State lawmakers increase bond capacity for Arizona school districts - East Valley Tribune: East Valley Education News

State lawmakers increase bond capacity for Arizona school districts

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Posted: Friday, June 21, 2013 5:01 am | Updated: 3:22 pm, Tue Jun 25, 2013.

Arizona school districts will be able to ask voters for more funds for building repair and construction under a plan lawmakers approved this month.

Currently under state statute, unified school districts can ask voters for approval to issues bonds that equal up to 10 percent of the assessed valuation of the district. High school and elementary school districts can use half of that. Voters – in giving approval – agree to tax themselves to pay those bonds back over several years.

Under the new plan, lawmakers doubled school districts’ debt capacity to help address the failure of the state to fund “building renewal” funds and new school construction, as well as reductions to capital funding during the last few years as Arizona faced the recession and declining revenues.

“There’s a misnomer that this is going to double and triple people’s taxes. It’s not,” said Chuck Essigs, director of government relations for the Arizona Association of School Business Officials. “It gives districts the ability to issue more bonds. But you don’t sell them one year and pay them all off the next. You pay them off over time. Most of the districts that will benefit from this, their tax rates won’t go up at all or be modest increases.”

The law is retroactive so that districts that had received voter approval to sell bonds – but found themselves unable to do so because of decreased property values – can now sell those bonds.

Mesa Unified School District was facing that issue under the $230 million bond sale approved in November. It had the capacity to sell less than half of that amount this year and next until. But hoped and anticipated the change as it went to voters last fall for the bond approval.

That issued plagued the growing Higley Unified School District, which was unable to sell $70 million of bonds approved by voters in 2006 because of decreased property values.

In the 1990s, state lawmakers approve Students FIRST, which led to the creation of “building renewal funds” and a formula for the state to determine when it would build districts new schools, based on enrollment and capacity. In doing so, the state decreased bonding capacity by two thirds. The Arizona Constitution still reads that unified school districts can bond up to 30 percent of their assessed valuation and high school and elementary school district can have a bond capacity limit of up to 15 percent.

But for the last few years, lawmakers have not fully funded building renewal funds as Arizona faced the recession. New school construction was also put on hold.

State lawmakers scrapped the building renewal funds formula this year and created “building renewal grants. So there is the chance the state may take on some of the building needs for districts, such as Mesa, but Mesa leaders and school board members are not too confident they will actually see any dollars.

“With the limited dollars in that account, it will have to be a major, substantial need … collapsed roofs, things like that,” Mesa Superintendent Mike Cowan told the governing board Tuesday.

Lawmakers funded $14 million grants for next school year.

Board member Mike Hughes said he believes much of the funds will go to more rural areas.

“I imagine Mesa would not be in the mix,” he said.

Assistant Superintendent Bobette Sylvester said, “Right now we have $110 million set aside for repair and renovation (in the bond project). Technically, some of those needs could be met. … Things will evolve in the next two years.”

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