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Iowa City School Board Puts Off Decision on High School Funding Policy
By Gregg Hennigan, Reporter
IOWA CITY, Iowa – The Iowa City school board will put off indefinitely a decision on what to do about a policy that requires $32 million to be reserved for a new high school.
School board members said at a meeting Tuesday night that they wanted to wait to take up the issue until after the district has a facilities plan in place to help guide decisions on building projects. That will likely be done in early June, although the board did not set a date to revisit the issue.
"We shouldn't be spending any money without a plan," board member Patti Fields said.
After Johnson County voters approved a special sales tax benefiting school districts in 2007, the school board adopted a policy that requires $3.2 million be saved annually for 10 years to go toward the construction of a new high school.
A majority of board members last fall were in favor of taking that money and spending it on elementary school projects instead, but the discussion was tabled until after this month's vote on a new revenue purpose statement, which is the document saying how sales tax money can be spent. Voters approved the revenue purpose statement, allowing the district to borrow up to $100 million in future sales tax revenue.
As of last June 30, $16 million had been set aside for the high school, said Craig Hansel, the district's chief financial officer. That money is earning about 0.5 percent interest, which he characterized as a poor return.
Interest rates to borrow money for a project probably would be between 2.5 percent to 3 percent, Hansel said.
Board member Karla Cook noted that for the $16 million, a difference of 2 percentage points between interest rates – 0.5 percent versus 2. 5 percent – equals $320,000. While the board did not discuss at length what it may do regarding the policy on the high school money, Cook indicated she did not think it would be wise financially to let it sit in the bank while borrowing money at the same time for more immediate needs.
"I'm not willing to pay $320,000 a year just to let it sit there," she said.
A tentative plan calls for a new high school to open in 2020, while district officials would like to build three new elementary schools, construct building additions and undertake renovations to older buildings before then.
No projects are currently under consideration, though, so board members said there was no rush to make a decision on the policy Tuesday night.