Thanks to historically low interest rates, the Lincoln Board of Education learned Monday it could float a bond issue for $286 million without raising the tax rate.
That’s at the upper end of a range district officials gave in April to an advisory committee that recommended $461 million in building projects for a 2020 bond issue.
Monday, LPS officials gave updated numbers to the school board, which must decide which of the projects recommended by the superintendent’s advisory committee — comprised of community members, staff and students — it should include in the first bond issue since 2013.
Officials based the original bond projection of $250 million-$290 million on a range of interest rates.
Turns out a steep drop in those rates means LPS can buy more bonds without raising the 16.1-cent tax rate now levied to pay off existing bond debt.
That’s possible because LPS officials are timing the bond issue when some of the existing bond debt will be paid off.
Scott Keene, managing director at Piper Jaffray who advises LPS, gave the board several options:
* Float a bond issue for $317.7 million with the same tax rate, by extending the amortization schedule (how long it takes to pay back the bonds) from 25 to 30 years. LPS officials said the district has never adopted a 30-year schedule and doing so would reduce the district’s flexibility to adjust the schedule based on interest rates.
* Float a $321.9 million bond issue by raising the tax rate 1 cent; or increase that amount to $357.6 million with a 30-year payback schedule.
* Float a $476.7 million bond issue to pay for all the recommendations. That would require a 5.7-cent increase in the tax rate — not an option board members showed an interest in pursuing.
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Board member Don Mayhew said figuring out what it would take to fill all the district’s needs was an interesting exercise, but not anything the board would seriously consider.
Two board members, though, said they would at least consider raising the tax rate by a penny.
Barb Baier said the district’s needs are great and addressing as many of them as possible now — with historically low interest rates — could save money in the long run.
Annie Mumgaard agreed.
“We have to look at our needs,” she said. “For me to say at this point in time, to draw a line in the sand, I’m unable to do that.”
Mayhew, Lanny Boswell, Connie Duncan and Kathy Danek all indicated they didn’t want to increase the tax rate.
The school board — which wants to finalize a bond resolution by the end of November — is considering a variety of recommendations from the advisory committee, including building two new high schools (smaller than the existing high schools), two K-8 schools and three elementary schools.
Matt Larson, associate superintendent of instruction, said research on the benefits of a K-8 school didn’t reveal any great benefits over elementary and middle schools and it would present a number of organizational challenges for LPS.
The district spent a decade shifting to the current structure of elementary, middle and high schools. Elementary and middle schools now have different schedules, Larson said, and there are lots of questions about leadership, staffing and lunch schedules that would need to be worked out.
Larson said he would prefer having different grade structures temporarily as needed. The district has done that before, including temporarily housing middle-school students at North Star.