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District advisers outline sinking fund renewal options and revenue projections
Summary
Municipal advisors explained sinking fund rules, allowable uses, and revenue projections for possible millage options (renewal vs. new levies), noting timing and legislative changes that affect election dates and fund duration.
Financial advisers from PFM laid out the purpose and mechanics of a sinking fund renewal and options for the board to consider.
Nate Watson, PFM managing director, and Tom Collis summarized state law limits (sinking funds up to 3 mills; current renewal authorization lapses with levy year 2026) and how sinking funds differ from bonds. They explained recent statutory changes that added limited equipment uses (security, pupil instructional technology, transportation vehicle equipment) and described election timing tradeoffs (May/August/November) tied to filing deadlines and potential state legislative changes to election calendars.
Watson illustrated revenue scenarios at different millage rates (current 2.403 mills under Headley rollback versus 2.5 mills or the 3‑mill maximum) and provided gross revenue illustrations based on 2025 taxable value assumptions. Advisers highlighted that sinking fund proceeds realize revenue over time (levy years) rather than bond proceeds which are upfront, requiring board consideration of inflation and net present value when comparing options.
Trustees asked about how long to authorize the fund (5 vs 10 years) and the interaction with other capital tools; advisers said the decision should align with the district'9s capital plan and potential future legislative changes. Board members discussed the impact of sinking fund revenue on the general fund: if sinking fund revenue is unavailable for maintenance and repairs, the general fund would have to cover those costs.
