To the Editor:
I would like to take this opportunity to respond to the bond financing speculations made by John A. Peters in a recent letter to the editor published on Tuesday, Aug. 27.
Following is a summary of information explaining the principal and interest estimates for the 20-year facility improvements bond. This information was provided to USD 428 by Piper Jaffray, the investment banking firm helping the school district with the bond information, and is available on the USD 428 website and has been published twice in the legal notices of the Great Bend Tribune. I believe the estimates which Mr. Peters derived from these numbers and published in his letter are incorrect and misleading as they are over $19 million more than what is being sought by the school bond proposal.
— For Question 1: As a result of financing $41,750,000 over 20 years at an estimated interest rate of 3.53%, the total interest expense paid over the 20-year period is estimated to be $23,843,800. The interest rate includes estimated bond costs of approximately 2% of the amount financed. The State of Kansas will pay 19% of the annual principal and interest payments. This amount is not paid up front but paid each year over the life of the bonds. These annual state aid payments reduce the local mill levy requirement to support the bond payments.
— For Question 2: As a result of financing $3,120,000 over 20 years at an estimated interest rate of 3.53%, the total interest expense paid over the 20-year period is estimated to be $1,780,287. The interest rate includes estimated bond costs of approximately 2% of the amount financed. Again, the State of Kansas will pay 19% of the annual principal and interest payments. This amount is not paid up front but paid each year over the life of the bonds. These annual state aid payments reduce the local mill levy requirement to support the bond payments.
To summarize with an estimated “all-in” number, as Mr. Peters’ attempted to provide, the more accurate estimate would be $70,494,087 ($19 million less than Mr. Peters’ estimate), of which 19% will be paid annually by the State of Kansas to USD 428, thereby reducing the local mill levy requirement.
This is a complex proposal that seeks to accomplish the core goals of addressing safety and security, expanding Pre-K, and addressing facility infrastructure and improvements. In addition to the scale and scope of the proposed improvements, the pieces of the plan are connected, making Mr. Peters’ proposed solution to “do the projects in order of necessity” an infeasible notion. For example, in order to expand Pre-K to all elementary buildings, space must first be created by promoting 6th-grade to Great Bend Middle School. Or in the case of safety and security, how do we pick which school should receive a storm shelter or secure entrance first? The proposed plan has been created after 18 months of community meetings, feedback and suggestions. With the election on Sept. 5, the community will share in the decision to pursue this plan with their vote.
I have watched this process unfold and believe the USD 428 administration and Board of Education members take their financial responsibility to the community very seriously. They have worked diligently to make the information available in person and digitally. I encourage you to take any opinion piece as just that, an opinion. Please take the time to review the information on the bond proposal, including proposed elements, tax calculators, virtual tours, and financing information available online at www.GreatBendSchools.net/bond or contact the District Education Center directly at 620-793-1500.