Sunday, February 22, 2004
Facing budget cuts for the second consecutive year, the Steamboat Springs School District is looking at new ways to generate revenue.
Last week, the School Board gave Superintendent Donna Howell and Finance Director Dale Mellor authority to work out a debt service deposit agreement with Dan O'Connell from Hanifen Imhoff.
Under the debt service deposit agreement, the district would sell future bond issue property taxes to a third party. The third party will pay the district up-front for the right to collect and invest the property taxes, and the party also will pay the bonds and interest on them when due.
An agreement would generate one-time revenue of about $340,000 for the district, and the money can be used for any purpose, Mellor told the School Board.
With 13 years left on district bonds, Mellor said he doubts the school system would attempt to refinance again because it wouldn't find a better interest rate than it currently has. The district can't refinance its bonds once it enters a debt service deposit agreement.
The agreement also would prevent the district from collecting interest on property taxes. Mellor estimates the loss of future interest earnings over the life of the bond to be about $158,000, meaning the district would have a net gain of about $180,000 if it entered the agreement.
"The only downside is giving up that interest," Mellor told School Board members. "Other than that, there's no downside.
Howell said the district and School Board must be cautious with how they spends a one-time source of revenue. Spending the money on one-time costs is the district's best option.
"I would discourage the School Board from using it for personnel or other recurring costs," she said. Such use of the money would result in larger deficits for the district in future years, Howell said.
Expenditures such as Montessori supplies, materials and teacher training would be an example of a more appropriate use of the funds, Howell said. The money also could go toward a curriculum audit that the district will undergo later this spring.