Marshall Public Schools Superintendent Dr. Carol Maher has issued a statement, answering questions and clarifying financing for the addition to the Spainhower Building.
A release from Dr. Maher says: A large body of research over many years has consistently found that school facilities impact teaching and learning in profound ways (Tanner, 2006). Marshall students, the same as other children in Missouri, deserve accommodating, comfortable, and attractive facilities where they can enjoy a meaningful school experience. Appropriate facilities will insure them equitable learning opportunities in a school setting that is a source of pride for them and the community.
In reference to action during the School Board meeting in September (a vote that approved the refinancing of a previous lease purchase to fund a classroom addition to the Spainhower School) the following questions were submitted.
1. How much money is in our balance/set aside fund for construction?
Currently there is $3,596,501 in Fund 4, the source for payments of the lease purchase. There is $2,300,000 local money budgeted from those reserves for the construction of the Spainhower addition and $964,110 has been spent. There are additional obligations that have been or will be paid through Fund 4.
2. How much will the Spainhower project cost? What is budgeted for that?
This was answered in the minutes from September 25, 2018, (regular/open session). Also, the unanimous vote by the board to advance to the addition phase of the project was included in these minutes. Here are applicable items from those minutes:
· Cost vs. value of Hab Center property for MPS: The immediate cost is approximately $7,196,200 for repairs, renovation and addition to Spainhower. The immediate value added to the district is approximately $12,500,000.
· During the superintendent’s report it was noted that, because there is no levy in Fund 3 to finance improvements to the Spainhower Building, a balance in Fund 4 is being built to finance the addition of a classroom wing. This addition will meet the goal to get kindergarten students out of trailers and into a permanent structure. The plan for savings in Fund 4 has been discussed in open session for three years.
· Discussion was held on advancing to the design phase for an addition on Spainhower. The administration would like to make Spainhower an Early Childhood Center, housing grades Pre-K through first grade. This would be approximately 28 classrooms (in total) and will get the kindergarten students out of trailers. The Alternative and TLC programs would be moved to another site in the district- possibly a vacant elementary school. On a motion by (Kathy) Green, seconded by (Mike) Mills, the board unanimously approved advancing to the design phase for an addition on Spainhower which included the HVAC.
3. How much additional money did the district vote to borrow at the last meeting? Actually, by law, a district is not allowed to simply borrow money from a financing entity (in this case, Wood & Huston Bank) and then proceed to expend those funds to construct a facility. The statutory language is that the financing entity (Wood & Huston) constructs and owns the facility. The law defines debt obligations secured by a mortgage pledge or deed of trust by stating, “…such bonds, notes, and other obligations issued shall not be the debt of the educational institution and the educational institution shall not be liable thereon … shall not constitute an indebtedness of the educational institution within the meaning of any constitutional or statutory debt limitation or restriction.” So according to the law, the district did not take on additional debt. In reality of course, MPS will make payments to Wood & Huston and at the end of that agreement, the district will own the addition. The entire structure will then be district property.
The lease-purchase amount upon which MPS and Wood & Huston agreed is shown in both tables included in the minutes of the September 24, 2019, board meeting, (Regular/Open session). The lease-purchase total amount is $9,540,000, and the new money portion is $4,896,200.
4. When did the bids go out for that new loan request? Who placed bids on that?
Because this was a refinancing of the 2017 lease-purchase (and not a loan), it was not necessary to advertise for bids. Our financial advisor, Dr. Brent Blevins (of Stifel Financial Corp., St. Louis), handled the research into the most beneficial financial package available to MPS. The local bank, Wood & Huston, offered a very generous lease-purchase agreement, with an interest rate at 2.1 percent and no closing costs. Because the 2017 lease-purchase rate was 3.4 percent, the district is saving over $65,500, and the addition of the savings from no closing costs equals about $100,000 for the initial year.
5. When did the School Board first know of the new bids? As discussed above, there were no bids taken for the refinance of the 2017 lease purchase. This resulted in the 2019 financial agreement between Marshall Public Schools and Wood & Huston Bank.
6. What is the difference between Lease-Purchase and a Loan? Again by law, school districts are not allowed to enter into a loan. There are only two ways to secure money for the repair, renovation or building projects necessary to provide students with facilities conducive to learning. Those two methods are: 1) The district finances through balances in Fund 3, the Debt Service Fund. Marshall has not passed a tax levy increase in over 35 years; therefore, there is not a sufficient amount in Fund 1 to be able to subtract money from the fund and place it in Fund 3. Without money in Fund 3, it is not possible to have sufficient district funds for building or repair. 2) The district enters into a lease-purchase agreement, secured through district property used as collateral for the lease. (The buildings are Marshall High School, MPS Central Office, the SCCC and the MHS Athletic Complex.) Payment is not run through Fund 3 and is a yearly board appropriation. This is what MPS has done for the past 12 years to finance needed projects.
In addition, it is interesting to revisit the origin of the agreement between MPS and Ittner Architects, the firm managing the Spainhower Addition construction. These minutes are from a special meeting on October 23, 2013:
· The board interviewed the following architects: Ittner Architects, PW Architects, and Hollis + Miller Architects. The Board unanimously approved to hire Ittner Architects pursuant to a successful contract negotiation.
· MPS awarded and agreed upon a contract on October 26, 2013, between the district and Ittner Architects which stated that the architect office would be used for projects approved over the next three tax levy or bond issue elections. The April 2014, tax-rate question failed; April 2015 tax-rate question failed; and the April 2016 tax-rate question passed. The third election project was to include district roofs and HVAC systems, along with renovations and repairs to the Spainhower Building. Ittner Architects was used for all projects funded by the third election, as agreed upon by the contract signed on October 26, 2013.
Bids have not been taken for any building repair, renovation or construction project completed or pending (such as the Spainhower addition) since the inception of the 2017 lease-purchase because in 2013, the MPS School Board contractually agreed that Ittner Architects would manage all projects, including those allowed by the passage of the 2016 tax rate that restored the previous rate of $3.12.