(Building Educational Success Together)
Shall the Board of Education of the Cameron R-I School District, Missouri, without an estimated increase in the current debt service property tax levy, borrow money in the amount of Ten Million Dollars ($10,000,000) for the purpose of providing funds for the site development, construction, equipping, and furnishing of a new Auditorium/Performing Arts Center to include a new entry and administration area; the construction, equipping, and furnishing of a new Vocational Agriculture (Vo Ag) building; to complete renovations and/or additions to the science department; to complete storm water drainage improvements; to the extent funds are available, renovate the current Agricultural building for other purposes, complete improvements to the Family and Consumer Science Department. and add additional parking; and issue bonds for the payment thereof?
If this proposition is approved, the adjusted debt service levy of the School District is estimated to remain unchanged at $0.9900 per one hundred dollars of assessed valuation of real and personal property.
Cameron R-I School District
(Frequently Asked Financing Questions)
1.What is the financing proposal of the Cameron R-I School District?
The Board of Education is seeking voter approval at the June 2, 2020 election for a $10,000,000 general obligation bond issue that extends but does not increase the current $0.9900 debt service tax levy of the District. The proceeds from these bonds will be used to provide funds for the site development, construction, equipping, and furnishing of a new Auditorium / Performing Arts Center to include a new entry and administration area; for the construction, equipping, and furnishing of a new Vocational Agriculture (Vo Ag) building; to complete renovations and/or additions to the science department; to complete storm water drainage improvements; and to the extent funds are available, renovate the current Agricultural building for other purposes,complete improvements to the Family and Consumer Science Department and add additional parking. These needed projects cannot be done through the present operating funds that we have available in our budget.
2.Explain what a general obligation bond is and how it relates to the financing for this project?
Under Missouri law the only way a School District can legally borrow money for school facilities’ improvements or construction on a full faith and credit basis is to seek voter approval of a general obligation bond issue. A “general obligation” means that the School District can and must levy sufficient taxes to repay the principal and interest associated with the bonds. With voter approval of at least a four-sevenths majority at the June 2, 2020 election the District can then sell the $10,000,000 of bonds in increments of $5,000. This financing process gains access to numerous investors at favorable terms compared to what would happen if the District was dependent upon a single lender to supply the funding. The interest earned by the investors is exempt from federal and state of Missouri income taxes. With the interest being tax-exempt, the actual rate the District has to pay is much lower than would otherwise be the case for a typical loan. Based upon current interest rates in the municipal bond market the average interest rate is expected to be less than 4.00%.
3.How can the $10,000,000 general obligation bond issue be referred to as a no tax increase program?
The current $0.9900 debt service fund levy is adequate to repay the existing bonds plus the $10,000,000 of new bonds by extending the levy eight years or less (from Fiscal Year ending 2032 to 2040), but not increasing it above the current level. This is feasible due to growth in assessed valuation; interest savings from previous bond re-financings, prepayments of principal, and very low interest rates in the current municipal bond market. In the past the District has been able to make prepayments to decrease the number of years and interest expense. To this end, if things go well the district will likely be able to continue to pay off the debt early.
4.Can the District pay the bonds off early to save interest expense?
Yes, the bonds will contain optional redemption (call) features that enable the District to prepay them at no penalty in the event debt service fund balances become large enough for that to occur. The call feature also provides the District the opportunity to refund the bonds to take advantage of lower interest rates in the future, if the overall economic conditions create that set of circumstances.
5.Will local investors have an opportunity to purchase the Bonds?
Yes, the bonds will be available to local investors prior to being offered to others. If you are interested in purchasing some of the bonds, let the District offices know and they will insure you are contacted after the election.
6.What type of rating will the general obligation bonds have?
The District can expect to receive an AA+ rating by Standard & Poor’s Corporation on the general obligation bonds. Missouri school districts issuing general obligation bonds for construction purposes are eligible in most cases to participate in the State of Missouri Direct Deposit Program. This program provides each issuer with an AA+ rating.
Information can also be found at http://cameronmo.apptegy.us/o/cameron-r1-school-district/page/2020-bond-issue