Questions and Answers

Q. Why is the district requesting voter approval of bond issues at a time of economic uncertainty?

Q. What ASD projects are on the proposed April 2011 bond issue?

Q. Why is ASD asking for $37.1 million for the project. Won't it cost much more than that?

Q. What will be the state reimbursement for these bonds?

Q. How much existing bond debt does the school district pay off annually?

Q. What is the mill rate (used to calculate property taxes) for the operation of schools and for the debt service on existing bonds?

Q. Why do schools cost more than commercial buildings?

It seems like ASD always has school bonds on the ballot, why is that?

The district took a "bond holiday" in 2010. In response to community feedback, no school bonds were put on the ballot.

ASD's mission is to educate students for success in life. Maintaining quality school facilities is essential to the support of this mission. This is no small task for a school district among the 100 largest in the U.S. The district owns 93 schools and six support facilities, consisting of more than 7.7 million square feet of space, at a present value of about $2.4 billion. A quality school's functional life without major renewal ranges from between 30 years to 50 years. For 93 schools, this would require the district to present bond ballot propositions for two to three major renewals every year. This does not consider that many schools were built during the 60s and 70s at a time of pronounced population growth; they are now candidates for renewal.

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Why is the district requesting voter approval of bond issues at a time of economic uncertainty?

One reason is that the school district is a "forever" owner of school facilities. The district is a steward of the taxpayers' investment. This stewardship includes continual responsibilities, some of which are:

• design and construct facilities with durability,
• care for facilities through preventative maintenance and a committed custodial program,
• extend facilities' functional life so long as it remains cost effective,
• reconfigure existing facilities to support changing educational programs and their technologies, and
• design flexibility into new and renewed facilities to accommodate education changes over a facility's 50-year life.

Another reason is that the state has committed to project reimbursements of 60-70 percent. This means taxpayers only have to pay 30-40 cents on the dollar for projects that are funded through the bonding process. Projects funded through other means do not qualify for debt reimbursement.

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How does the district determine projects for bond proposals?

The district develops a 10-year Capital Improvement Plan. This serves as a guide for future capital bond request ballot propositions. Projects are selected for the CIP based on evaluation of several factors:

• condition surveys of facilities' sites, major building systems (such as mechanical and electrical) and interior and exterior finishes;
• assessment of facilities' ability to meet districtwide educational specifications;
• enrollment history and projections;
• input from the community on its educational goals and needs; and
• project scopes and cost estimates.

This information is analyzed and evaluated by the Facilities Department, district administration and the superintendent. Proposed projects and their priorities are then included in a draft CIP.

The CIP is reviewed by a Capital Request Advisory Committee comprised of public representatives from all school attendance areas and the community at large. This community-based citizens group meets regularly to review facility needs and recommend bond propositions to the superintendent. The superintendent recommends the CIP to the Anchorage School Board for approval. They hold a public hearing and then act on recommendations. The CIP is also reviewed by the municipal Planning and Zoning Commission, and submitted to the Anchorage Assembly.

The school board and district administration provide extensive project information to the assembly. The assembly has authority to change proposed bond issue projects before approving them to be placed on bond ballot propositions.

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What ASD projects are on the proposed April 2011 bond issue?

The district has three bond propositions:

• Proposition 1 would complete the renovation of Service High School which began in phases more than a decade ago.
• Proposition 2 funds building life extension and design projects throughout many district schools. Building life extension projects include safety systems, lighting, heating and communications systems upgrades and roof replacement. Design projects include Girdwood K-8, Airport Heights, Gladys Wood, and Inlet View elementary schools. Funds to design a Career, Technical and Vocational Education program on the West/Romig joint campus are also included in this proposition.
• Proposition 3 improves and expands Career, Technical and Vocational Education programs at existing schools.

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Why is Service High School the district's highest priority?

In the late 1990s, the school board made a commitment to renew its high schools. This commitment has been reflected in the district's capital improvement plans since then. Prior to then, the district focused on needed elementary school renewals. Because high schools are much larger and renewals are much more expensive, the decision was made to create master plans with phased projects spread over multiple years. Phasing also would allow classes to continue to function during construction.

Built in 1971, Service started off as a junior and senior high school until junior high students moved to Hanshew in 1984. In 2000, the district created a master plan to renovate and renew the facility originally built to serve two separate programs. To date, less than 50 percent of the master plan work is completed. This remaining scope is equivalent to constructing three new elementary schools or one new middle school.

Over the past few years, the district revisited Service High School renewal's 2000 master plan to investigate cost saving measures that would not significantly affect a commitment to deliver a complete educational program. Estimated cost savings of $23 million were realized through consolidating phased funding to one-time, and reconfiguring master plan components through innovative design solutions to achieve a one-year reduction in the construction timeline.

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Why is ASD asking for $37.1 million for the project. Won't it cost much more than that?

The total construction project is estimated at $68.4 million but the district only needs $37.1 million in bond funding to meet the financial need. The district currently has $10 million in previously approved but unused bonds that will be redirected to this project, with voter approval. The state has approved a $21 million grant for the Service project with $9 million in local matching funds. The remaining amount of funds needed for the project is included in Proposition 1. In addition, the state has approved much of the project for 60 percent debt reimbursement. This means that the state has approved an additional $16.8 million of bond principal costs, easing the burden on local taxpayers.

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Are Proposition 2's building life extension projects a result of poor maintenance?

No, the district builds durable facilities with cost-effective systems and finishes to withstand Anchorage's sub-arctic climate and extensive use by students, staff and the general public. The district takes care of these facilities through routine preventative maintenance and custodial programs, building life extension projects, and capital construction renewal projects. Routine maintenance is funded through the operating budget; capital and building system renewal projects are funded through bonds, legislative appropriations and grants.

The district's current regular operating budget allocates $23.5 million for routine, day-to-day maintenance; this covers items such as painting, repairing roof leaks, replacing broken glass, fixing locks, plowing snow, repairing fences, and maintaining plumbing, heating, electrical and roofing systems, etc. As with a homeowner's roof, there comes a "critical" point when the cost of repairs becomes excessive and the entire roof needs to be replaced and renewed to extend the home's life. Building life extension projects involve major expenses not covered by the regular operating budget.

Bonds can be sold to finance building life extension projects because they are capital construction projects intended to make buildings last longer. For example, repairs keep the roof operable during the original 20 years of its life; a new roof helps extends it another 20 to 30 years. Also, bond projects are eligible for 60-70 percent reimbursement from the state, lowering the project cost for taxpayers.

More than half of the district's 93 schools and six support facilities are at least 25 years old. In order to keep ahead of exceeding the "critical point" of cost at these 93 facilities, the district would need to request funding for at least four renovation projects per year. This assumes all facilities' original construction was spread out over the years; reality is that most construction occurred during concentrated periods of population growth.

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What will be the state reimbursement for these bonds?

Through the state's debt reimbursement program, the state has approved 60-70 percent reimbursement for all three school bonds. The state reimbursement approved for each of the bonds significantly reduces the cost to local taxpayers. Funding of the state reimbursement plan has been supported by legislators and is subject to annual appropriation. The legislature has fully funded the program every year for the past 18 years. Thirteen Anchorage legislators have signed a letter in support of the program. You can find out more about the State of Alaska's funding program for school construction online.

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What is the total cost per year for the district’s bonds on $100,000 assessed property value?

If voters approve all three school bond propositions, the total cost to retire the debt is $8.01 per year per $100,000 of assessed property value, after state reimbursement. Without reimbursement, the cost is $18.11 per $100,000 of assessed value.

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How much existing bond debt does the school district pay off annually?

The school district makes annual payments on principal and interest for school bonds approved by voters. Since the last successful school bonds, the district has paid off $148 million in bond debt. Over the next five years, the district will pay off between $53 and $58 million of bonds each year.

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What is the total amount of existing bond debt for the district?

The district currently has $694 million of existing bond debt principal.  A variety of state reimbursement plans combined pay 55.1 percent of the total debt.  The district currently has a highly rated bond status, making the bonds more attractive to investors and less costly to taxpayers generally.

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What is the mill rate (used to calculate property taxes) for the operation of schools and for the debt service on existing bonds?

Here is a chart of the last five years’ mill rates and the estimated mill rate for the proposed 2011-12 school year budget.
School Year     General Fund    Debt Service    Total
2004-05           5.99                 1.26                 7.25
2005-06           6.19                 1.40                 7.59
2006-07           5.79                 1.34                 7.13
2007-08           5.54                 1.25                 6.79
2008-09           5.69                 1.25                 6.94
2009-10           5.90                 1.28                 7.18
2010-11           6.13                 1.31                 7.44
2011-12           6.15                 1.31                 7.46

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What will the district do if the bonds do not pass?

The district will continue to use the facilities as they currently exist and maintain them to the best of its ability. However, if bonds are not passed, operating budgets for preventative maintenance and repairs will need to increase in order to maintain minimally acceptable conditions. Because there is pressure to minimize budget growth, an increase in the operating budget for maintenance takes away funds that would otherwise be spent on education in classroom. Eventually, systems wear out and fail. At worst, building systems failure can cause school closures.

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Why do schools cost more than commercial buildings?

Schools have a different occupancy classification and more stringent building code requirement than most standard commercial structures. Schools must be constructed to meet much higher seismic, fire and life safety standards to protect children in the event of fire, earthquake or other emergencies. In addition, school facilities involve more complex and intensive technological and mechanical systems, such laboratories and kitchens. This construction is more expensive for schools than for commercial buildings. Materials used in school construction must be of higher durability and quality than standard buildings in order to withstand the heavy use and potential abuse. These materials typically have higher initial costs but lower long-term costs when considering reduced maintenance and repair over time. Lower-cost materials and equipment typically have shorter life expectancies and require more frequent replacements.

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How much is the district spending on this information campaign?

In January, the school board approved $45,000 for the district to provide the public with factual information on its proposed bond projects. The purpose of the district’s bond program is to provide information so that citizens can use the information to assist them in making educated, responsible decisions.

The “School Bonds Yes!” political organization, which can advocate for bonds, is separate from the district. The district does not provide money to this organization.

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