School committee recommends bond to pay for $40 million in improvements

Members of Keep Improving Douglas Schools decided to take on the task of explaining to voters why Douglas County School District needs a bond to pay for about $40 million in capital improvement projects.

"Doing the research on how people really feel about the school board and the district and trying to educate everyone is going to be key," committee chair Johnelle Prado told members on Feb. 7 at Douglas High School. "We're going to need a bond committee that's willing to work very hard to start selling this. We're in an uphill battle in the mud."

In September, the school board approved the formation of the committee to explore funding options for the district's capital improvement projects, exceeding $100,000.

The district levies 85 cents per $100 of assessed value in property tax. Ten cents of that is a special debt service tax guaranteed by outstanding bond payments.

With that debt service tax revenue comes a special governmental services tax that helps fund the district's capital improvement projects. When the district's existing bonds retire in 2011, they will lose that 10 cent tax rate and the governmental services tax. If a new bond is passed by voters, it will replace the old bond, and the district will hold onto that revenue.

District officials have said passing a bond will not raise property tax but will only preserve the current tax rate.

The question is whether denying a bond would lower property owners' tax bills by 10 cents per $100 of assessed value, or if that tax rate would be used by other county entities.

Assistant Douglas County Manager Michael Brown said Nevada law allows county entities to grab tax rates lost by other entities.

"If the school district loses that rate, the proceeds from the debt service tax will be shared proportionately by county entities who receive revenue from property tax," said Brown.

Some county entities have not levied their maximum allowed property tax rate and would likely grab the school district's 10 cents if lost. For example, a county district currently levies 12 cents per $100 of assessed value. They are allowed to levy 21 cents, and could add the school district's loss towards that difference.

"The tax bill for long-time homeowners in Douglas County won't change, but allocation will change," said Marty Johnson, the school district's financial consultant.

Since their inception, Keep Improving Douglas Schools has been working on a project priority list. Tier one of that list includes 45 projects totaling about $33 million. Top priorities are replacing the outside lights at Douglas High School, replacing the back-up generator at Jacks Valley Elementary School, re-keying all schools so that teachers can lock classroom doors from the inside, replacing original underground gas lines at Gardnerville Elementary School and renewing fire alarm systems and panels district-wide.

Because the school district is prohibited by law to advocate for a bond, members of Keep Improving Douglas Schools will be the ones tasked with going from door to door trying to convince voters that a new bond is justified.

"I want to be part of something that has potential to pass," said committee member James Settelmeyer. "And doing that you have to be willing to give a 110 percent."

Members decided that a continuation bond, rather than a traditional bond, would benefit the school district most.

"The continuation bond gives you more flexibility because the amount of money you're going to get is more open-ended," said Johnson.

Where a traditional bond allocates a fixed sum of money, a continuation bond allows the amount issued to change based on current revenue streams. If the targeted amount increases, more money can be issued. Conversely, if the targeted amount becomes less, any additional money issued can be rolled over towards lower priority projects.

If, following the recommendation of the committee, the Douglas County School Board gets a bond measure on the ballot for November's election, it will be voters and not committee members deciding how the school district funds its capital improvement projects.