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 August 2018, OFCC informed us that we would not be eligible for funding until 2020 at the very earliest. [edited: I thought notice came in late July 2018, but it was actually August 2018]
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.
Andrea Brady's Blog 
Thanks for the info Andrea. Question, I saw at the auditors site that this levy is for 37 years and we will have to pay about $880/year for this. Does that amount change as the value of our house changes? Also, as more houses are built, will that amount go down as new houses are being added or could the bond be paid off in less than 37 years? Finally, not sure if you can answer this, but why are all of these new developments being approved when we clearly don’t have the room in our schools for all of the additional students?
Suzette, thanks for the question. The bond is for a specific amount, so as property values increase, the amount each individual homeowner pays would decrease. The same is true when new homes are built in the district. I can’t answer your question about new developments, although we do have room for the students who will come from the new development on Branch Hill; it just won’t be at the closest elementary school to them. Our true enrollment concerns come as neighborhoods continue to turn from empty nesters to young families and as all-day kindergarten becomes a mandate, which will require additional room (since currently most kindergarten rooms are able to be used twice in one day).
I spoke with the Clermont County Auditors office and I wa told that as our property values increase, we would be paying more.
Holly, interesting you posted this as a conversation I just had made me realize I might not have been correct in what I posted, but I haven’t yet gotten to confirm. I had thought a bond was like a mortgage, a fixed rate unless it was “refinanced.” If payments do increase, then the bond will be paid off in fewer than 37 years. I’m going to confirm exactly how it works so I understand.
@holly Hornsby, this is what I have learned. The bond issue is like a mortgage: it’s a total amount of money locked in at a certain interest rate over a certain number of years. The annual payment is set; the district will not collect more in any given year.
When new homes are built, that total amount is split between more properties, so everyone’s payment will go down. However, with the few new homes that will be built in our area, that will be negligible.
When property revaluations happen, if every home in the district is increased at the same amount, your payment will stay the same. If your home’s value goes up at a higher rate than everyone else’s, then your payment will go up. Once again, it will likely be negligible.
The only times a huge change would be noticed would be: 1) if there are a significant number of new homes built in the district during the period of the bond; or 2) if a large group of homes (such as half the district) increased at a significantly higher rate than the rest of the district.
Otherwise, the amount you pay at the start will be pretty close to what you pay at the end.
Hope that makes sense.
I have moved out of the district but would like to support the levy. Where may I send a small donation?
Wendy, so glad to know you feel the plan will benefit the district! And how generous of you to want to support the bond committee even though you’ve moved away – I know the committee will greatly appreciate it 🙂 You can find the contact info at http://www.unitethem.org.
I am leaving questions here because someone in Milford directed me here.
– You claim the state turned you down for funding. Why? Why, unlike Batavia, did you not secure funding?
– You claim that new mandates in 2019 would increase cost and you want to avoid the mandates. Are they bad? Why do you want to build to less than current standards?
– How is it that in 3 years (May of 2016-May of 2019) the “inflation” was $12m ($86-98m) but now in 6 months the added inflation would be $7.1m?
– Why not focus on “needs” now (hitting up property owners) and then re-work the rest to maximize innovation and other sources of funding?
– What role did Chris Hamm play in convincing you (and other Board members) to accept the FCC offer vs. negotiate in public to get a better deal? Why did you think you had no leverage when Commissioner Humphrey cited your approval as a key reason he could vote yes?
– What of innovative approaches that would reduce the burden on property owners. For example, an income tax approach like Goshen or CNE. Where can I watch a board meeting where such options were deliberated in public?
Chris, I am not “claiming” anything; this article presents what happened with the situation. Here are answers to your questions:
1. Read the article; I explain it there.
2. I simply presented the fact that new mandates that take effect in July will increase the cost of construction if the bond does not pass until November or later.
3. The rate of inflation fluctuates. The rest of the information is in the article.
4. It is less expensive to complete all the construction at one time vs. parceling it out. Plus, the placement of the new building and other immediate needs requires most of the work to be done at the same time.
5. A real estate transaction has two parties: the buyer and the seller. The school district is only a party if it’s land we are buying or selling. We have limited leverage with for-profit situations and no leverage for non-profits. The FC land is owned by a non-profit, and they owed us nothing. District administration negotiated with FC. No other board member influenced my vote.
6. Not sure how an income tax is an “innovative” idea? Any type of tax is a burden to our community. An income tax puts a much higher burden on earners, a property tax spreads it out further, but is extremely hard on those on fixed incomes. There is no good solution with the options we have right now. You didn’t mention West Clermont in your question – I guess that’s because you already know that Milford does not have a piece of land that could be leveraged like West Clermont had, so that was never an option for us.
Ms. Brady, thank you for your replies. I have added comments below. I put my original quiestion, then your reply (numbered) and then my comment / additional question.
MY ORIGINAL QUESTION: You claim the state turned you down for funding. Why? Why, unlike Batavia, did you not secure funding?
1. Read the article; I explain it there.
– I don’t think it does. In May 2016 you said there would be $16m from the state. What specifically changed?
MY ORIGINAL QUESTION: You claim that new mandates in 2019 would increase cost and you want to avoid the mandates. Are they bad? Why do you want to build to less than current standards?
2. I simply presented the fact that new mandates that take effect in July will increase the cost of construction if the bond does not pass until November or later.
– So did you not look at what those “mandates” were and whether they were good or bad? How do you know, then, that they increase cost? Is there an ANALYSIS showing that? Can you share it?
MY ORIGINAL QUESTION: How is it that in 3 years (May of 2016-May of 2019) the “inflation” was $12m ($86-98m) but now in 6 months the added inflation would be $7.1m?
3. The rate of inflation fluctuates. The rest of the information is in the article.
– Again, where is an actual document showing the $7.1m in supposed inflation that will take place from May to November? That is a very precise #. How was it calculated based on some substantive analysis?
MY ORIGINAL QUESTION: Why not focus on “needs” now (hitting up property owners) and then re-work the rest to maximize innovation and other sources of funding?
4. It is less expensive to complete all the construction at one time vs. parceling it out. Plus, the placement of the new building and other immediate needs requires most of the work to be done at the same time.
– I did not ask about “all at one time” vs. parceling it out. I asked about “needs” now vs. “wants” and how much you asked for now. People all seem to say the Middle School is in need of replacement but that looks to be only 1/3 of the total. Is the other 2/3’rds “needs” or “wants”?
MY ORIGINAL QUESTION: What role did Chris Hamm play in convincing you (and other Board members) to accept the FCC offer vs. negotiate in public to get a better deal? Why did you think you had no leverage when Commissioner Humphrey cited your approval as a key reason he could vote yes?
5. A real estate transaction has two parties: the buyer and the seller. The school district is only a party if it’s land we are buying or selling. We have limited leverage with for-profit situations and no leverage for non-profits. The FC land is owned by a non-profit, and they owed us nothing. District administration negotiated with FC. No other board member influenced my vote.
– Did you talk to any Commissioner about your “leverage”? Are you denying that commissioners would not have approved something the school district objected to? I have provided video evidence (Humphrey). You did not even have a public meeting on it and make FCC / the Port Authority explain the situation to parents.
Mr. Lucas announced the “result” two days before the “meeting.” And as for “influenced your vote”, that is not quite what I meant but I could have been clearer. What communication did Chris Hamm have with you? How about George Lucas? On August 14, Mr. Lucas said he had the approval of all Board members (two days before any presentation or vote). What was communicated to and from you by other Board members prior to August 16? How about Michael Doss?
MY ORIGINAL QUESTION: What of innovative approaches that would reduce the burden on property owners. For example, an income tax approach like Goshen or CNE. Where can I watch a board meeting where such options were deliberated in public?
6. Not sure how an income tax is an “innovative” idea? Any type of tax is a burden to our community. An income tax puts a much higher burden on earners, a property tax spreads it out further, but is extremely hard on those on fixed incomes. There is no good solution with the options we have right now. You didn’t mention West Clermont in your question – I guess that’s because you already know that Milford does not have a piece of land that could be leveraged like West Clermont had, so that was never an option for us.
– First, was an income tax even discussed? In many places it is seen as much fairer because it hits earners (who tend to be in the age range of kids) vs. property owners (2/3 with no kids in the schools). Add to that that property tax is regressive (hits lower income and fixed income harder). As for West Clermont, true re the land here although I think you should have pressed for FCC to be a TIF that supported the schools. That may have been a possible option you should have pressed in negotiation (in my view). You had 3 years to get the $16m in state funding secured that you had in your May 2016 document. You also, in 2019 could have “fought” that the maximum $ to the people be no more than $70m (what was said by the schools in 2016). It is about setting priorities ($10m in athletics, is that a need?).