For hundreds of years, school districts have used public funds for transportation, facilities, and other needed infrastructure to educate the children of the general population, regardless of income, race, or political affiliation.

People may have different opinions about how to facilitate public education, but the fact of the matter is: public education is public: publicly funded, publicly attended, and the benefits of an educated electorate, stable society, job creation and economic development, are also public.

If your memory were such that you could remember walking into school on your first day of kindergarten or first grade, you would remember that the buildings were already there. Someone else built them and maintained them for years or decades before you arrived.

You used the buildings for 12 or 13 years, and then you moved on. Your obligation changed from being a student, to being one of the many who fund public education for future generations. Just like someone funded yours. This is a prime example of community building.

For school districts with numerous facilities, voter-approved bonds are an important financing tool provided by the state legislature to fund major renovations, infrastructure improvements, and building replacement.

The benefit of the school bond is that the district gets all of the money upfront, avoiding future inflationary costs.  The bond is paid back with interest over 20 years.  This funding method is far more efficient and inexpensive than the alternative of piece-meal funding, and deferred maintenance over the same time period.

The Rapid City Area School District uses 23 buildings for educational purposes across a district spanning more than 400 square miles. The challenge is that the district’s ordinary annual funding is not sufficient to address the needs of its aging facilities, especially when half were constructed prior to 1960. This funding challenge is shaped, in part, by South Dakota’s approach to school funding and property taxes:

1. The legislature has largely tied school funding to property taxes.

2. Lowering property taxes remains one of the legislature’s apparent priorities.

Rapid City school district last received approval from the voters for a school bond in 1973. For 53 years, they have been using a combination of annual inflows of capital improvement funding from the state, and relatively small capital outlay certificates, or loans to accommodate for growth and major maintenance of its buildings. However, delaying necessary construction and maintenance can increase costs through inflation, deterioration, emergency repairs, and repeated mobilization of contractors.

Over the course of more than five decades, necessary prioritization has caused several schools to go without much needed repairs or upkeep.

If you focus on anything in this article, focus on this: saying no for 53 years has increased taxpayer spending, not decreased it. Deferred maintenance is the financial enemy of any building owner—and in this case, that owner is the taxpayer. It is plausible that our property taxes are higher today than they would have been had we chosen more efficient funding strategies for our public schools over the past half-century.

Here’s an example:

If the school bond passes, necessary upgrades and construction will occur. The bond will be paid back over 20 years. Starting out, the tax burden for the owner of a home valued at $336,000 will be about $13.72 per month.  As Rapid City and the surrounding area grows, that $13 burden will shrink over time. Based on an analysis of the past growth and predicted future growth, that tax burden will be cut in half over the next six to seven years.

If the bond does not pass, the school district will still fund these improvements and necessary additions over a longer period of time, perhaps incrementally over 20-30 years, at an additional cost of approximately $60 million in interest and inflation.

Which sounds like a more efficient funding strategy?  Please consider supporting your local school district on November 3rd.

 

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