Meeting with Mr. Ostergaard, Part 2

Steve Diaz continues his discussions with Dale Ostergard in this email sent to the School Board.

Dale:  Good morning.  I want to thank you for taking the time to read and respond to my email on the PERS obligation and the proposed 2014 bond (your clarification of the figures is reprinted below following the text of this email).  You will forgive me for missing the 1/4/2011 district posting, obscurely labeled "debt service" and not posted under a more transparent heading, such as, say, "proposed new bonds" -- so that it could easily be found and called-out for what it is, just as I hope you will understand how I might have missed the unlabeled change of subject on a chart showing the PERS funding obligation and might have attributed the bond to cover that expense.  The problem is, your clarification only makes the problem worse.

If, as you now clarify, the proposed bond at 1.2 mills on the ad-valorem rate (on top of the 10% increase we suffered just this past year for the building project) is just more "renovation" expense, then we in fact face a total of 5.39 mills for the PERS underfunding, plus the 1.2 mills for additional building expense, meaning a total prospective increase of 6.59 mills on school taxes alone in 2014 (compared to my initial impression that the 1.2 was included in the 5.39).  None of this includes the base operating and maintenance budget base, salaries, or other items.  This is an impossibly unaffordable burden for homeowners to bear.  Inasmuch as you tell me that your chart does not reflect any expense for financing the 539 mills, can you advise me what options the school board may be considering to fund this sum?  Are you advised that the district has sufficient credit, capacity or resources to cover such a level of spending?  Can you tell me in one simple "bottom line" number what the millage rate becomes after 2014 in consequence of the school boards intentions regarding "renovation", the PERS obligation, and all other spending, combined?  So, you may now understand why your "clarification" is even more troubling than the chart before explanation. 

Again, I have an idea the school board may wish to consider, given the untenable financial position its adventurous building dreams have place us in.  Let's start with the roughly $70 million the district unwisely borrowed years before it could possibly have needed the money for a building project with which it still cannot proceed, at rates that are too-high given the actual market for such securities in the intervening period and at the present time (unsound public policy and very poor planning and exercise of judgement).  Of such funds, why don't you pay the $11+ million PERS obligation in cash, and use the balance to correct the negligent deferral of maintenance of the public school property, using any "left-over" cash for such upgrades as we can afford, scaled to the significant decline in school population in this district?  If the board should find that it, at that point is some relatively smaller sum short for necessary maintenance, updates and appropriately scaled facilities, perhaps a new renovation plan could be proposed. Such an approach would put the school board's feet back on the ground by covering, on a priority basis, our necessary legal obligations, while restoring confidence in the common sense and fiduciary responsibility of the school board, preserving our enormous investment and assets in existing public property and infrastructure, while also allowing the district to revise much of the platinum-plated, unnecessary and unaffordable waste the board is currently trying to trim from the building plan (after ridiculing such ideas for the past several years and excoriating those members of the public who proposed such ideas, but were ignored, during the Act 34 "process".

To regain public confidence, the school board must demonstrate the ability to admit some measure of self-doubt, admit very substantial errors of judgement (for which it must take responsibility, not point fingers), and exercise creativity and responsibility in the management of the educational and financial affairs of our community.  I hope the school board is capable of admitting that there is no serious question of merely pushing ahead on the disastrous course by which they have arrived at the present situation.

Respectfully.  Steve Diaz

 

Mr. Diaz,
The bond issue you are referring to in 2014 is the anticipated bond necessary to complete the HS financing. This proposal can be found in the ACT34 hearing noted as the "Series 2012" bond on page 35. It shows up on the district's forecast of 1/4/2011 posted online in the Devt-Service row under Expenitures for 2014-2015.

There is no bond issue proposal to account for pension obligations. I apologize if in our discussions you came away with that interpretation.
Regards,
Dale