Should school construction savings be sent back to taxpayers?

August 23, 2012

It’s always good news when projects come in under-budget – especially when they are taxpayer-funded.

In Spokane, the Spokane School District says it’s on track for bond-funded projects to come in $47.9 million below budget. That’s an enormous savings and the school district should be congratulated for making it happen. And taxpayers should be pleased.

The question now becomes what to do with that extra money? Spokane voters approved a $288 million bond in 2009 with the understanding that it would go toward specific projects.

Now, with the extra savings, the school district is considering funding numerous other projects such as a classroom addition at North Central High School and another addition at Mullan Road Elementary School.

Those projects may very well be needed, but are they really what taxpayers approved?

In a Spokane Journal of Business article, the district’s Associate Superintendent Dr. Mark Anderson said “we’re not proposing to spend it all now.”

The question truly is whether they should spend it at all, or whether it should be returned to the taxpayers? At the very least, taxpayers should be allowed to chime-in on whether they want the extra funds spent on those projects, or perhaps something else. They might have a different priority.

School officials could insist on using the extra funds to pay off the bonds early.  That would return the savings to taxpayers, by ending that part of the property tax sooner, which would increase home values in a down market and boost family take-home pay in these tough economic times.  Early pay-off would also enhance the fiscal reputation of the School District and lower its borrowing costs.  It would also make future school levies & bonds easier to pass, since voters would see how responsibly the District manages the public’s money. 

Just because you have an extra $48 million, doesn’t necessarily mean you have to spend it.


No obligation to spend as described

I don't know if it's different in Spokane - it probably isn't - but here in Seattle the school district is under no obligation to spend capital funds on any specific projects. Sure, they will describe the work that they expect to do with the money, but those plans are not legally enforceable. I'm sure it's the same in Spokane.

Are the extra projects what the taxpayers approved? No, they aren't. But the taxpayers didn't approve any projects. The taxpayers approved a bond levy, and that's what they got. There are no "extra" funds. They raised exactly what they werre authorized to raise.

Here's a quick test for bias in your thinking:
If the project had come in over-budget would you expect the district to simply extend the tax without public approval since the people voted for the project, or would you insist that the people had voted to raise a specific dollar amount? When the estimate is high do you think that the vote was for the project and when the estimate is low do you then think that the vote was for the dollar amount?

School Taxes for Capital Projects

Two assumptions - - first, funds are collected as projects move forward or after completion. And, second, the use of capital projects APPROVED by voters are specific and use of funds used beyond the approved project is not in keeping with voter’s intent.

If funds are collected prior to the project’s completion payment, how will the collected extra taxes be refunded? Will a refubd check be sent to each property owner?

It will be interesting here at our policy center site to see insights from experts on the issue. It is one requiring attention to keep voters informed as we provide more and more funding for priority approved projects.