In January, the Milford School Board voted to put a 4.7 mill bond issue on the May 7, 2019 ballot. The bond issue would generate just under $98 million to build a middle school to replace the current Milford Junior High School; build a 1,000-seat auditorium to be shared by the high school and new middle school; renovate part of the unrenovated section of the high school; replace parts of the roof and the HVAC in the high school; and replace/renovate several athletic facilities. This bond is not part of the Ohio Facilities Construction Commission (OFCC) partner program where the district would receive a percentage of qualified building costs (27%) back from the state.
Two big questions have arisen about how we got to this point in our construction process: 1) Why are we no longer receiving a percentage back from the state? and 2) Why are we running this issue in May instead of this November (or last November)?
A quick overview of the OFCC program
To understand why we are no longer part of the state co-funding program, we must return to the start of the Master Plan process. In the early 2000s, the district entered a building co-funding program with the state: based on relative wealth of the community, school districts could receive a percentage of state-approved building costs back from the state to help offset the cost impact on local communities. For Milford, that co-funded percent was 27% of certain building costs that were approved by the state.
Milford administrators and board members worked with state representatives to identify district needs, population expectations, and configuration preferences. A “Master Plan” was developed that included building six new elementary schools serving grades K-6; replacing the junior high; and adding on to and renovating the existing high school.
When the OFCC program was first implemented, the requirements were for a district to complete all their building projects before the co-funded percentage was “paid back” from the state to the district. Since Milford could not run all the construction projects at one time, the district knew it would be a long process before those state funds would be received.
In addition, a district could not just run a bond issue and start building; the program required each district wait until it came to the front of the line. At that point, a district could run a bond for some or all of their construction cost requirements and qualify for co-funding.
Step 1: Four new elementary schools, 2000-2004
In the Master Plan development process, new elementary schools were determined to be the most pressing need for our students. The community passed a bond issue to build McCormick, Mulberry, Meadowview, and Pattison elementary schools in 2001, and these schools opened in August 2004.
At this point, the district started the waiting game to be approved for the next portion of the plan. Unfortunately, many Ohio school districts found themselves in need of new or renovated construction at the same time, putting a high demand on the state’s limited pool of money. Milford was far down the list.
Step 2: High school addition + renovated public spaces, 2007-2010
In 2007, the district saw an opportunity to refinance current bonds and, for no additional taxes, generate enough funds to complete part of the high school work. The community passed that bond renewal and the district added the Ninth Grade Community and the new music wing to the high school. It also renovated many of the high school’s “public areas:” the entryway, main office, Bauer Commons, and the cafeteria. However, over 60% of the high school was not touched in this process, including maintenance items such as the roof and HVAC.
Step 3: New Charles L. Seipelt and Boyd E. Smith elementary schools
In 2013, OFCC changed the way it was refunding district co-funding: instead of having to complete the entire plan before funds were paid back, OFCC began issuing “credits” based on work already completed. A good portion of the four elementary schools and the high school work qualified for the 27% rebate, and the state greenlighted $25 million for Milford to use on construction projects. The caveat: the money could only be used for projects that could be completed at one time – we could not complete just a portion of a project with these funds.
The district determined that both Seipelt and Boyd could be replaced with this money, with the addition of a small amount of local money from the General Fund. While the junior high may have been more pressing in its needs, the $25 million was not enough to replace the building, and thus we could not use the money for it at that point.
The new Seipelt and Boyd buildings opened for the 2016-17 school year.
Step 4: New junior high, finish high school renovations, and other work
Once Seipelt and Boyd were opened, the last phase of the Master Plan was to replace the junior high and finish other miscellaneous work. However, we had to wait for Milford to get to the top of the list before we could run a bond issue. If we ran the bond issue before our number was called, we would not receive the 27% co-funding.
OFCC meets several times a year to determine what districts are likely to be funded in the next cycle. As the economy improved, more and more districts higher on the list than Milford began to pass their bond issues – which pushed us even farther back.
Each time district administrators met with OFCC, they were told “next time,” or “soon,” which kept us waiting and hoping we would be funded in the next round. However, in July 2018, OFCC informed us that we would not be eligible for funding until 2020 at the very earliest.
Step 5: New plans
At this point, we began seriously to consider leaving the OFCC program. The junior high is in bad shape; it needs to be replaced sooner rather than later. Waiting an additional 2+ years and incurring significantly more cost since construction costs are increasing an average of 5% a year did not seem to be in our students’ and community’s best interest.
In addition, the state has many requirements for what spaces can be co-funded and how we can configure our buildings. They base configurations on enrollment projections – but even the numbers they were starting with were below where our enrollment currently is! One of the reasons Seipelt and Boyd opened at close to capacity is because of these requirements.
We know enrollment projections are higher than what the state believes, and we also know other factors – such as new development, an influx of younger families, and mandated all-day kindergarten – are coming in the next 5-10 years. These factors alone mean we will need significantly more room at our elementary schools.
These evaluations and others led to the idea of moving to a middle school vs. a junior high. The more we looked at our needs and the restrictions the state would put on us, combined with the uncertain timing and growing construction costs, the more we believed it was best to leave the state program and build what Milford needs now and into the future.
In addition, if we looked at these factors and what the state would fund, our projection was that, once our number was called, a much smaller portion of our needs than expected would qualify for the 27% co-funding. Based on current needs, we believe we would qualify for $13-15 million back from the state (once and if approved) – which is a good amount of money, but significantly less than 27% of the entire project.
Timing of bond issue
The district has been anxiously waiting to put this issue on the ballot for years. If the state had approved our funding last July, we likely would have been on the November 2018 ballot. However, we did not receive that approval.
The deadline to place an issue on the November 2018 ballot was the end of July 2018. Since we were still working through the options and trying to determine if we should leave OFCC or not, there was no way we could have been ready to make that decision.
That means our next option was May 2019. That decision had to be made by the end of January 2019.
Cost to run in May vs. delay to November
To run an issue on the ballot costs money, whether that issue runs in November or May. This cost is divided between the organizations that are on the ballot in any given election. Since May 2019 is a special election, there is nothing else on the ballot, so the district must pay the entire $58,500 cost.
However, waiting until November will cost an additional $7.1 million in construction expenses – significantly more than the $58,500 to run the issue in May.
This is due to two main factors. First, construction cost is increasing at 5% a year. Because of how the design process falls, we would lose a full year in construction timing if we wait until November, meaning waiting six months actually costs us almost the same in inflation as waiting 12 months.
Second, new mandates are being implemented in July 2019, which will add greatly to the cost of the project. Any construction plan passed by the community prior to July 2019 is exempt from these new mandates; we will be exempt if we pass the bond issue in May, but if we do not and have to run again in November, the cost for these mandates must be added to the plan.