School leaders applaud lawmakers for ability to use tax for security, technology - MLive.com

GRAND RAPIDS, MI - West Michigan school leaders are applauding the Michigan Legislature for passing a bill that allows districts to use sinking fund millages for technology and security upgrades, in addition to building repairs and renovations.

Kent ISD, Grand Rapids Public Schools and the West Michigan Talent Triangle have been among those at the forefront of the fight to expand the allowable uses of the tax for years.

On Thursday, Oct. 20, the Senate voted in favor of the legislation 36 to 0 and sent it to Gov. Rick Snyder. The House passed the measure in June by a vote of 107 to 1.

"Thanks to our legislators for recognizing the need and approving the expansion of this funding tool that allows us to purchase technology on a pay-as-you go basis instead of incurring the fees and interest costs of issuing bonds," said Kent ISD Superintendent Ron Caniff.

"This is the equivalent of a homeowner paying for a new roof out of their checking account instead of using a credit card. It will save taxpayers tens of thousands of dollars."

School leaders have long argued their residents and businesses pay more with a 20 to 30-year bond for technology and security than with a shorter length sinking fund because of the added cost of unnecessary interest and issuance fees.

School leaders push bill to save taxpayers cash on security, technology

Of the 544 Michigan school districts, 173 have sinking funds, including 16 in Kent and Ottawa counties. If the bill sponsored by Michael McCready, R- Bloomfield Hills, is approved districts would be able to access the expanded use beginning this May upon voter approval.

"I am grateful to our legislative leaders for expanding a fiscally responsible funding mechanism that enables schools to support safety and technology while keeping general fund dollars focused on classrooms and student learning,'' Northview Superintendent Scott Korpak, whose district is one of 12 Kent County systems with sinking funds.

The bill Snyder is expected to approve would expand the allowable uses of a sinking fund to include school security improvements and technology. However, sinking funds approved after the effective date of the bill would be limited now to a maximum of 3 mills over 10 years, instead of 5 mills over 20 years.

A sinking fund is described by the Senate Fiscal Agency essentially as a savings account, allowing districts to accumulate funds to currently pay for real estate, construction or repair of school buildings without incurring debt services that accrue when bonding for capital projects.

Last school year, East Grand Rapids voters renewed the district's 0.5 mill sinking fund levy for 10 years, from 2016 to 2025, for capital repairs and improvement.

"As a district, we believe it makes good financial sense to be able to finance technology purchases from a sinking fund instead of incurring debt through a bond issue," said Kevin Phillips, assistant superintendent for business for EGR, who said East is thankful to lawmakers for making the adjustment.

Over time, there will be technology replacement needs at a level not large enough to ask for a bond proposal, but large enough to put pressure on the general fund. Access to the sinking fund for those purchases is a great solution for the district and taxpayers."

School leaders have been lobbying for greater flexibility for 20 years and say the West Michigan legislative delegation was instrumental in the victory. State Reps. Amanda Price, R-Park Township; Thomas Hooker, R-Byron Township; Roger Victory, R-Hudsonville; and Ken Yonker, R-Caledonia, were co-sponsors of the bill.

Business leaders have previously opposed any tax expansion because of fear the money would be diverted to paying the operational costs of schools. However, the Michigan Chamber of Commerce liked the targeted approach taken in the bill and took a neutral stance and so did the Grand Rapids chamber.

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