In November, we’re being asked to vote on extending a bond override to save the Kyrene and Tempe Union school districts from financial disaster. We’re being told such an action won’t increase our taxes. Really?
A bond, public or private, is a form of debt. A debt must be repaid. The public sector has only one source of funding... taxes. In the case of school districts, it’s property taxes. Yours and mine.
Because a bond is debt, interest must be paid on that debt in order to make it profitable for the lender. The debt service on the Tempe Union High School District (TUHSD) bonds is currently $7,607,025 and is projected to be $8,125,085 for the coming fiscal year. A 6 percent expense increase.
That money must come from somewhere. Where? Our property taxes? That can’t be, because we’re told by the school district leadership it won’t happen. But, then, we can’t always count on government folks to be accurate in their projections, can we?
Now that we can be secure in the knowledge our property taxes won’t increase, we must consider other sources for debt service and debt reduction. Perhaps the state of Arizona will come to the rescue. Great idea! But wait... the state gets its funding from taxes, too. We can’t win for losing. The tax man cometh one way or another.
But, but, but it’s for the children, our future leaders. We must do this!
However, prudence says it’s smarter to reduce the debt, thereby reducing the debt service, thereby leaving more money to pay teachers to teach our children to be good stewards of their money. Notice administrators weren’t included because the ratio of administrators to teachers is almost 90 percent in the TUHSD while at the Kyrene School District it’s 68 percent. That begs the question, is all that extra support payroll necessary for TUHSD? (The student-teacher ratio is 1:20.7). That’s a question which must be answered before we begin to think about extending the override.
Kyrene has done a masterful job in reducing its debt service by about 64 percent (2012 fiscal year compared to 2011 fiscal year). The student-teacher ratio is about 26:1. Kyrene has a current ratio of about 7:1 according to the June 30, 2012 financial report and assets increased by about $1.8 million. These are good numbers. Total revenues dropped about $2.8 million. Not bad considering the decrease in real estate tax income due to the drop in real estate values. As real estate values improve, the tax revenue will increase. Of course, this premise is based upon the good folks in Foggy Bottom and our state Legislature gaining a little common sense.
All things considered, it looks as if some financial housekeeping could avoid the need for approval of the bond override. Operating within budget is the answer, not a vote to extend the debt.