Supt. explains what bond, sinking fund proceeds can and cannot be used for

If voters approve the school district’s proposals for both a $28.28 million bond and a 5-year 0.75-mill sinking fund, the proceeds would go towards one thing and one thing only, according to Superintendent Tim Throne: capital improvement projects for the district’s already-existing buildings.

Should the two proposals be approved, officials are looking to invest a total of $30.4 million into transportation, building systems, site improvements, roofing, technology infrastructure, security cameras/access and playgrounds throughout the district.

What proceeds couldn’t go towards, Throne stressed during a recent interview with this reporter, are teacher, staff or administrative salaries and benefits or district operating costs.

“We have to tell the state ahead of time exactly how we’re going to spend these monies from the bond proceeds,” said Throne. “When we made that bond application to the state, we had to tell them ahead of time in those major areas where we’re going to spend this money. It is flat out illegal for us to spend money in A) areas that we didn’t identify in our application and B) on operating expenditures. I would go as far as to say not only can we not spend it on salaries, retirements, benefits, we can’t spend it on our monthly (electricity) bill. You cannot spend these proceeds on operational expenditures. That’s against the law.”

The State of Michigan does not allow districts to use bond or sinking fund proceeds to be used for operating expenses, salaries, benefits or routine maintenance.

They may only be used to fund major repairs and renovations to school buildings.

When a bond is approved, a district borrows a lump-sum dollar amount, which is paid back by taxpayers over a set period of years with interest and fees. A special unlimited tax is set up to pay off each bond. Bonds can also be refinanced in later years to save the school district and taxpayers money.

Some of the allowable uses of a bond in Michigan are: construction for additions to existing school buildings, remodeling existing school buildings, energy conservation improvements, school bus purchases, direct bond program costs and fees, final audit costs, technology purchases limited to hardware and communication devices that transmit, receive or compute information for pupil instructional purposes only, and operating software accompanying the purchase of hardware and communication devices.

A sinking fund millage is a limited property tax to fund major repairs and renovations to school buildings.

The tax is levied each year and the revenue generated is used to address building improvement identified by a school district.

State law allows a district to levy a sinking fund millage of up to three mills for 10 years.

Using a sinking fund, the school district accesses the money on-hand to pay for projects as they are completed. Since the school district has not borrowed money for the projects, no debt is incurred and it does not pay interest on the money used.

Funds generated through a sinking fund can only be used for construction, renovations and repairs of buildings. By law, this money also cannot be used for bus replacement.

When it comes to ensuring district teachers and staff are compensated fairly, Throne said officials currently do whatever they can within the district’s means to achieve this goal.

Throne referred to several three-year agreements, including pay raises, which were recently approved by Oxford Schools for the Oxford Education Association (OEA), which represents teachers; the Oxford Educational Support Personnel Association (OESPA)– which represents secretaries, paraprofessionals and technology specialists; and the American Federation of State, County and Municipal Employees (AFSCME), Local 1472– which represents bus drivers, monitors, mechanics and food service workers.

“We approved three-year agreements with all of our union groups. We continuously do studies on the districts around us on what other districts are paying and, while we understand we may not be able to pay the highest salaries due to state foundation allowance limitations, we also don’t want to pay the lowest. We want to pay a fair wage and to afford our staff increases each year which help them afford the general cost of living increases,” Throne explained. “We’ve been consistent with our staff in providing annual raises and I’m very proud to say that everybody has worked hard to make that happen.”


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