The is asking voters to approve a no-tax increase generalobligation bond issue on April 5.
The proposition requests $18.5 million in general obligation bonds with no tax increase for residents. Superintendant said the district's debt-service levy will remain at 62 cents per $100 assessed valuation.
A bond issue is a loan made by the district with permission of the registered voters in the district. General obligation bonds must pass with four-sevenths of the majority vote.
DuBray said the bond issue would help pay off a leasehold revenue bond issue passed in 1997, and free up between $3 million and $4 million per year in the district’s operating fund.
Nearly 19,000 students from both O'Fallon and St. Peters are enrolled in the Fort Zumwalt School District, making it one of the largest districts in the state.
In 1997, to accommodate the district’s growth, Fort Zumwalt purchased leasehold bonds to build , a second gym at DuBray Middle School and install air conditioning in Lewis and Clark Elementary School and, DuBray said.
At the time, the legal limit for general obligation bond was 10 percent of assessed valuation minus any district debt.
Fort Zumwalt didn’t have the legal capacity to pass a general obligation bond, so they used the leasehold revenue bonds.
DuBray said now that the legal limit has increased to 15 percent bonding capacity, the district is able to issue more general obligation bonds.
If the district had the capacity to pass general obligation bonds in 1997, they would not have asked for leasehold bonds, DuBray said.
General obligation bonds are more appealing because they are paid off with the debt-service fund, which is only used to pay of the principle and interest of the bonds.
Leasehold revenue bonds are paid for out of the operating fund. The district’s operating fund is also used for salaries, benefits, supplies and equipment.
“If we could convert that lease purchase bond issue to a general obligation bond issue, then our payments come out of the debt service, and we eliminate the need to pay off the lease purchases and free that money up to be used on other purposes,” DuBray said.
DuBray said refinancing the leasehold revenue bonds could save the district up to $4 million dollars a year.
“It’s just a no-brainer. We can use money that’s there but can’t be used for the purposes we need it for,” he said. “It would allow us to use our money more wisely and forestall things like tax increases and further cuts.”
Fort Zumwalt is a formula district that relies heavily on state aid. DuBray said the state formula has been underfunded since 2008, but was propped up on stimulus money that will not be available starting next year.
“It stands to reason, when the state starts hurting in their own budget, that a district like ours is going to hurt because we depend a lot on state aid,” DuBray said.
As legislation grapples with formula woes, the district is looking for ways to work with the revenue shortfall.
DuBray said last year the district cut 40 professional and support staff positions through attrition, but added some positions back for the new full-day kindergarten program started in the 2010-11 school year.
He said the district plans to cut another 40 positions through attrition this year.
If the bond issue does not pass in April, the district will continue to look at ways to make cuts, DuBray said.
DuBray said the passing of the general obligation bond would also help the district return to a balanced budget and eliminate some of the deficit. The Fort Zumwalt School District has run a deficit for the past three years.
In December, Jeffrey Orr, Fort Zumwalt’s chief financial officer, announced the district was able to cut the from $9 million to $3.6 million. DuBray said this was because the district received better than expected revenue in addition to $1.9 million received from the early retirement of a tax increment financing (TIF) from the city of St. Peters.