Why did the trustees choose a 50-cent bond?

The PAYG has served the district well in addressing the capital project's needs since the time of its passage in 1986 until recently. Projects were paid off upon completion. There was no interest cost and all of the revenues went towards building and improving school facilities. It also allowed the district flexibility in addressing student growth throughout the past thirty years. 

Unfortunately, during this period of time, the Nevada State Legislature changed laws that capped the annual growth of property tax revenues. As a result, since 2006 all the municipalities in Nevada have recognized ad valorem/property tax revenue growth lagging changes in assessed value. This same phenomenon has taken place with our PAYG funding. The annual PAYG revenues have not kept up with construction inflation. The example we showed at the forum reflected Sage Elementary which was built in 2004, cost the district $9,602,735, and has a square footage cost of $163.97. Adobe Middle School which was built in 2007, cost $28,897,864 which is square footage cost of $284.65. Liberty Peak, built in 2019, cost $35,873,695 with a square footage cost of $369.04. The cost to build Adobe in 2020 would be $41,930,806. 

As a result of the increased construction costs and the flattening of the PAYG revenue growth, it is taking longer and longer to generate the funds necessary to build new schools as compared to building a facility at today’s cost through a bonding program. 

Unfortunately, the PAYG funding method leaves the District falling further behind in providing necessary facilities and current construction inflation greatly exceeds the growth in municipal bond interest rates. 

Based upon current trends, the PAYG funding method could leave the District falling further behind in providing necessary facilities. 

How will that affect municipalities that want some of the PAYG tax levies?

By requesting a 50 cent debt rate, if passed, local municipalities will have access to 25 cents of the tax rate within the statutory cap. 

For taxpayers, will they see a decrease in their tax bill or any other significant changes outwardly?

The District is reducing its tax rate. If the bond question is approved the rate will go from $0.75 to $0.50, so theoretically every taxpayer would see their overlapping tax rate drop $0.25. Other local governments in Elko County have the ability to increase their tax rate as part of the budgeting process and could increase their rates which would decrease or eliminate any savings taxpayers would otherwise see. 

Now that the legislature has approved pupil-centered funding, how will that affect the school district, particularly if the school bond question fails in the special election?

The pupil-centered funding plan was implemented on July 1, 2021. This new funding distribution similar to the previous Nevada plan provides no capital project funding. The only means for a Nevada school district to generate funds for capital projects is through 

voter approval for a bond rate or a tax override/PAYG. If the bond proposal was to fail, the school district would have no funds or any funding mechanism available for capital projects. 

A follow-up to that is the persistent rumor that the school district's general fund would support capital funding. Can you explain why that isn't the case?

The Elko County School District’s general fund receives no funding allocations for capital funding. Any general fund expenditures for capital projects would directly reduce instructional programming at all of our schools. 

How does a bond get repaid and who buys the bonds? (in brief)

The District issues bonds after a resolution are passed by the school board outlining the terms and conditions of the bonds. The bonds are sold in the public markets under a competitive process where investment firms are invited to submit bids for the bonds. The winning investment firm then sells those bonds to individual investors, bond funds, or other types of institutions. The District pays the bonds from the resources available in the Debt Service Fund. The property tax revenues generated by the bond levy will be deposited into the Debt Service Fund and those revenues, any interest earnings, and available balance can only be used to repay the bonds. Bonds generally pay interest twice a year and principal once a year. 

Without a bond or capital funding, what would that mean for the capital project list? Would there be significant delays in basic repair or maintenance for schools needing mechanical upgrades for aging facilities?

Without capital funding, there would no longer be a capital project list. The only funding available would be the funding currently programmed for the day-to-day maintenance and operation of our schools. Any changes to that funding would ultimately result in decreased services and instructional programming. 

In the school district's current situation, how will bonds provide continued funding for years to come due to the roll-over and how will it benefit the community in the long run?

The proposed bond program is based on minimal to no growth in the District’s assessed valuation. As property tax revenues increase over time there should be more revenue than is needed to make the debt service payments each year. At that point, the School Board will have the option of presenting a new funding plan to the voters for their approval. That plan could be for additional bonds, a new PAYG plan, or a “rollover” program that combines the bond and PAYG option. Just to reiterate, any new funding plan would have to go back to the voters for approval under current law. 

Can you clarify the school district's transparent process?

The school district continues to approve a 5-year capital improvement plan in conjunction with the annual budget in the spring of every year. The development and prioritization of this plan are discussed openly at school board meetings every spring and used in the development of our annual budgets and development for the school district’s annual debt management plan. The Elko County School District has been commended since the first passing of PAYG in 1986 until now from the Nevada Department of Taxation for the District’s diligence and oversight of the Elko County School District’s Capital Projects Program. 

To Clarify, the District's bond proposal will free up 25 cents of the tax rate that will be available to the other municipalities. What happens to the 25 cents? Couldn't the District continue to pay the PAYG at 50 cents?

The District is proposing a funding plan that will generate funding upfront versus waiting to accumulate funds. The proposed tax rate is 25 cents lower than the rate the District is currently levying for capital projects. A lower tax rate would mean it would take additional time to accumulate the needed funds for a project. If local governments choose to increase their rates to use up that 25 cents then there would likely be no change in the amount of property taxes a homeowner pays.