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Board to vote on borrowing $2 million
Published 8:06am Wednesday, June 15, 2011The Niles Community Schools Board of Education is expected to vote on a proposal to borrow as much as $2 million in an advance on the district’s current sinking fund and foundation pledges at its next meeting, June 27.
“This is borrowing against funds that we already know we will receive,” Supt. Richard Weigel said. “We have some urgent needs in our district that we must address. For example, the bus drop-off and parent drop-off at Howard is not a good situation. I am concerned about student safety and we just cannot wait any longer before we address it.
“Teachers have repeatedly told me that they are concerned for child safety and it is an issue that must be addressed before school begins in the fall,” Weigel said. “We also have $500,000 pledged from different local foundations over the next three years for our New Tech Academy. However, we need some of those funds right now to purchase the equipment needed by fall.”
The Howard Elementary School parking issue isn’t the only project scheduled to be addressed with the advance. Those projects include:
• Improve the bus and parent drop-off at Howard Elementary School.
• Support the Cyber Cafe at NHS along with funds from the Niles Education Foundation and Chartwells.
• Improve the serving lines for NHS.
• Improve the rooms for the Niles New Tech Entrepreneurial Academy.
• Put in the technology infrastructure for Eastside School.
• T12 and T8 lighting conversion for a 20 percent energy savings.
• Miscellaneous improvements including some plumbing at Eastside, resurface the parking lot at Eastside, improve security in the elementary buildings and electrical upgrades at NHS.
Niles Community Schools receives a little more than $500,000 each year from sinking fund revenues and has $500,000 pledged over the next three years for the New Tech Academy.
Jeff Curry, who serves as treasurer of the board’s finance committee, said the group has been discussing the option and believes now is a unique opportunity for the advance.
“Interest rates are at absolute historic lows,” Curry said. That, coupled with the current rate of inflation, presents a unique time to borrow.
The sinking fund millage is a limited property tax, considered a pay-as-you-go method for addressing building remodeling projects. According to the district, the state mandates that a school district may ask voters to approve a taxation for a sinking fund and Niles Community Schools did this many years ago for the purpose of maintaining aging buildings. The district has the income for another seven years.
“Our sinking fund is a blessing from the community and we are intent on using those funds wisely,” Weigel said. “Borrowing some money against future payments allows us to do some improvements right now that have been put off for a long time. It does not, however, provide enough funds to upgrade all the facilities or replace the boilers in all the buildings — that is another big need. Eventually we will need to replace the heating systems in all of our buildings.”
United Federal Credit Union would loan the funds to the district, to be paid back with sinking fund money.
The State Treasury Department has strict guidelines for the use of sinking fund dollars and specifically those funds are not allowed to be used for teacher or administrator salaries. Sinking funds may be used for purchasing, completing, remodeling or repairing facilities or parts of or additions to those facilities; acquiring and improving sites for school buildings, structures, athletic facilities, playgrounds or other facilities; and technology infrastructure. Technology in this case refers to wiring or materials used for installing technology. It does not include equipment or software. This fund may be used for repair but not for maintenance.
In short, sinking funds can’t be put toward salaries and compensation, for example.
Both Curry and Weigel were asked how they might handle criticism for borrowing money necessary for a slate full of projects at a time when districts are cutting spending.
“Some (of the projects) could be put off for later,” Weigel said. “Or we can do them now to make life better for our children. They’re not big but I think they are important.”
Curry hopes the community won’t focus on criticism.
“I think if you’re intimately involved with what’s going on with schools, we can’t afford not to,” he said. “We’re at an edge of a cliff, falling off the cliff — we being Michigan, not just Niles. We can handle this stuff. We can handle this absolutely.”
Curry added he believes the changes within the district are already starting to show positive results, citing the at-capacity levels of enrollment for both New Tech and Eastside Connections School.
“We finally have Schools of Choice kids coming to Niles, not from Niles,” he said. “We absolutely can not afford to lose students. We have to gain and of course provide the best education that we can.
“I find any criticism about the fact that we’re doing too much to be … I just don’t think it’s accurate at all,” Curry said. “It’s absolutely tremendous, what’s going on right now. We could have piecemealed this renovation of the New Tech wing over a couple of years, but why not do it now, more cost effectively? It just, to me … it’s a lot more financially prudent. We can pay it back. We have a defined repayment source.”
The board will vote on the item during its next meeting Monday, June 27 at 7 p.m. at the Westside Administration Building.
Let me point out I was a big supporter of both failed bond issues and feel that our community desperately needs new schools, and that the taxpayers should support them. Going on and on about the economy as a reason not to is silly and counterproductive – new schools will draw new business and new residents. Nothing else will. Unskilled labor jobs that pay living wages are NEVER coming back to Niles, or anywhere else for that matter.
With that said – I once again have some problems with what appear to be the charades and doubletalk over Eastside. If Weigel would have just said “because of all day kindergarten we need more classroom space” I would have understood completely the need to rep-open Eastside, I think most people would have understood – and that it was going to cost money. But what had become very apparent is that is not his way – it has to be someone else’s fault and mistakes – at all times and in all matters. In this case we were told that
the board was mislead about how much money closing Eastside would save – its really nothing” and that “opening Eastside will only happen if it is cost-neutral”. Now no one really believed that, but that is what you said. Was not a major portion of the costs savings originally based on maintenance items like paving the parking lot, fixing the plumbing and putting in wiring structure? Now we need to borrow money to fix up Eastside? Which is it? In this press release, Weigel is claiming the main purpose here is to fix the traffic at Howard – but if you want community support, attach the numbers and be honest – most of this money is for Eastside. I also find the statement that “if you are involved, you would understand” to be quite insulting.
While I entertain little optimism that the board will do anything but roll over as usual here, I would encourage Mike Dreher to once again be the voice of reason and vote no. You will have my support when you start being honest about your agenda!
No offense intended Niles Viking. There is alot going on in the State right now and it is very difficult to know everything and to understand all that is happening. I am glad you are informed as well as you are. I still feel bad for the community when a glass is half empty viewpoint is taken on such great news. You feel offended for some reason whioh leads me to believe you were part of the decision process at some point in the past. We thought closing Eastside would save us more money than it did. We all did, including me. It did not work out that way, students left and went to Brandywine, and St Mary’s etc… So, we lost students and state aid, not good. Our new Superintendient has come up with a terrific way to bring back a neighborhood school and to boost educational opportunity in Niles. The magnet school is FULL that is great news. The glass is half full. Enough negative lets get on with things. New Tech is FULL, the WAY program is new and offering new opportunities to our students. Full day K is booming. I refuse to be mired in the negative when we have so much happending now that is great.
To Niles Viking: I take exception to your phrase, “While I entertain little optimism that the board will do anything but roll over as usual here…” Consider that the school administration publicized the vote two weeks in advance. There will be ample time for the citizens of Niles to comment in the press or come to the board meeing on 27 June to comment in person. I believe in transparency so that issues like the advance against the sinking fund can be discussed fully. Bring your objections in person to the board. I look forward to hearing your case.
What to do with $170,000.00?
Per Michigan Legislature MCL 380.1212 Sinking Fund, the funds may be used for “repairs, not maintenance and cannot be used for furnishing or equipping.” “A sinking fund may be used for technology, but is limited to wiring or materials for installing technology; this does not include equipment or software.” While I agree we need new buildings, the reality is this community rejected a plan for new buildings which were outlined and created by nearly a hundred of its own customers. We could debate the ‘whys’ but the fact remains, we couldn’t sell them on new buildings at that time.
Our schools, like businesses should appreciate the importance of cash flow and revenue generation. Schools generate cash by attracting students. Like businesses, schools must attract customers in order to grow and prosper. Every new client is opportunity for a long term relationship. Like the name implies, Eastside is going to be a ‘magnet’ school designed to draw in students to feed other Niles schools. It’s another tool in our educational arsenal to provide a unique product to a market niche.
How much revenue per square foot does an empty building generate? The state issues a little more than $6,000.00 for each student in attendance. Every student this school draws in will add $6,000.00 in revenue and hopefully a repeat customer. Add one new student per grade level, that $170K will come back after a couple years! I also understand we will be leasing space to other outside entities to generate revenue. Kind of like diversifying your assets to multiple markets by leasing a huge stamping press to Ford and another to Chrysler while making sub-assemblies to Hummer all under one roof…
“The district already had the support of more than 100 volunteers to help in prepping the school for its opening in the fall.” “Parents of students enrolled at the school will also be expected to volunteer some time to the school’s needs.” – Niles Daily Star May 17, 2011 I can’t think of a previous initiative which had parents making such a commitment to their child’s education. Niles folks are getting excited again about their school! As this momentum of investment and return builds, credibility will grow and I think the community will be more likely to support the high cost of new schools.
Good plan, great potential, minimal risk. I like it. Great job Niles!
I actually wrote the above back on May 17th after the plan was submitted and passed by the board but never published it. Today, without question or speculation, we can say a vision and a plan was implemented on the faith of the community (market, customer). Then the community (market, customer) responded in faith and merit (quality) of the plan (or product). From empty building at 0% enrollment to 100% enrollment in four weeks? Are you kidding me? That’s a phenomenal accomplishment and better than any investor could expect on his return. Kudos to Niles! The payback has already begun.