Kinsey: The financial folly of AJUSD’s proposed $93M bond tax increase
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This coming election Apache Junction Unified School District is asking us to vote on a $60 million bond that will be financed over 19 years. This bond is financially foolish because of the expenditures covered by the bond and because of the way it is financed through 2039. The bond amount per enrolled student is over $19,000.
Brenda Kinsey
The $60 million bond covers urgent needs for the schools, such as a new track, site improvements, technology, etc. Less-urgent needs are included as well, such as office remodels, kitchen remodels and new marquees.
A total of $3.6 million is included to remodel the closed Superstition Mountain Elementary School (SMES) in an ill-advised scheme to reopen and create more capacity in a district already operating well below capacity in three of its five schools, which will strain the operating budget of other schools since district funding is received based on student count, not school count.
Furthermore, the bond includes nearly $7 million for contingencies and rounding to get to an even $60 million. Finally, many of the items listed could be covered by building renewal grants from the Arizona School Facilities Board, which the district has not been utilizing.
The $60 million bond will cost a total of $33 million in interest, per the election pamphlet mailed and available online at the Pinal County Recorder’s website. Therefore, the total property tax increase for the bond is $93 million. For every $1 collected in property taxes $0.36 will go to private investors in the form of interest payment.
The total interest is high because the bond is financed over 19 years with the highest taxes collected after our current outstanding bond is paid off in 2027. We will be paying a tax rate of $1.34 per $100 net assessed value from 2027-39. Residents will be taxed for the majority of bond expenditures when the bond capital purchases are wearing out and likely in need of replacement. By financing the costs beyond the reasonable life of the assets purchased, it lessens the chance that a future bond will be passed after 2030 when capital needs to be replenished for those future students.
Our community and district can improve our schools by following the best practices of our neighboring districts. Literally all districts pass bonds in smaller amounts on a per-student basis and do so for shorter bond terms.
The bond passed in Mesa last year was $5,000 per student, and it passed in a year a prior bond expired so it didn’t raise property taxes but merely prevented the property tax decrease. This year Gilbert, which is a district 10 times the size of AJUSD, has a $100 million bond that will be financed over 14 years and cost $28 million in interest; the interest on Gilbert’s $100 million bond will be less than the total interest on AJUSD’s $60 million bond. The per pupil bond amount is $3,000 per student.
Based on records obtained from a Gilbert district representative, in the last 27 years the total bonds passed in Gilbert ($497 million) calculates to less than $15,000 per currently enrolled student (33,480 students) even though some of those bonds were for building schools when the district added over 9,000 students in the early part of the last decade. Clearly, benchmarking to other districts shows that AJUSD is asking for too high of a bond and financing it over too many years and asking for the residents to pay extra for this folly.
I invite all AJUSD residents to vote no on the bond and demand a smaller bond amount over a shorter period of time. Next year the district could ask for an $18.5 million bond for the most-urgent needs. Then, it could use regular capital outlay funding responsibly over the next seven years to buy the next level of urgent needs. It could use the sales proceeds from Gold Canyon Elementary and the forthcoming state-funding increases to restore the district additional assistance as well. Additionally, the district needs follow the best practice of optimizing Arizona School Facility Board grants, which we taxpayers are funding via the sales tax. Finally, the district can come back in 2026 and ask for another bond for $10 million to cover the non-urgent needs.
Going forward, the optimal strategy for the district should be to ask for smaller bond amounts financed over a shorter life to save interest and put more of the tax increases into the classroom instead of into the pockets of bond investors.
For example, passing a $10 million bond with a term of 14 years every seven years would keep the capital needs replenished and the property tax rates constant.
Please demand a responsible financing strategy by voting no on question number 432 on the mail-in ballot. The students enrolled in AJUSD deserve a financial sound strategy to keep the schools funding steady, and our community deserves steady tax rates that come from lower interest payments.
