This piece is a follow up to address and clarify some of the points I couldn’t delve into in fewer than 750 words. You can read it straight through, or use the links below to jump to specific sections.
Here are the facts:
- In June of 2018, our mill rate is projected to be $22.00.
- We’d start borrowing on the bond as of July 2018.
- By September of 2021, our mill rate would be $28.16—a 28% increase.*
Here’s a chart, to help clarify the increase and the timeframe.
* These figures are based on a $60 million bond. In my op-ed, I was considering a $60-$70 million bond, which is why I rounded that figure up to 30%. Since the ad-hoc committee recently forwarded a $60 million bond to the School Board—and that’s the figure for which the analysis was done—I’m going to use the 28% figure from here.
- all municipal and school operating costs (19.5%)
- the payments on the bond borrowing (about 3%)
- all municipal and school capital costs, including the cost of the necessary improvements to school facilities identified in the system wide assessment (5.5%)
That last one is key. For two reasons.
First, because the city’s Capital Improvement Plan (CIP) has had no impact on the tax rate for years. It is typically kept at a level that keeps the tax rate flat. Increases in the tax rate are usually due to increases in the operating costs of the city and school department—not capital needs.
The CIP will, however, impact the tax rate in coming years because the capital needs for the city and the school department are so great. We are heading into some very expensive years, and that's important to keep in mind.
Second, the four schools that are being considered under the bond don't have the most pressing needs across the system. So in addition to the 3% increase from the bond borrowing, there will be a 2.8% increase due to additional school facilities’ capital needs. (That's encapsulated above in the third bullet point; a little over half of that 5.5% is on the school side.)
Of that $321 million, $191 million in capital improvements need to be addressed in the next 10 years.
Of that $191 million, the four schools we're talking about bonding only account for $45 million dollars of those needs. And most of those needs have been identified as needing to occur in years 6-10 of this 20 year plan—not right away in the first five years (between now and 2022).
Here’s a chart to try to lay that all out clearly.
So… we're discussing committing $60 million to four schools that have under $9 million in capital needs over the next 5 years, while the other 13 schools and facilities in the district have nearly $29 million in capital needs in that same time period.
If we look a little further out, over the next 10 years, we have a total of $191 million in capital needs to address. More than 75% of those costs are associated with school facilities that are not being considered under this bond.
Keep that in mind while considering this:
The system-wide study also identified the schools that had the best shot at getting state funding in the current funding cycle. Those schools are:
- Casco Bay/PATHS
- Portland High School
Three of the four schools that are the focus of the bond are among the schools most likely to get state funding. The applications for the current cycle are due in April. We'll know by summer of 2018 which of our schools, if any, qualify. But if we bond them, they are no longer eligible. That bears repeating:
If a school is bonded locally, it is not eligible for state funding.
Considering that there are many needs to address across the school system, it makes sense to apply for state funding for all of the schools identified as good candidates for state funding while we attend to the most pressing needs, in order of priority. We need all the state funding we can get to make the necessary improvements, and if even just one of these schools qualifies, it could save us anywhere from $25-$45 million.
In future years, the annual amount is a little higher at times, which is why over the life of the bond (20 years) it averages out to costing about $125 per year. Again, that figure is based on the taxes for a property valued consistently at $225,000 for the entire 20 year period.
That $125 a year is significant for some, not for others. But the important point is this: that’s only a portion of the tax increase people will see. That’s just 3% of the 28% increase that would occur between June 2018 and July 2021. There’s still another 25% to consider, so in total, we’re talking about an extra $1386 per taxpayer (based on that $225,000 property), or, broken down over the payment period, about $400 each year.
And that's without any unanticipated costs, like, say, the potential elimination of the General Assistance program that provides money for municipalities to assist families with low incomes.
But here's the thing: proceeding down this path will put us in a worse position overall, not a better one. Why? Because it will leave us without the ability to maintain and upgrade our facilities system-wide. We may wind up with four updated schools, but we’ll be left with multiple buildings on the verge of failing and we won’t have the capacity to fix them.
Okay. Back to the essential question: If this bond isn’t the path forward, what is?
The answer: The $321 million system-wide school facilities capital plan.
The whole point of having this report done was to help us prioritize our school facilities spending so that all of our facilities can be maintained and improved. As page 2 of the report states:
“This plan is intended to assist the City of Portland and the Portland Public School District in identifying, prioritizing, budgeting, and scheduling execution of the work over the plan period. It is anticipated that it will also facilitate strategy discussions and ongoing coordination efforts with the State of Maine Department of Education relative to prioritization of projects and best use of available funding sources.”
And we can do just that.
We have a team in place in City Hall now to get this work done. In addition to finally having a permanent city manager with a strong administrative and budgeting acumen, we have an assistant city manager who gets it, too. We also have a new Director of Finance who has already found ways to save the city money and who understands how to budget and bond without putting the city's bond rating at risk.
Also, because of the advocacy of many concerned citizens, this issue—the improvement of our school facilities—has become a priority for many on the School Board and the Council. Perhaps even everyone in those two bodies.
- Casco Bay/PATHS
- Portland High School
So... three of the schools being considered under this bond are among the schools considered to have the best chance for state funding. The Superintendent, the School Board, and the Ad Hoc committee all have this information.
We keep hearing that none of these schools will receive state funding, but that is a misleading statement. In the last funding cycle for Major Capital School Construction, Hall, Longfellow, Reiche, and Presumpscot all made the state list.
Hall was funded, and we are in the process of getting a brand new facility at a cost of $1.4 million to local taxpayers. The state is picking up the other $28.3 million.
When the funding cycle closed last fall, Longfellow and Reiche were slated as the next two schools to receive funding. Presumpscot was a little further down the list.
While the state has said that Longfellow and Reiche will not be funded as part of the last funding cycle, applications for the current funding cycle are due in April, and the five schools identified by the study all have a shot at receiving state funding.
We should be applying for these funds for all five of these schools. We'll know by summer of 2018 whether any of them have qualified for funding or not.
- NOTE: If you consider the construction timeline we would follow if we bonded the four schools being considered, the second school would not even enter its design phase until late 2018 or early 2019—several months after the determination for state funding will come out.
It’s important to remember, though: schools that have been bonded locally are not eligible for state funding.
To that, I can only say that I consider it a priority, as I know my colleagues on the Council do, and I would certainly work to ensure that the $321 million in capital needs is planned for in our ongoing capital budgets.
I mentioned this at the January 12th meeting of the Council’s Finance Committee, and I know my colleagues on the Council are serious about improving our schools.
We absolutely need to incorporate the findings from this system-wide study into our capital improvement plan.
We also need to apply for every scrap of state funding we may be eligible for.
And yes, there may even come a time when a bond is necessary to address some of the needs specified in the plan. But it would be a smaller bond and it would be for a package to address, say, ADA issues at several schools, or essential improvements to structural integrity, or safety and security system-wide, or a package of individual elements at various schools—or perhaps even one school—that we can't find other funding for.
These steps represent the right path forward: the path that will make improvements at all school facilities system-wide; the path that will ensure all of our students and teachers inhabit buildings that are safe, healthy, and structurally sound.
That’s why we need to abandon the idea for this narrowly focused $60 million bond and implement the $321 million 20-year school facilities capital plan instead. The 20-year plan will address needs at all 17 of our schools and other school facilities in order of priority. That means the elementary schools will be improved as well, they’ll just get their upgrades in order of need, as it should be.