by Tracy McCue, Sumner Newscow — So you are looking at this car in the dealer parking lot. You like how she drives, the way she looks, the way she feels. It would look great in your garage.

But there is one hitch: the price. And what happens at that negotiation table with the car dealer will determine whether you drive off that lot with a car or not.

Tuesday’s election is no different.

The Wellington USD 353 voters will be going to the polls Tuesday to determine whether the Security and Safety Improvements, proposed by the Wellington School Board, is worth the 20-year financial commitment.

The background

Steve Shogren, of Shogren and Associates and the financial advisor for this project, has been in Wellington before. In fact, one could argue he lived in Wellington for three years as the community struggled through three elections while deciding on a new high school at the turn of the century.It’s just not USD 353 Shogren advises. He does it all over the state. He helped Belle Plaine a few months ago with its bond proposal.  That fell do defeat. He helped at the Cheney School District last week. That one passed.

He wins some and loses some. But his job is always the same. His purpose is to position school districts in the most advantageous spot possible in passing whatever school project is being proposed.

“Raising taxes is always a tough sell,” Shogren said. “Especially when you have people on fixed incomes who may never use the facilities you’re trying to build.”

But Shogren has a mantra he has used forever.

“You never go wrong when voting for schools,” Shogren is convinced.

Shogren said he likes Wellington’s proposal for three reasons.

1) Wellington school district has one of the highest state aid reimbursement rates in the state of Kansas.

2) Interest rates are low.

3) Wellington has benefited from the lowering of mill levy rates elsewhere specifically from the Kansas Star Casino.

“I think this is a window of opportunity, Wellington taxpayers shouldn’t pass up,” he said.

State aid 

If Wellington passes this $11.5 million bond issue, the state of Kansas will reimburse USD 353 at a 52 percent rate using 2014 figures. The rate is determined by a formula based in Topeka in which a school district is reimbursed based on the wealth of a child. And that is determined by the overall assessed value of a school district multiplied by the number of full-time enrollment students.

That rate is then compared with the other 285 school districts in the state.

Wellington’s 52 percent  reimbursement rate is rather high, Shogren said. A rich school district like Johnson County gets zero. Conversely, a very rural school district in western Kansas will get zero not because it is wealthy district, but because they have few students.

“I think there are only 10 school districts that is as high in Wellington in the whole state,” Shogren said. “Most school districts have a 25 percent rate for school construction reimbursements. Wichita School district is at 27 percent.”

State aid has been around for awhile since the early 1990s when the Kansas State Legislature decided the state schools had some significant building issues to address and this was an incentive program to get construction moving.

The program worked as new schools or improved facilities popped up across the state. Wellington took advantage of the program in 2001 with the building of the new high school. People may remember the rate for USD 353 was 38 percent then. Today, the state is paying 52 percent (it fluctuates each year) for Wellington’s high school.

The program has been a godsend for school districts like Wellington, but each year there is a threat that the state could be taking it away.

“You never know but each year there is that potential of losing that state funding,” Shogren said. “That’s why I keep going back to that window of opportunity. If we don’t use it now, we might not get it later.”

Interest rates

The conventional wisdom today is it a great time to invest in bonds. It is not so great of time being a lender.

Shogren said if Wellington voters pass the issue Tuesday, the bond rates would be at a 50-year low.

“We are estimated the interest rate at 4 percent,” Shogren said. “I think that is a conservative estimate. We could very well finance these bonds at 3.25 percent.”

The mill levy

When taxes are raised, holy hell usually follows.

But let’s remember in 2012 and 2013, Sumner County was the beneficiary of a tax “decrease” due to the advent of the Kansas Star Casino. Because Sumner County taxpayers receive one percent reimbursement on all casino business traffic, the county taxpayers as a whole saw a decrease of 15.546 mills in the first year. A mill levy is a “tax rate” that is applied to the assessed value of a property. One mill is one dollar per $1,000 dollars of assessed value.

In 2011, Wellington city taxpayers had a mill levy rate of 177.516 for all county, state and city taxes (see figures here).

In 2012 that levy fell to 162.352. Translation: If you owned a $100,000 home in Wellington, you were billed $1,853 in 2012 compared to $2,042 in 2011. That’s a saving of $179.

When Wellington voters passed the new high school bond issue in 2001, it was estimated that the school district would have to pay off the new school by raising the rate to 18.5 mills. What happened though, due to the low costs with bond, it didn’t require that much. Today, the mill levy for the 25-year high school bond issue is at 12.67 mills.

Here are the mill levy figures for Wellington since 2001:

Notice in 2001, USD 353 taxpayers had 9.26 mills designated toward bonds. That jumped to 18.55 in 2002 when the bond issue passed. The mill levy leaped to a 179.113 high in 2010. But one can see in 2012 when the casino revenue kicked in and it decreased. As far as mill levies are concerned they are where they are in 2001.

The proposal

As mentioned above, USD 353 taxpayers are currently paying 12.67 mills on a 25-year bond issue for the new high school and elementary school.

In 2014 (see figure sheet here: Proposed New Bond Issue)  it is estimated $1.88 million of that bond debt will be paid with the state aid kicking in $976,189 at a 52 percent rate. Wellington paid $874,848.

If Wellington passes the bond issue Tuesday, taxpayers will see an estimated increase of 2.65 mills. Therefore, a taxpayer will see his property taxes increase on a $100,000 home at $30.47 a year or $2.54 a month.

“What does $2.54 pay for these days?” Shogren said. “It won’t pay for a gallon of gas. That’s for sure. It could get you a hamburger, but not a cheeseburger.”

The bonds from both 2001 and 2014 would be combined. At its current rates, Wellington taxpayers will be assessed 15.32 mills. In 2026, when the 25 year high school project has run its course, then the mill levy will drop to 9.74 mills since the security and safety bond issue will still have eight years left.

“I’m not sure there’s ever been a time that Wellington can get so much for so little money,” Shogren said.

Here is a comparison of mill levy rates at the eight Sumner County schools:

Wellington’s total mill levy rates as oppose to other towns is also comparatively low. In a survey conducted by former Wellington City Manager Gus Collins the total mill levy in Wellington is the lowest of 11 towns comparative in size: See overall figures here: Tax Information – City of Wellington.

The decision

Tuesday is voting day. Polls open at 7 a.m. and close at 7 p.m. Voting locations can be found here. You can still advance vote.

Just like the guy buying the car, voters will be deciding on peripheral issues that has nothing to do with the school. It isn’t just about the car. It’s about his world. Will this car cost him say a house payment, or eating out, or cable television, etc.?

Wellington voters most certainly have other issues to worry about. The hospital is looking at bringing up a half-cent sales taxes to cover expenses. The county commissioners are looking at allocating more money toward road and bridges. The city has street issues. Overall, there are needs everywhere.

While taxes have lowered, assessed valuations have gone up — which isn’t a bad thing if the economy is growing. Is it growing in Wellington? That’s going to take more time than what Sumner Newscow has to figure out. The double edged sword when it comes to property taxes is it just isn’t the mill levies issued by county, city and schools for goods and services, it is also the county appraiser on the other end who establishes how much your property is worth.

Decide on the information above and look at the other two issues in part one on the security and safety rooms and part two on the miscellaneous other project, and determine whether it’s worth your investment.

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