2015-04 Energy Exemption Projects Tax Impact
- First published on 16 April 2015 Posted in District News
In 2009, the Wisconsin legislature passed Act 28 which provided school districts the ability to exceed the State imposed Revenue Limits without going to referendum for energy efficiencies that result in the reduction of energy costs. The Revenue Limit is a vehicle which limits the amount of tax dollars, both state and local, that a district can levy. The interpretation of Act 28 was that the projects and their costs would have to be expended and levied within the same year. Some districts had multi-million dollar projects that caused a very large increase in the local tax levy.
In 2011, Act 32 modified Act 28 requiring districts to hire a third party performance contractor to ensure the energy savings of the project. In exchange, the legislature allowed districts to issue bonds for up to 20 years; the repayment of the bonds would be an allowed Revenue Limit exemption.
A performance contractor must be certified by the State. At this time, there are only 14 certified vendors for Wisconsin. Chilton Public Schools performed a Request for Qualifications (RFQ) during the summer of 2014 and selected Nexus Solutions from Milwaukee. Over the past six months, Nexus has worked with the Buildings & Grounds Director, Dan Kopf, and administration assessing the district’s facility needs and potential energy efficiencies.
At the February 23, 2015 board meeting, the Board of Education approved the administration’s recommendation for $5,580,000 in projects that qualify for the State’s Energy Efficiency Exemption. Dan Kopf, Buildings & Grounds Director, will be providing additional information on these projects in the District’s next newsletter article submission in two weeks. Today, I want to provide you with an understanding of the impact of this project on you, the taxpayer.
In 2009, the district initiated a plan to levy funds, within the State Revenue Limits, to ensure that money would be available to pay for future capital expenditures needed to maintain the facilities of the district. The funds set aside in the Capital Fund reduces the amount of money available for the instruction and day-to-day expenses of educating the students and running the schools. This has required the administration and board to make financial adjustments over the past six years to the General Operating Fund. As of June 30, 2014 we have set aside over $400,000 to ensure future capital maintenance projects can be completed. The Capital Fund is not used for the payment of wages, supplies or utilities, but rather for large maintenance expenses such as boiler replacement, heating and air control system upgrades, safety and security, etc…
Over the past twelve (12) years, the board has refinanced debt six times effectively saving the taxpayers over $2.6 million dollars in interest payments. The last debt refinance was done in January 2015 that achieved over $500,000 in savings.
It is the savings for the recent refinance, as well as the estimated utility savings that exceed $600,000 over the next ten years, that will be used to keep the debt service levy to the same level as was levied for the 2015 year. The district will issue bonds and schedule the repayment of those bonds around our current debt so that in 2020 and 2022, when the debt for the high school is paid in full, the new debt for energy projects will maintain the same debt level for three additional years.
In short, the almost $5.6 million in projects will not increase the current levy. Instead, we have structured to pay the debt with achieved interest savings, certified utility savings and extending debt for three additional years.
If you have any questions regarding Chilton Public Schools debt or how Acts 28 and 32 are being utilized by the district, please do not hesitate to contact Lisa M. Lau, Business Manager, at 920-849-7199 or at firstname.lastname@example.org.
I encourage you to look for Mr. Dan Kopf’s newsletter article that will appear in this publication in two weeks. Mr. Kopf’s article will explain, in detail, the specific energy efficiency projects that will be completed in the School District of Chilton this summer. Stay tuned….more to come!