When school districts over-collect for bond payments
If you take out a mortgage, you typically know what your payment is going to be each month, and from year to year. But if you approve a school bond in Idaho, you may only get a range.
That's because Idaho code 33-802A allows for school districts to collect up to 21 months worth of payments in a 12 month period. This can be an excellent tool for paying off debt more quickly. But does that happen? And is it really what taxpayers approved?
Consider the language used to describe many of last year's school bonds:
Middleton School District
"Principal not to exceed $59,435,000, to be paid off within 20 years; anticipated interest rate is 3.77% per annum."
Vallivue School District
"Principal not to exceed $55 million, to be paid off within 20 years; anticipated interest rate is 3.78% per annum."
"Not to exceed" and "within" are the key phrases there.
Legislation was introduced in the Senate Local Government & Taxation Committee today by Rexburg Senator Doug Ricks which would lower 21 month period to 15 months.
Senator Ricks discussed this issue with me on our Peak Policy program in November.
As Senator Ricks mentioned, a school district in Idaho Falls was able to pay off its 20-year bond in just 12 years. Again, this might seem like a good thing. But it was not necessarily what voters approved. And it also allows school districts to pass more bonds in a shorter period of time.
The reform introduced today is an important step in increasing confidence in elections and providing more transparency for taxpayers when considering school construction bonds.