Nevada County Picayune and Gurdon Times Newspaper Archive

Board discusses options

BY AUTUMN PENNINGTON

Gurdon's School Board started off the week of March 10 with a public meeting to discuss the bonded indebtedness issue.

Superintendent Bobby Smithson spent the majority of the evening discussing the four different options the board had to choose from in order to meet the requirements made by Amendment 74 and the Arkansas Department of Education.

After some discussion, it was decided for the board to meet again on March 12 at 7 p.m. to decide which option the school board supported and if and when they would hold a special election.

Carey Smith, vice president of Stephens, Inc., in Little Rock was on hand to give more thorough information on the millage structure and bonded indebtedness issue.

Smith wrote in an option explanation packet, "As the District is aware, the Arkansas Supreme Court recently ruled on the Lake View School District lawsuit. In part of this opinion, they interpreted that Amendment 74 requires each district to have a minimum of 25 actual maintenance and operation mills. In other words, a district can no longer allow excess debt service millage to count towards the 25 maintenance and operation mill requirement.

"The District's current millage structure is as follows: Maintenance and operation: 12.9 mills, Dedicated maintenance and operation 0.0 mills, Debt service: 23.1 mills which gives a total of 36 mills.

"Because Gurdon has only 12.9 maintenance and operation mills, the district has the ability to transfer a portion of the existing debt service millage to maintenance and operation to count towards the 25 mill requirement.

"However, in order to transfer debt service millage, it will be necessary to refinance the district's 1998 and both 1999 bond issues. This is because the current 23.1 debt service mills are pledged to those bonds. As a result, voter approval is required to restructure the millage and refinance these issues."

Smith then explained option 1 to the board as being the option to ask voters to approve 12.1 new maintenance and operation mills.

Smith wrote in his explanation, "This option would enable Gurdon to meet the 25 maintenance and operation millage requirement without refinancing any outstanding bond issues. However, it would require a significant increase in the district's current millage rate."

Option 2 is to ask voters to approve 2.2 new maintenance and operation mills, transfer 9.9 debt service mills to maintenance and operation and refinance three of the existing bond issues.

Smith explained this option as enabling the district to meet the 25 maintenance and operation millage requirement with a smaller millage increase than option 1.

This would be accomplished by transferring the district's excess debt service millage to maintenance and operation. As mentioned earlier, this approach would require refinancing Gurdon's 1998 and both 1999 bond issues. Therefore, voter approval would be necessary to restructure the millage and refinance these issues.

"According to our calculations," Smith said, "the debt service millage that is presently required to pay Gurdon's bond payments is approximately 13.2 mills. This means that a total of 9.9 mill (23.1 minus 13.2) could actually be transferred to maintenance and operation. After this transfer, the total maintenance and operation millage would only be 22.8. as a result, an additional 2.2 mills would still be needed."

At present, Gurdon's total annual bond payment through the year 2010 ranges from approximately $562,000 to $570,000.

After 2010, these payments decline to approximately $482,000 because the October 1, 1999 and 2000 bonds payoff at that time. The district's payments drop again in 2016 to approximately $126,000 because the 1997, March 1999 and 2001 bonds are retired in 2015.

The final payment on the 1998 bonds is scheduled for April 1, 2018. This is Gurdon's final payment on the existing bonds.

This option would create level annual bond payments of roughly $500,000 from 2004 through 2018. The final payment date on the districts bonds would not be extended beyond the year 2018.

Option 3 ask voters to transfer 12.1 debt service mills to maintenance and operation and restructure three of the existing bond issues.

Option 4 is to ask voters to transfer 12.1 debt service mills to maintenance and operation and restructure three of the existing bond issues to produce project funds.

Smith said, "Like option 3, this option would enable the District to meet the 25 maintenance and operation millage requirement by transferring debt service millage to maintenance and operation.

In addition, this option would produce a significant amount of project funds by restructuring the 1998 and both 1999 bond issues and levelizing the annual bond payment. To explain further, let's assume the estimated annual payment of $435,000 in option 2 was extended from the year 2022 to 2030."

The board members voted unanimously to support option 3 in a special school board election to be held on Tuesday, May 20, 2003.