Question 1

Why does the district need a bond proposal?

Accepted Answer

Many school districts in the State of Michigan typically seek approval for bond proposals every 5-10 years. This allows for significant improvements to occur and keep district facilities current.  The last bond proposal brought to the Parchment School District voters was a successful election over 15 years ago.

The Board of Education and district administration would like to pursue a bond proposal to implement major facilities updates.  The desire for continuous facilities improvements is driven by the district strategic plan.  Overall, a key goal for the district is to prepare our kids to become successful, contributing members of society. Upgraded facilities that support education for our current and future students will have a major impact in achieving this goal.

Due to the size and scale of school buildings, maintenance, updates, and replacement of facilities is costly and often not possible through the traditional funding received by school districts.  Our district has a number of growing needs that require large sums of money to undertake. A bond proposal is the best approach to making the significant updates and improvements needed at PSD.

Question 2

What funding sources are available to schools?

Accepted Answer

Schools receive funding from the following sources:

Foundation Per Pupil Allowance*#
The State of Michigan provides a per pupil amount of funding to school districts.  Currently, the amount received per pupil is $9,608.

Operational Millage (Non-Homestead tax levy)*#
This is a voter-approved tax levy that provides operational funding to support the annual school budget. The current Non-Homestead levy in the Parchment School District is 18.0 mills.  These are taxes paid by owners of commercial properties, investment properties and residential properties that do not serve as the owner’s primary residence (rental properties and vacation properties).

* Staff salaries and benefits account for approximately 80-85% of the use of Foundation and Operational Millage funding.  The remainder of these funds are typically used for costs of educational programs, building maintenance and operation costs, and supplies. This leaves very little funding available for facility improvements.

# In the State of Michigan, there is not adequate funding for major school infrastructure projects included in the Foundation Per Pupil Allowance. Funding for school infrastructure improvements is obtained primarily through local voter support.

Voter-Approved Sinking Funds
Voter-approved sinking funds provide an annual collection of taxes based on property values. Typically, the collection provides a smaller amount of funding that allows for minor facilities improvements and renovations.  Under new legislation, sinking funds can pay for buses, student technology and safety/security improvements.  Sinking funds cannot be used for the purchase of furniture.  Parchment School District currently levied a 1.93 mill sinking fund millage that had a final collection in December of 2024.

Voter-Approved Bond Funds
A bond is a state-approved borrowing process for a set scope of projects. When voters approve a bond proposal, the school district sells bonds in the authorized amount and uses the proceeds of the sale to pay for those projects identified in the bond proposal. Bond proposals are most useful when a district needs a large funding source for facility improvement projects.

In many ways, the bonding process is like a homeowner obtaining a mortgage and making payments over a period of years.  The current levy for bond debt in the Parchment School District is 7.01 mills. The proposed levy associated with the November 2025 bond would increase the tax rate by 2.95 resulting in a total bond millage rate of 9.96 mills.

Question 3

How does our current millage rate compare to other districts?

Accepted Answer

We appreciate the continued investment the community has made in our school district and have been mindful of our impact to taxpayers by not asking for a significant tax rate increase over the current levy.  People often wonder why our levy is higher compared to some of the larger surrounding districts.  The simple answer is that our tax base is smaller comparatively and requires us to levy a higher millage rate to generate more bond funding to support facilities projects.  The graph below highlights the comparison of the funding generated per 1 mill of levy with many of our neighboring and comparable districts.

Question 4

How would the bond proposal affect my taxes?

Accepted Answer

If approved, the ballot proposal would allow the district to sell bonds in the amount of $32.35 million with a 2.95 mill net increase over the current tax rate. The district's 2020 sinking fund was not renewed and

Some community members may be eligible for the Michigan Homestead Property Tax Credit. This tax credit indicates that households that pay homestead property taxes greater than 3.2% of their annual income may be eligible. Eligible households may deduct up to 60% and senior citizens may be eligible to deduct up to 100% of the millage increase cost up to a $1,800 Homestead Tax Credit limit. The eligibility for the credit begins to decrease after the household income exceeds $60,701 and ends completely after the household income exceeds $69,701. To understand how this applies to your situation, please consult your account or tax advisor or preparer to determine the actual impact on your taxes.

https://static.wixstatic.com/media/e8a7c8_eb1db1a0ff4446c9a8f5a5f2b25133ae~mv2.png

Question 5

Would all the bonds be sold at one time?

Accepted Answer

The bonds may be sold in series.  A series bond means that voters are asked to approve the overall bond amount once at the November 4th, 2025 election.  Approval at this election authorizes the district to sell bonds up to the amount of $32.35 million over the next few years.  Timing of the sale of bonds is monitored and suggested by the district’s financial manager, PFM Financial Advisors. Following a successful election, the first series would be sold in 2025 and the second series is anticipated to be sold in 2027.  This approach is an opportunity to save in interest costs, and it also staggers cash flow for the project, so it is received when needed for construction to align with the potential staggered start and completion dates of the proposed projects.

Question 6

Can any of the bond proposal funds be used for employee salaries or operating expenses?

Accepted Answer

No, by law, bond proposal funds cannot be used for employee salaries and benefits, athletics or student programming. They also cannot be used for repair or maintenance costs or other operating expenses. Bond proposal funds must be used only for purposes specified in the ballot language, and as required by state law, they must be independently audited.

Question 7

What is a mill?

Accepted Answer

A mill is equal to $1 per every $1,000 of taxable property valuation (not the market value of a home; homeowners can refer to their latest assessment for their home’s taxable value).

Question 8

What is the difference between a bond proposal and a sinking fund?

Accepted Answer

Bond proposals are used to finance major capital projects. The district is able to borrow money upfront and pay back the bond amount over time.
Sinking funds are provided on an annual basis to address the immediate needs of school buildings, facilities, and surrounding school sites. This is intended for short-term improvements rather than major renovations and upgrades.

Question 9

What has the bond money been used for in the past?

Accepted Answer

A history of school funding can be on the "History and Tax Impact" page.

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