrooms and infrastructure are inadequate, and in some cases, inoperable. We have experienced backups of raw sewage in the bathrooms and intermittent access to utilities at the field; facilities and infrastructure at the field are more than 40 years old. o High Priority Items Fire panel replacement The Weston Elementary fire panel, which manages the fire alarm and suppression systems, is in need of replacement due to its age. Replacement of windows and doors at Borland Elementary Windows and doors at Borland elementary are 43 years old, and are failing. This is both a safety concern and an efficiency concern. They are in need of replacement with new, energy efficient windows and doors. Community/family pavilion at athletic complex The athletic complex has become a hub of activity for the schools and the community. A community/family pavilion will offer shelter, seating, and amenities to students, families, and community while using the facility. Utilities at the athletic complex Utility hook-ups are needed in order to run water and sewer to the complex, and upgrade the existing electrical extensions. o Moderate Priority Items Heating and cooling systems renovations at Weston Elementary Parking lot renovations throughout the district Parking lot lighting replacement at the High School Installation of energy efficient doors at the High School Replace 23-year-old carpeting at the High School Service drive repairs Metasys upgrade The school district needs to install an automated system (Metasys system) to connect heating, cooling and ventilation systems for the purpose of improving energy and operational efficiencies in all buildings across the district bringing all independent systems together in an efficient and reliable manner to ensure that runtime, starts and stops are scheduled to increase efficiency and realize energy cost savings. All of these items perform a daily function in the operation of the school district and each of the district s facilities have some type of infrastructure needs, which would be prioritized annually based on the availability of sinking fund dollars, should the proposal pass. Q: Will the energy efficiency of our buildings be improved with these projects? A: Yes. Upgrading the Metasys system, and replacing windows at Borland Elementary and doors at both Borland Elementary and the High School will improve the energy efficiency at each site. Page 4 of 5
Q: When will the work begin? A: If voters approve the millage, taxpayers would see the first tax on their summer 2017 bill. Money is collected locally and comes to the school district on an annual basis it s considered a pay-as-you-go method. The money is collected locally; it stays local and does not go through Lansing. Projects could begin as early as the fall of 2017. Q: How will the sinking fund millage proposal appear on the ballot? A: Ballot proposals seem to be written in such a way that only a lawyer can understand them. The following language is what voters will see on the ballot. MILLAGE PROPOSAL, BUILDING AND SITE SINKING FUND TAX LEVY Shall the limitation on the amount of taxes which may be assessed against all property in Imlay City Community Schools, Lapeer County, Michigan, be increased by and the board of education be authorized to levy not to exceed 1.25 mills ($1.25 on each $1,000 of taxable valuation) for a period of 4 years, 2017 to 2020, inclusive, to create a sinking fund for the construction or repair of school buildings and all other purposes authorized by law; the estimate of the revenue the school district will collect if the millage is approved and levied in 2017 is approximately $470,000? Q: If I have further questions, where can I get additional information? A: Please call (810) 724-9861. Paid for by Imlay City Schools, 634 W. Borland Rd., Imlay City, MI 48444 Page 5 of 5