The Independent-News, Volume 111, Number 9, Walkerton, St. Joseph County, 1 August 1985 — Page 5

CONTINUATION OF COMPREHENSIVE STUDY FOR GLENN SCHOOL CORP.

FINANCING POSSIBLE JOHN GLENN SCHOOL CONSTRUCTION Funds for school building construction in Indiana may come from a variety of sources. Public school officials are charged with the responsibilitiy of measuring the impact on the financial structure of their school district of each of the alternate methods available to them. Often the optimum method of providing building funds will involve a combination of several sources. The various sources have restrictions on their use, and these are important considerations in development of a capital improvement plan. School Bonds Bonds are a legal written promise to repay borrowed funds at a specified time with a fixed interest charge. Bonds have been used to finance school buildings in Indiana for over one hundred years. Indiana’s constitution limits school districts and other civil corporation's bonding power to two percent of taxable property. These general obligations or "full faith and credit" bonds generally receive favorable interest rates from buyers. The use of general obligation bond issues for major building programs is restricted by the severe debt limit. Legislation in 1965 increased the maximum term of any general obligation bond issue to 25 years but most are for 20 years or less. School bonds may be used for purposes of new construction, remodeling of buildings, equipment, site purchases and site development. John Glenn School Corporation now has $410,000 in outstanding bonds. Bonds could be outstanding, based on latest assessed valuation of $46.8 million, in a total amount not to exceed $935,000 and this potential will grow slowly as assessed valuation increases and existing debt is retired. After January, 1986 payments are made, a bond issue of $540,000 would be possible. School Building Corportions Indiana's school construction needs became critical after World War 11. To meet this need, the legislature in 1947 devised a method to evade the constitutional two percent debt limit by authorizing the use of local school building corporations or "holding companies”. Local corporations may be formed in school districts for the express purpose of building and leasing a school building to the school district. The school building corporation obtains its funds by issuing

NOTICE TO TAXPAYERS OF BUDGET ESTIMATES AND TAX RATES In (he mailer of determining tax rates for certain purposes bv Lincoln Township, St. Joseph County, Indiana. Before the Township Advisory Board. Notice is hereby given to taxpayers of Lincoln Township, St. Joseph Couniv, Indiana, that the proper officers of said township, at 300 Illinois St., Walkerton, Indiana, will conduct a public hearing on the 1986 budget on August 20, 1985, at 7:00 p.m. Following this meeting the aforementioned officers of said township, will meet, at 300 Illinois St., Walkerton, Indiana, on August 27, 1985, at 7:00 p.m to adopt the following budget The proposed use of the Federal Reveune Sharing Funds will be considered at this meeting. The general public is encouraged to attend and participate at this hearing for the proposed uses of the Federal Revenue Sharing Funds. Special assistance is available to handicapped persons who desire to attend by calling 586-3756. BUDGET ESTIMATES AND TAX RATES Estimate Os Net Budget Funds To Tax Township Funds Estimate Be Raised Rate Township Fund $ 8,000 $ 6,2215 06 Fire Fighting Fund 9,000 7,352 .20 Federal Revenue Sharing Fund 8,686 Township Poor Relief Fund 17,01X3 15,554 .15 Emergency Medical Service Fund 10,500 10,660 .29 TOTALS — ALL FUNDS 553.186 539.787 5 .70 Taxpayers appearing shall have a right to be heard thereon. After the tax levies have been determined and presented to the County Auditor not later than two days prior to the second Monday in September, and the levy fixed by the County lax Adjustment Board, or on thier failure so to do, by the t ounty Auditor, ten or more taxpayers feeling themselves aggrieved bv such levies, may appeal to the State Board of Tax Commissioners for further and filial hearing thereon by filling a petition with the (ounty Auditor on or before the tenth day alter publication by the County Auditor ot tax rates charged and the State Board ot fax ( ommisvioners will fix a date tor hearing m this Counts Lloyd 1 Stephenson, I rustee Dated Julv 25, 1985 ! incoln Township 2tal

bonds. There is no legal limit on the size of the bond issue. Such bonds are classed as first mortgage bonds and are secured by annual payments from the school district as specified in the lease agreement. Lease contracts must be for a minimum of 15 years and may not exceed 30 years. School building corporation bonds technically are not quite as secure as general obligation bonds and consequently may have slightly higher interest rates. The higher rates on school building corporation bonds also are due to the usually longer terms of issue. The John Glenn School Corporation has a lease-rental agreement for the high school. Bonds amounting to $1,180,000 were issued in 1967 with $575,000 outstanding after January 1, 1985 bonds were retired. The building corporation undoubtedly has surplus funds which are invested and will ultimately be used for retirement of bonds in advance of scheduled final maturity in 1994. Annual lease-rental is $86,200. Under certain conditions, an existing school building corporation can raise funds for renovations to the facilities originally constructed by it. A new bond issue is made to obtain funds to retire all existing bonds, pay the call premiums and raise the needed renovation monies. This possibility might be feasible for the John Glenn School Corporation for the high school building in some near future year before funds are available for retirement of all outstanding bonds. Private Corporations In 1957 the Indiana General Assembly expanded the concept of the lease-rental plan by enacting a law permitting school districts to lease school buildings from private corporations. Lease provisions with the notable exception that a 50 year instead of a 30 year lease, and terms for less than 15 years are possible. Private corporations have private sources of funds. The absence of the cost of issuing bonds and different provisions for interest during construction becomes the basis of their ability to compete financially with the local non-profit school building corporation. School district officials need to consider carefully the relative merits of the private corporation for profit method and of the school building corporation when developing their finance program, and careful analysis of all of the costs associated with each method should be made. If provisions for "advance refunding" to take advantage of lower

interest rates cannot be guaranteed, it is not advisable to enter into lease arrangements with the private corporations at this time. The John Glenn School Corporation has two such arrangements with a private building corporation. The first of these is for the Walkerton Elementary addition, was incurred in the mid-1970’5, its principal amount was $900,000, the interest rate is 7.3375%, and the annual lease-rental is $87,453. Final payment will occur in September, 1995. and the option "purchase price" will be $677,556 in March, 1986. That is the earliest date that the project could be re-financed if it is deemed desireable to do so. The second private corporation lease is for the high school addition. Incurred in 1982, the financing was for $4,310,000 to be repaid fully in December, 1992. Interest rate is 11.15’/j, annual payment ranges between $712,938 and $727,850. Approximately $3,735,000 is the principal balance outstanding, although the option to purchase can not be exercised until June, 1989, when the option price will be $2,538,992. The other lease-rental arrangement is with South Bend Community School Corporation. Annual lease-rentals range from $42,683 to $42,982 and continue through 1995. A total of about $470,000 will be paid through the life of the lease. Borrowing, repaid either directly by the school district or through a lease-rental arrangement, provides a means of stabilizing tax rates. Lease-rental contracts require a fixed payment each year with provision for "calling" or retiring bonds early when surplus funds are available or when interest rate conditions become more favorable. General obligation bonds mature serially over the years and may be grouped to provide a constant or a declining tax rate. Legislation in 1973 provided that school building corporations which originally incurred high interest rates moved downward to the point that a savings in debt service costs could result. The effect of this law is to enable school districts to obtain facilities when needed, regardless of prevailing interest rates at the time of construction, and still take advantage of any favorable interest rate trends which develop in the future. Loan Funds Indiana administers two loan programs for school districts that have established need and are otherwise qualified for aid. The Common School Fund advances up to $1,500,000 at lower than market interest rates to reorganized districts meeting need and local effort requirements. The local district must raise (by school building bond issues or cumulative building funds) an amount equal to two percent of adjusted assessed valuation in order to qualify for an advance from the Common School Fund. The second loan fund, the Veterans Memorial School Construction Fund, provides up to $250,000 at one percent interest to be repaid over a 20 year period through deductions from state aid AMERICAN LEGION POST 365 North Liberty BINGO Every Saturday Evening 7.00 p.m. You Must Be 18 Years Old To Play SSOO JACKPOT

AUGUST 1, 1985 - THE INDEPENDENT-NEWS -

distributions. A Veterans Fund advance requires that the district show need, be bonded to 90 percent of its legal limit, and have levied a minimum of a 50 cent tax rate for school building purposes during each of the previous three years. John Glenn has no Veterans Loan. John Glenn Schools has received two such loans. Common School Fund Loan #1 balance will be $131,250 after the July 1, 1985 payment is made. Annual payment is $42,879 for both principal and interest in 1985. and the payment will decline by $1,266 each year. Final principal payment will occur in 1989 and the interest rate is 3-3/8%. For the latest Common School loan, the amount owed will be $656,250 as of July 2, 1985. Payment of principal and interest is $60,598 in 1985 and the amount declines by $1,266 each year. Final payment will occur in 2003, and this interest rate also is 3-3/8%. The possibility will exist for another Common School Loan, at 8 or 9 percent interest rate, but any facility planning should proceed under the assumption that no state loan will be available — if one is obtained, then total borrowing costs might be reduced. State Guarantees Indiana’s 1967 Legislature enacted a law which guarantees the payment of all future school district bond or lease-rental obligations. The law provides that should any school district fail to meet its obligations, the state will make the payments and deduct the amount from the school district’s next state aid distribution. It is believed that this legislation has a favorable effect on bond interest rates.

NOTICE TO TAXPAYERS OF BUDGET ESTIMATES AND TAX RATES Notice is hereby given the taxpayers of Town of North Liberty, Indiana, that the Town Board of Trustees of North Liberty, Indiana, at the Town Hall on August 12, 1985, at 7:00 p.m. will conduct a public hearing on the budget. Following this meeting, the aforementioned Board of Trustees will meet at the Town Hall on August 19, 1985, at 7:00 p.m. to adopt the following budget. BUDGET ESTIMATE Complete detail of the budget estimates by fund and/or department may be seen at the Clerk-Treasurer’s Office NET ASSESSED VALUATION $4,195,000 Estimate Os Net Budget Funds To Tu Fund Estimate Be Raised Rate General Fund $168,957 $151,020 $3.60 Park Fund 7,401 6,712 .16 Debt Service Fund 11,600 10,051 .2396 Cumulative Capital Development Fund 1,780 1,678 .04 Cumulative Capital Improvement Fund 5,396 Motor venicie Highway Fund 38,215 Local Road & Street Fund 21,704 TOTALS $255,053 $169,461 $4 0396 Taxpayers appearing shall have a right to be heard thereon. After the tax rates have been determined and presented to the county auditor not later than two days prior to the second Monday in September, and the rate fixed by the county tax adjustment board, or on their failure so to do, by the county auditor, ten or more taxpayers feeling,themselves aggrieved by such rates, may appeal to the state board of tax commissioners for further and final hearing thereon by filing a petition with the county auditor on or before the tenth day after publication of the county auditor of tax rates charged, and the state board of tax commissioners will fix a date for hearing in this county. Paul F. Williams, Jr. July 29, 1985 Clerk-Treasurer NOTICE TO TAXPAYERS OF BUDGET ESTIMATES AND TAX RATES In the matter of determing tax rates for certain purposes by Liberty Township, St. Joseph County, Indiana. Before the Township Advisory Board Notice is hereby given to taxpayers of Liberty Township, St. Joseph County, Indiana, that the proper officers of said township, at I iberty Township Trustee’s Office, 64595 State Road 23, North Liberty, Indiana, will conduct a public hearing on the 1986 budget on August 17th, 1985 at 9:00 a m Follow ing this meeting the aforementioned officers of said township, will meet, at the Liberty Township Trustee’s Office, on August 27th, 1985 at 700 p m to adopt the following budget. The proposed use of the Federal Revenue Sharing Funds will be considered at this meeting. The general public is encouraged to attend and participate at this hearing for the proposed uses of the Federal Revenue Sharing Funds Special assistance is available to handicapped persons who desire to attend by calling 656-4587. BUDGET ESTIMATES AND TAX RATES Estimate Os Nel Budget Funds To Tax Township Funds Estimate Be Raised Rate Township Fund $35,450 $33,950 $ 19 Fire Fighting Fund 22,300 12,515 08 Township Relief Fund 12,000 7,510 .04 TOTALS — ALL FUNDS $67,750 $53,975 $ .31 Taxpayers appearing shall have a right to be heard thereon After the tax levies have been determined and presented to the County Auditor not later than two days prior to the second Monday in September, and the levy fixed by the County Tax Adjustment Board, or on their failure so to do, by the County Auditor, ten or more taxpayers feeling themselves aggrieved by such levies, may appeal to the State Board of Tax Commissioners for further and final hearing th*- filing a petition with (he County Auditor on or be fore the tenth d iblication by the County Auditor of tax rates charg - ed and the Stat' f Tax Commissioners will tix a date tor hearing in this county. Dale J Nelson, Trustee Dated July 23, 1985 I ibertv Township

Cumulative Building Fund School districts in Indiana may accumulate funds for construction, remodeling, and major maintenance needs. A statute passed in 1945 now permits a tax levy of up to $1.25 per hundred dollars of taxable property to be collected and reserved for capital outlay and/or lease-rental payment purposes. Such a tax levy may be approved by a school board, subject to certain legal procedures, for a period up to five years. A school board may decrease an established cumulative building fund rate by resolution but may not increase such a rate without due notice of intent to the public. It is necessary to have rather specific school building needs identified in order to establish a tax levy, and the levy must be approved by the State School Property Tax Control Board and the State Board of Tax Commissioners. John Glenn has a 25 cent rate which continues through 1989. The tax on property will yield about $117,000 plus license excise tax of perhaps $15,000 each year. Unencumbered balance is $152,376. and it is estimated that all funds on hand and anticipated to be collected will be needed for maintenance of existing buildings. State Grants A portion of non-property tax revenues in Indiana is earmarked for local public schools for use for school building debt retirement. The state collects the taxes and distributes the receipts to school districts through the ADA Flat Grant on the basis of average daily attendance. Receipts from this source are to be applied first on existing bond or lease-rental obligations with any balance used in (Continued On Page 8)

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