• How does the district estimate the projections and scenarios to pay for the State High Project?
    The Board of Directors has reviewed various financing projections or scenarios to pay for the State High Project prepared by the administration and the district’s financial advisor.
    At the December 2 board meeting the latest projections on tax implications (PDF 4.1MB) were presented by the Business Office.
    This document (PDF) and presentation (PDF 3MB) to the Board on Nov. 18, 2013 provides the latest projections on project financing.
    This presentation (PDF of a PowerPoint) to the Board on Nov. 11, 2013 provides more information on funding the project. 

    Key Variables and Assumptions
    These financing projections use key variables and assumptions to estimate the impact on the district budget and the taxpayer through referendum:

    Project Cost between $109 and $115 million based upon the architect’s latest cost range for options under design. All scenarios do not meet current cost estimates.

    Referendum Debt is the amount of debt funded through a separate tax to be included in a referendum question on the May 2014 ballot.

    SCASD Up-front Contribution represents resources assumed to be committed from current reserves in the amount of $10 million.

    SCASD Annual Allocation is the projected amount of budgetary resources that the district would commit to fund a portion of the debt for the project. In the wrapped structure the SCASD annual allocation increases during the repayment period as the district’s current outstanding debt service payments decrease.

    Bond rating is the evaluation that rating agencies give entities who issue bonds. The current district bond rating is AA-. However, historically the district’s bond rating was AA. The rating of AA would produce a lower interest rate for the district resulting in lower interest expense with respect to debt. If the district is able to upgrade its credit rating to AA, that upgrade should decrease interest expense by 10 to 15 basis points (.10 to .15%).

    The interest rate of 4.75% is the current interest rate in the bond market that the district would pay to issue bonds to fund the project, assuming the current bond rating of AA-. An interest rate of 5.3% is the 25-year historical average for AA- bonds.

    Repayment period, also known as amortization period, is the length of time for the bonds or loan to be repaid. The analyses thus far have been prepared assuming 20 or 30 year repayment scenarios.

    Structure of level or wrapped debt service describes how the debt service is paid. A level structure assumes the same, or relatively same, payment of combined principal and interest throughout the repayment period. A wrapped structure exists when the principal and interest payments for a debt issue change in amount during the repayment period. There is a limitation, however, that 
    an organization's total debt service payments must remain level or decrease in amount. In a wrap structure the payments of a specific debt issue may only increase by the amount that the payments for all other debt issues decrease. The advantage of a wrapped structure is to utilize resources already in the district budget that become available as debt service payments decrease in the future, thus lessening the tax impact for the taxpayers. Our multi-year budget projections include a commitment of $9 million per year between the debt service and capital reserve transfer budget line through 2046.

    Tax Millage and Rate Increase for Referendum Debt –represent the amount of tax revenue in terms of millage rate and percentage increase required to fund the referendum debt. The increase in tax rate will be in effect until the referendum debt is repaid.
Last Modified on December 12, 2013