Thanks to interest from bond proceeds, Lawrence district is spending more than the $87M it planned for school improvements
photo by: Elvyn Jones/Journal-World File Photo
With 3 1/2 projects down and 3 1/2 to go, the Lawrence school district is spending more than the $87 million it projected to voters as part of the 2017 bond issue.
At the halfway point, an updated document provided to the Journal-World shows that budgeted spending for the seven school projects now totals $90.66 million.
District officials, though, say the additional spending is a good thing. It’s not creating any financial pressure on the bonds because the spending is coming from interest — like the kind you could get on a savings account.
The bond issue passed with approval from roughly 75 percent of district voters in May 2017. With that, the district sold $87 million in bonds to get a large amount of cash upfront.
That cash has been sitting in a bank account, and large amounts of money bring in large amounts of interest. It’s expected to draw $6.38 million, and that presents the district with a choice: whether to spend the money on additional improvements at the schools, or to use it to help pay off the debt created by the bond issuance.
Thus far, the district has budgeted $3.66 million of the interest for projects at the secondary schools — hence the $90.66 million total.
“… The district has used bond interest and premium to expand what we can accomplish in meeting building needs and to capitalize on efficiencies with bidding/use of existing contractors while construction is ongoing,” district spokeswoman Julie Boyle said in an email. “This is a common practice. These funds have been used on roofing, technology updates, and to respond to changes since the secondary facilities master plan was completed in 2016.”
The remaining interest, minus district issuance of bonds and closing costs of $238,073, comes to roughly $2.49 million. Asked about the plans for the remainder, district Chief Operations Officer Kyle Hayden said the complex Lawrence High School project, which will touch virtually every part of the school and is expected to take 27 months, hasn’t started yet.
“Because of the unknowns and potential risks, it is fiscally responsible to wait to see if needs arise for allocating these funds,” he said via email.
Boyle said when the projects are complete, any remaining bond principal or interest earnings will be used to pay interest on the bonds.
The district has completed construction projects at the Lawrence College and Career Center and at Southwest and Billy Mills middle schools. Work at Free State High School has entered phase two. Construction is set to begin in March at West Middle School, and the Liberty Memorial Central Middle School and Lawrence High projects will start once school lets out.
Updated project totals
It’s not uncommon for actual construction totals to differ from what was presented to voters.
With the district’s 2013 bond issue, some of the numbers changed quite significantly. For instance, Prairie Park Elementary had spending of about $1.1 million less than what was planned when the bond issue was presented to the public, and Quail Run Elementary had spending of about $1.7 million more. Percentage-wise, some differences ranged from under the estimate by 68 percent to over by 73 percent.
That is not the case so far with the 2017 bond issue. The amount budgeted to be spent at each school is largely in line with the estimates provided to voters. Here’s a look at the estimated totals presented to voters, the actual costs the district was projecting as of its update to the Journal-World and the percentage difference for each:
• Lawrence High School: Estimate $50.8 million; updated $52.8 million; 3.93 percent more
• Free State High School: Estimate $15.2 million; updated $16.3 million; 7.25 percent more
• Liberty Memorial Central Middle School: Estimate $4.3 million; updated $4.45 million; 3.48 percent more
• West Middle School: Estimate $9.8 million; updated $9.79 million; .08 percent less
• Billy Mills Middle School: Estimate $1.8 million; updated $2.06 million; 14.37 percent more
• Southwest Middle School: Estimate $4.3 million; updated $4.44 million; 3.22 percent more
• Lawrence College and Career Center: Estimate $600,000; updated $612,000; 2.08 percent more
Capital improvement plan projects
The school board approved its next five-year capital improvement plan during its Jan. 28 meeting. Between years 2019, 2020 and 2021, the district has allocated $2.16 million for capital improvement projects at the secondary schools.
Of those, $2.1 million are things the district realized after the bond passed that would be good to get done at the schools.
“The bond dollars just haven’t been able to support those to this point,” Hayden told the board at its Jan. 14 meeting, when it received a draft of the CIP. “Now, I will say that our bond funds have gone above and beyond what the master plan scope had identified, so we’ve been fortunate to capture more scope along the way on every single project.”
He said Thursday that if the remaining $2.49 million in bond interest is not spent, however, these projects could still be paid for with bond funds instead of the capital outlay budget.
“We kept these items in the CIP for now as a budgetary holding spot until we are further along at LHS,” Hayden said via email Thursday.
Here’s a breakdown of those items and when they’re scheduled in the CIP. Any project that costs more than $20,000 will come back to the school board for final approval.
As a side note, these numbers do not include all of the CIP items the district has planned for each school. These are the ones Hayden mentioned specifically to the board that could be included in the bond projects.
• Lawrence High School — 2021: Grab and Go Snack Bar, $150,000.
• Free State High School — 2019: Audio/visual technology, $370,000; improvements to pavement, $130,000. 2020: Grab and Go Snack Bar, $150,000. Total: $650,000.
• Liberty Memorial Central Middle School — 2019: Audio/visual technology, $200,000; theater lighting, $200,000; sound system, $50,000. Total: $450,000.
• West Middle School — 2019: Auditorium lighting, $75,000.
• Billy Mills Middle School — 2020: Theater lighting controls, $20,000; special education renovation, $100,000; fire alarm replacement, $100,000; auditorium lighting, $75,000; audio/visual technology, $200,000. Total: $495,000.
• Southwest Middle School — 2020: Auditorium lighting, $75,000; audio/visual technology, $200,000. Total: $275,000.
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