Michigan Lawmakers Consider Repurposing Money for School Technology Upgrades

A bill would allow schools to tap into funds that are currently used for school repairs instead of having to get enough votes for bond measures.

by Erin Dietzer, Holland Sentinel, Mich. / June 20, 2016 0

(TNS) — A Michigan bill would allow schools to use sinking funds for technology and security upgrades, which supporters say would save taxpayer money.

House Bill 4388, introduced by State Rep. Michael McCready, R-Bloomfield Hills, would allow voters to approve up to 3-mills of property tax for 10 years for a sinking fund that could be used for security and technology upgrades, as well as for current sinking fund uses. Currently, sinking funds can be used for repairs and renovations to school buildings and land purchases.

"This is something that we have been advocating for as local superintendents for several years," Holland superintendent Brian Davis said. "It has the potential to save our local tax payers significant funds on interest for items like technology and safety/security that are now bonded over several years."

Under current law, schools must pursue bonds in order to fund technology and security upgrades. The issue with bonds is that they come with interest and issuance fees, which means there can be significant added cost over the lifetime of the bond.

Chris Glass, director of legislative affairs for the West Michigan Talent Triangle (Kent, Muskegon and Ottawa intermediate school districts), said residents of Holland and Zeeland school districts are paying $974,614 and $559,657 in added costs because the schools had to use a bond.

"The rough estimate is that the added cost is usually equally to 10 percent of the total allocation," Glass said.

Glass said it makes sense to include technology and security in the sinking fund because it's a short asset that needs to be refreshed every few years or so. Schools having to repeatedly come back for bond requests isn't cost-effective, Glass said.

"It's like, if you were lucky enough to have $60 million in the bank, you wouldn't take out a 5-year loan with interest for a car," Glass said. "You'd just be able to pay for it. Sinking fund allocations come in each year, allowing schools to get into a routine and allocate that money instead of having to go out for a bond."

Holland, West Ottawa and Zeeland all had bonds including technology and security upgrades, bonds that passed in 2010, 2014 and 2015 respectively. These three districts also have sinking funds of .75, .3 and 1.0 mills.

Davis said Holland's current sinking fund, which generates around $925,000 annually, would be adequate for a district-wide technology refresh that could last 4-5 years, depending on costs at the time.

"The addition of technology will allow districts to remain current and relevant with instructional practices avoiding the increased costs of bonding such purchases over extended periods of time," he said.

Zeeland Public Schools community relations manager Ginger Smith had a similar opinion, saying the bill would be an "absolute win for the school districts."

Local state reps Daniela Garcia, R-90th District and Amanda Price, R-Park Township, who was one of the bill's co-sponsors, voted in favor of the bill, an action that Davis and Smith praised. HB4388 passed the House with a vote of 107-1 on June 8. The bill has been referred to the Senate committee of appropriations.

©2016 Holland Sentinel, Mich., distributed by Tribune Content Agency, LLC.