At least one member of the Jefferson County Public Schools Board of Education appeared to be on the defense Thursday evening while debating whether or not to issue certificates of participation (COPs) for a new school and an upgrade to another.
“There is a temptation to adopt some sort of discretion over whether or not the growth happens,” member Brad Rupert said in reference to the projected growth of new students in the district over the next few years. “We don’t have that discretion. The growth is happening. We don’t decide whether the kids are going to show up. We simply do our best job at projecting how many kids are showing up.”
Rupert’s remarks came up during discussion of issuing COPs for a new K-8 school in the Candelas area of northwest Jefferson County.
The board voted 5-0 to go ahead with the COPs at an estimated cost of about $25 million. A second COP to finish phase II of Sierra Elementary School at an estimated cost of $15 million, also passed, 4-1 with Amanda Stevens the lone no vote, saying she wants to be sure to treat all students equally
The discussion is one that has been ongoing for nearly two years.
COPs allow a third party, usually a dummy corporation created by the government itself, to use the new construction as collateral on bond debt that is then repaid by “leasing” the property back to the government. It is often used as a way to finance constructions projects without asking voters to approve a regular bond issue, as is required under Colorado’s Taxpayer’s Bill of Rights (TABOR).
However, also because of TABOR, the lease cannot last for more than one year. Instead, it must be reviewed annually until the bonds are paid off. In practice, this means that a future board could vote against renewal, which could force the district into years of legal battles trying to determine who owns the building and who’s responsible for the debt.
The payments could be a problem considering current revenue projections in education funding from the state are bleak.
Steve Bell, chief operating officer for the district, told the new board in December that the projected growth in that area is at a critical level. He warned of split schedules, year-round school, and long bus rides if the district didn’t find someplace for 800 more kindergarten through eighth-grade (K-8) students, and most immediately K-6 students.
Rupert repeated several times that he understands people don’t like debt but said that you can’t conduct business without it and that leases and loans are a fact of life.
“All debt is evil,” Rupert said. “I hear what people are saying. I hear as a value people are debt resistant. Reality is we are talking about building 30- and 40- and 50-year assets. It’s appropriate to align the expenditure of the assets with the lifetime of those assets. You don’t buy a house without a mortgage. You pay for it over time at today’s prices not tomorrows prices.”
However, the debt itself is not the evil, former board members said. It’s taking out a mortgage without first asking the person who will write the check that’s the problem.
The previous board refused to issue COPs, saying they were a way to get around the Taxpayer’s Bill Of Rights (TABOR) and created new debt without asking taxpayers to do so.
“That’s not the way I want to operate,” then-President Ken Witt said last fall. “If voters want to approve debt, take it to them in a well-fashioned argument.”
Rupert added that to teach kids you have to provide seats for them.
“Just because we don’t have the luxury of cash in our piggy bank, doesn’t mean we can avoid building those schools,” Rupert said. “We must build those schools.”
Yet the former board members – three of whom were recalled in November – found the cash. They took $15 million in underspent money from the district’s general fund and another $3 million from the capital transfers fund to build a K-6 school at Candelas, taking care of the immediate problem. They also told Bell to start the process of asking voters for a bond at the next election.
But the current board returned the $15 million to the general fund, saying they needed the flexibility of the additional funds because of the unsure forecast in school finance for next year.
The board had planned on giving $5 million of that $15 million to the staff as bonuses, but Superintendent Dan McMinimee said classified staff union representatives and representatives of the Jefferson County Education Association did not want the district making “arbitrary” decisions on compensation, so McMinimee complied and took the offer off the table.
It is unknown why he did, but there was chatter on local talk radio and social media sites that the $5 million could be viewed as a payoff after the revelation that the teacher’s union largely drove the recall effort in November.
The $3 million will remain in the capital transfer fund and put toward lease payments on the new building. The argument in favor of a COP is that $3 million in capital transfer money is made every year. However, in December, Bell said the district stopped transferring that money in 2009 because of the recession. In fact, he said the district was unable to make that transfer again until 2015.
That was not discussed Thursday, although Stevens expressed her concerns about future transfers several times.
“Ultimately, we’re not out of the woods for future budget cuts, and I want to be sure that our reserves are sufficient to weather possible budget cuts that come because of state level decisions that we can’t control,” Stevens said. “You’re right. There are ongoing transfers, but they are funds that disappeared pretty quickly when other general fund pressures came to bear.”
Stevens voted yes on Candelas anyway because she said it was more efficient and made sense. She voted no on the Sierra Elementary School improvements because she said a bond was the best way to handle that.
“I know there are other schools where the same safety concerns around the use of temporary buildings exist and the same priority one and priority two urgent needs exist,” Stevens said. “And my deep commitment is that we will not step up to one or two needs as they exist, but that we will take action with a major bond package to solve those problems for all students district wide to the best of our ability.”
There has been no discussion on how much the bond would be, but Bell told the board in December he needs $789 million just to maintain the current facilities.
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