Kyrene School District Governing Board will vote Sept. 12 on approving the sale of $19.5 million in bonds to support various capital improvement projects the district has planned in coming years.
If approved, this sale of bonds is the last of the bond funding approved in the November 2017 election, which authorized nearly $117 million to be used for capital projects not covered by state funding.
Even though this is the last of the 2017 bond authorization, Kyrene has another bond initiative in the upcoming Nov. 7 election, asking voters to approve an additional $161 million in bonds to maintain schools, support school safety and continue updating the district’s bus fleet.
The board vote to authorize the sale of the remaining bonds is Tuesday, Sept. 12, and the district anticipates that the sale will take place in early October, as explained by district Chief Financial Officer Chris Herrmann at the board’s Aug. 22 meeting.
Herrmann was also joined by Michael LaVallee, managing director of Stifel Public Finance, the district’s bond underwriting firm, to discuss what the bond funding will be used for if approved.
“A small portion of this upcoming bond sale is expected to be used for capital projects that would be completed during the latter half of the school year, but the majority of these proceeds should be used for projects in the 2024-25 school year,” Herrmann said.
Based on the district’s 10-year capital master plan, the $19.5 million will not cover all of the projects planned for the 2024-25 school year. In total, the district estimates that projects for that school year will total $36.7 million.
Because of this, another bond sale from the upcoming bond election would be necessary to complete the capital projects scheduled for the summer of 2025.
If the November bond election is unsuccessful, Herrmann said that this would change all plans going forward, and staff would have to immediately reprioritize and scale back the project work that is planned for the next school year.
“If we were not able to secure a new bond authorization, we would have to rely on the capital funding provided by the state, and as shown on the previous slide, that only provides a fraction of the funding versus what we receive from our bonds and capital overrides today,” he said.
State funding only accounts for 5.3% of the district’s capital projects funding, with bonds providing 69.8% and district additional assistance override money contributing 24.9%.
Anticipated capital project spending by category for 2024-25 entails:
Maintain schools: $30,938,500 (84%)
Transportation: $3,080,000 (9%)
Administrative: $2,670,000 (7%)
With a bulk of the district’s bond spending allocated to maintain schools, Kyrene will put those dollars toward construction projects, new technology like laptops, fire alarm systems and classroom presentation tools, as well as other classroom-related needs.
For construction projects, the district estimates that the costs for all projects in 2024-25 will be $13.8 million to provide improvements to roofing, playfields/courts, air conditioning, lighting and other school infrastructure.
Board President Kevin Walsh asked about interest rates and whether those have impacted the budgeting process.
Herrmann said that interest rates don’t impact the amount of money generated from a bond sale, so the real impact is felt by the community because interest rates would factor into the borrowing costs that would be paid back by taxpayers when tax rates are set.
He noted that given Kyrene’s high credit rating though, it helps to cushion the impact of higher interest rates. However, with inflation, the bond dollars are not able to do as much with construction projects in particular.
“When we have our voters approve a bond, that money is kept regardless of what inflationary rates look like, and so that’s probably been more of a limiting factor for us,” Herrmann said.
Reporter Caroline Yu can be reached at cyu@iniusa.org
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Meet Caroline Caroline Yu joined Independent Newsmedia, Inc., USA, in 2020 as a summer intern covering Scottsdale. As an intern, she continued her coverage of Scottsdale, Paradise Valley and Tempe. After graduating in 2022, Caroline became a full-time reporter for Scottsdale and Paradise Valley. She is currently reporting for the Tempe market.
Community: She is a supporter of the environment and tries to get involved with related community events.
Education: Arizona State University with a BA in Journalism and Mass Communications, with a minor in French.
Random Fact: She used to be a ballet dancer for 10 years.
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“A small portion of this upcoming bond sale is expected to be used for capital projects that would be completed during the latter half of the school year, but the majority of these proceeds should be used for projects in the 2024-25 school year,” Herrmann said.
Board President Kevin Walsh asked about interest rates and whether those have impacted the budgeting process.
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