Ferndale Sinking Fund
On the August 2nd, 2016 ballot, a measure was approved that will levy a tax on residents for a Sinking Fund for Ferndale Public Schools. The measure asked for an increase of 1.3 mills ($1.30 per $1,000 of taxable value of your property -approximately 50% lower than your market value) for 15 years. This will raise about $850,000 per year for facility improvements or about $13,000,000 in fifteen years.
Ferndale Sinking Fund Executive Summary
What is a sinking fund?
A Sinking Fund millage is a limited property tax, considered a "pay-as-you-go" method for funding building maintenance and infrastructure projects. No debt or interest expense is incurred with a Sinking Fund. The tax is levied each year and the revenue generated from this levy is designated to building upgrades or repair. Sinking Fund expenses are audited by the Michigan Department of Treasury for compliance annually. The Sinking Fund revenues cannot be used for general fund expenditures (i.e.., to keep schools open).
Why do we need a Sinking Fund if we just passed a bond in 2012?
Over the past decade, there have been severe cuts to the state's per pupil allocation compounded by shifting enrollment trends, which is the primary source of funding for the district's ongoing operations. The only additional means to fund the district is by asking voters for approval to levy mills for debt (i.e. purchase of land for future building projects) and sinking funds (i.e. capital outlay to build or renovate facilities). The original amount of work identified in 2012 was over $30 million, but the law on bond funds prohibited going out for that amount. Without the Sinking Fund millage, major repairs would need to be paid for with operating funds that would otherwise be used to support educational needs of the district.
The District has identified $13,000,000 worth of projects over the next 15 years that are critical school safety or building and site repair/improvements (see below). Suspending these facility repairs would result in more expensive emergency repairs in the future. The Sinking Fund allows the district to systematically respond to these maintenance needs, ultimately reducing the total cost while prioritizing student safety.
Items | Estimated Cost |
---|---|
Roofs | $3,075,559 |
Exteriors | $2,888,516 |
Interior Improvements/Energy Efficient Lighting | $2,944,764 |
HVAC & Energy Efficiency | $3,261,100 |
Electrical | $1,063.320 |
Total | $13,233,319 |
What is the difference between a sinking fund and a bond?
Most school construction and improvements are paid for with bonds, which is really borrowing money. We have to pay that money back with interest and fees, and have a special tax dedicated to paying off each bond. Because it's complicated, schools usually only use bonds for major projects every 10 to 20 years. That makes sense for new structures and additions, but not so much for things like roof replacement or heating system upgrades. The sinking fund allows schools to pay for these kinds of smaller renovations as we go, without having to borrow money or pay interest. It also means that we're not letting our schools deteriorate for ten or fifteen years while we wait for a new bond project.
What has the school district asked of residents?
We asked for an increase of 1.3 mills ($1.30 per $1,000 of taxable value of your property -approximately 50% lower than your market value) for 15 years. This will about $850,000 per year for facility improvements or about $13,000,000 in fifteen years. Below is the impact on your property taxes.
Home Market | Home Taxable | Annual | Monthly |
---|---|---|---|
$100,000 | $50,000 | $65 | $5.41 |
$150,000 | $75,000 | $97.50 | $8.13 |
$200,000 | $100,000 | $130 | $10.83 |
$250,000 | $125,000 | $162.50 | $13.54 |
Please review the following documents.