CORRECTION: Board member Jared Schiel's name and position on the cost of the gym and it's affect on the potential bond issue were updated to more closely reflect his comments during the meeting on Feb. 21. Hays Post apologizes for the error.
By JAMES BELL
Hays Post
ELLIS — During its regular meeting Monday, the Ellis USD 388 Board of Education had planned to vote on sending a potential bond issue to district voters, but with recent activity in the Kansas Legislature that could secure a significant amount of funding from the state for the bond, the board decided to postpone its vote until next week.
“There was a state law that changed back in 2015,” said bond counsel for the district, Dustin Avey, managing director, public finance investment banking with Piper Sandler. “Because of that change in the law, the Ellis school district gets zero percent state aid, meaning the state of Kansas does not pay for any portion of your work.”
But with potential changes to that law currently under consideration in Topeka, he told the board moving now could cost the district the opportunity for the state to fund around 20 percent of the potential bond issue.
“Based upon conversations beginning last Thursday and Friday, and then into today, there is a potential that a current state aid law would be fixed by the Legislature this legislative session,” Sandler said. “If that law becomes fixed, you would receive approximately 20 percent state aid, meaning that the state of Kansas would pay for approximately 20 percent of your annual principal and interest payment.”
With the board considering a bond issue of around $5 million, that would mean turning down the potential of around $1 million in state aid if the law is changed.
While the potential is there, Avey told the board there are no funding guarantees.
“We expect that bill to be before the Senate and committee this Friday for a hearing. If it gets passed out of the Senate Ed Committee on either Friday or Monday, we would expect it to go to the Senate floor for a vote sometime next week,” Avey said. “So that’s hurdle No. 1.”
If the legislation passed through the Senate, the legislation would then move through the same process in the House.
“And if through the House, then it would be able to go to the governor for the signature,” Avey said.
To reap the benefits of the change, however, would require moving the proposed bond timeline, which would have seen the measure go to voters in May, to later in the year.
“If we were to proceed tonight, with passing that resolution and moving forward with the May 10 election — if this fix would become law, it would not impact this district because it only impacts those districts who have the bond election approved by voters after July 1,” Avey said.
The change in the law also would not affect the upcoming bond issue in nearby Hays, as the district is already excluded from the potential state aid due to the district’s high property tax valuation.
“They don't receive any state aid because their assessed valuation per pupil is higher,” Avey said. “And they're considered a wealthy school district per that metric. But there are other districts like yourselves are considered more property-poor on a comparable basis.”
While the Legislature moves to consider the change in law, Avey said, the district would have some idea of the potential for the change to occur this year if it were to move out of senate committee this week.
The board then considered postponing the vote to move forward until next week.
If the bill were to pass out of committee, the board would consider further options. If it fails, they can choose to move forward with the bond election on May 10, as proposed.
Waiting “is the most responsible thing for our community,” said Superintendent Corey Burton.
Board member Latisha Haag also noted that bond issue components should also be reconsidered with the potential increase in available funds.
“I think we need to reconvene and have a discussion about the financials because 20 percent is going to make a huge difference,” she said. “I'm concerned about the backlash that we're going to catch for not having the gym on there, and then asking the community to pony up money to build a gym — outside the bond — later.
“For me, I think it's smart to wait until Tuesday to at least know if it comes out of committee. It doesn't come out of committee, we have our answer.”
Board member Jared Schiel responded, adding the cost of the gym to the bond issue may cause the bond to fail when presented to the voters, based on earlier information.
“We’ve already determined you can't put a gym on this bond and pass it,” he said, but an additional 20 percent could change the bond scope in a way to allow the gym to be put into the bond issue and stay under their desired total cost.
If “waiting till after July 1 we get 20 percent back from the state, then maybe we relook at our financials, and let's see if we put the gym back on. So yeah, I wouldn't feel comfortable voting on financials tonight. I think we have to look to wait and see what's going on.”
Schiel said the decision slows a bond issue that has already faced setbacks due to the pandemic.
“It's one more hurdle," Burton said. “But it has the potential to be positive. This has the potential to be positive for our community."
The board voted 7-0 to table the measure until a meeting is set next week.