1. Fennville Public Schools
Sinking Fund Update,

2. What is a Sinking Fund? 2

3. School Funding Basics
General Fund

4. School Funding Basics
Food Service Fund
General Fund

5. School Funding Basics General Fund Food Service Fund
Agency (Student Activities) Fund

6. School Funding Basics General Fund Debt Service/ Capital Projects Fund
Food Service Fund
General Fund
Agency (Student Activities) Fund

7. School Funding Basics General Fund Sinking Fund Debt Service/
Capital Projects Fund
Food Service Fund
General Fund
Agency (Student Activities) Fund
Sinking Fund

8. Three Main Ways to Accomplish Site Improvements
Sinking Fund—Collection of funds without borrowing for a specified period of time
Bond Issue—An authorization to borrow money up front in order to pay it back (with interest) over long periods of time
General Fund—also pays for teaching supplies, utilities, fuel, salaries, etc.

9. Three Main Ways to Accomplish Site Improvements
Bond Issue
General Fund
Sinking Fund

10. Three Main Ways to Accomplish Site Improvements
Bond Issue
General Fund
Sinking Fund
Paycheck

11. Three Main Ways to Accomplish Site Improvements
Bond Issue
General Fund
Sinking Fund
LOAN
Paycheck

12. Three Main Ways to Accomplish Site Improvements
Bond Issue
General Fund
Sinking Fund
Paycheck
LOAN
Paycheck

13. Sinking Fund Proposal
Proposal asks for a 10-year sinking fund at ½ mill per year
Will generate about $170,000 annually for projects and maintenance in the district
Is done on a “pay-as-you-go” basis—no borrowing and no interest payments
May not be used for supplies, salaries, or equipment
Will not be used for land or property purchase

14. Why Now? Several projects need immediate attention
Building security
Safety improvements
Lower level parking lot at the elementary
Site lighting at the high school
High school carpeting, lighting, lockers, and mechanicals
Auditorium lighting, sound, and control panels
Preparation for future needs
Ongoing maintenance costs as buildings age

15. Why Not the General Fund?
Limited availability of funds each year
Basic maintenance must come first, and that is even difficult to do financially
Major projects are not able to be funded without taking money away from the educational program

16. Why Not Another Bond Issue?
Necessitates selling of bonds, with related interest costs
Because funds must be expended within five years, would necessitate a higher tax rate
Cannot be used for items not specifically included in the bond request, and therefore cannot be used for unforeseen needs

17. An Example High School Roof Replacement Cost of $597,000
Failure of roof occurred right after bond issue
Forced to borrow and pay back from General Fund (still paying!)
Interest cost (even after refinancing) of $109,000

18. What Will It Cost? 1 mill = 1/1000 (or 0.001) ½ mill = 0.0005
½ mill x Taxable Value = Amount of Tax
Taxable Value is typically ½ of the property’s value
Therefore, a $100,000 home (taxable value of $50,000) would be taxed $25 per year
x $50,000 = $25

19. The Ballot Language
Shall the limitation on the amount of taxes which may be assessed against all property in Fennville Public Schools, Allegan County, Michigan, be increased by and the board of education be authorized to levy not to exceed .5 mill ($0.50 on each $1,000 of taxable valuation) for a period of 10 years, 2013 to 2022, inclusive, to create a sinking fund for the construction or repair of school buildings; the estimate of the revenue the school district will collect if the millage is approved and levied in 2013 is approximately $170,000?

20. Also on the Ballot…
The annual authorization to levy 18 mills on non-homestead (vacation and business) property

21. Questions?