FREQUENTLY ASKED QUESTIONS

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.

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 May 2025 bond would increase the tax rate by 2.95 resulting in a total bond millage rate of 9.96 mills. In combination with the expiring sinking fund the net change of total levy associated with sinking fund and bond debt would result in an increase of 1.02 mills over the 2024 levies (7.01 mills plus 2.95 mills less 1.93 mills).

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.

If approved, the ballot proposal would allow the district to sell bonds in the amount of $36.4 million with a 2.95-mill net increase over the current tax rate. The district intends to not seek renewal of the sinking fund in 2025 and this will result in a change in the net tax increase (combination of sinking fund millage and bond millage) of 1.02 mills over the 2024 total levy. 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.

The bonds may be sold in series. A series bond means that voters are asked to approve the overall bond amount once at the May 6th, 2025 election. Approval at this election authorizes the district to sell bonds up to the amount of $36.4 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.

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.

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).

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.

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

An overall project schedule that includes designs and construction dates hasn’t been finalized. The timelines and sequencing for the various projects will be based upon further analysis by our architectural and construction management teams. The preliminary breakdown of projects by series is as follows. This also is subject to change based upon advice from the architectural and construction management teams. Timing for the Series 2 bond sale is anticipated to be in 2027 but will be monitored by the district’s financial manager and the actual timing will be determined at a later date after further analysis of market conditions. PROPOSED SERIES 1 WORK – Bonds to be sold in June 2025 Central Elementary - Anticipated Projects o Renovation for the relocation of the main office and secure vestibule o Replace electrical service o Increase electrical transformer size o Renovate main office restrooms to meet ADA requirements North Elementary – Anticipated Projects o Renovation at main entry/secure vestibule to create direct pathway to main office o Replace electrical service o Increase electrical transformer size Northwood Elementary - Anticipated Projects o Renovation at main entry/secure vestibule to create direct pathway to main office o Replace electrical service o Increase electrical transformer size Parchment Middle School - Anticipated Projects o Replace select portions of roofing o Replace electrical service o Install ADA buttons and operators at main entry vestibule o Renovate office restrooms to meet ADA requirements Parchment High School – Anticipated Projects o Replace select portions of roofing o Replace concrete curbs at student drop-off area for barrier free access Parchment Innovation Center – Anticipated Projects o Renovate office restrooms to meet ADA requirements PROPOSED SERIES 2 WORK-Bonds anticipated to be sold in June 2027 Central Elementary - Anticipated Projects o Replace classroom unit ventilators (new units to provide heating and air conditioning) o Replace building temperature controls systems o Replace fire alarm system o Replace single pane exterior windows North Elementary – Anticipated Projects o Replace roof o Replace classroom unit ventilators (new units to provide heating and air conditioning) o Replace building temperature controls systems o Replace select exterior windows Northwood Elementary - Anticipated Projects o Replace roof o Replace classroom unit ventilators (new units to provide heating and air conditioning) o Replace building temperature controls systems o Replace fire alarm system o Replace single pane exterior windows Parchment Middle School - Anticipated Projects o Replace classroom unit ventilators (new units to provide heating and air conditioning) o Replace library mechanical unit (new unit to provide heating and air conditioning) o Replace chilled water system – upgrade to include cooling of gymnasium o Replace building temperature controls systems Parchment High School – Anticipated Projects o Replace classroom unit ventilators (new units to provide heating and air conditioning) o Replace library mechanical unit (new unit to provide heating and air conditioning) o Replace building temperature controls systems Parchment Innovation Center – Anticipated Projects o No projects anticipated

Parchment School District is committed to a process of creating and maintaining a proactive approach to updating facilities. Continually evaluating and monitoring school facilities helps to protect the community’s investment in its schools. A comprehensive effort has been made early in the process to identify current facility needs while also identifying and anticipating future needs through the creation of a long-term facilities plan. We appreciate the previous community investments and want to continue to build upon the success of past projects. Facilities are a major component in creating environments that prepare students for competing in an ever-changing world. The district engaged a construction manager in 2019 to prepare a facilities study to help us better understand the upgrades needed at each of our buildings. During the early spring of 2023, working with architectural, engineering and construction specialists, the school district completed an update to the facility study. The study identified districtwide facility needs and has helped inform the proposed direction of the bond proposal. Overall, there were approximately $123.7 million dollars of total facilities recommendations indicated in the report for Central Elementary, North Elementary, Northwood Elementary Parchment Middle School, Parchment High School, and the Parchment Innovation Center. A summary by building is as follows: Central Elementary School (42,500 sf - original construction 1956) $17,255,078 Recommendations – Poor Condition Items $2,602,324 Recommendations – Fair Condition Items $14,652,754 Northwood Elementary School (49,000 sf - original construction 1939) $14,219,067 Recommendations – Poor Condition Items $4,675,125 Recommendations – Fair Condition Items $9,543,942 North Elementary School (46,000 sf - original construction 1958) $15,408,168 Recommendations – Poor Condition Items $2,600,161 Recommendations – Fair Condition Items $12,808,007 Parchment Middle School (90,850 sf - original construction 1909) $36,797,493 Recommendations – Poor Condition Items $22,067,427 Recommendations – Fair Condition Items $14,730,066 Parchment High School (145,000 sf - original construction 1959) $28,744,609 Recommendations – Poor Condition Items $5,761,981 Recommendations – Fair Condition Items $22,744,609 Parchment Innovation Center (16,000 sf - original construction 1954) $11,312,732 Recommendations – Poor Condition Items $5,969,117 Recommendations – Fair Condition Items $5,343,615 TOTAL ALL RECOMMENDATIONS $123,737,147 The district worked with key stakeholders and community groups to collaboratively prioritize needs identified in the 2025 bond proposal. These can be viewed here.

Key Priorities of the Established Bond Scope Include: The overarching theme of the bond proposal is ‘Safe, Warm (and Cool) and Dry’. The following information gives more detail on the types of projects that are included within the bond scope and the ways in which they are helping achieve this overall theme. Safety and Security The safety and security of our students and staff is the highest priority. Peace of mind in the classroom allows for a more comfortable learning experience. Improved Office Presence/Visitor Flow – The office at Central Elementary is located at the center of the building and does not have good presence or visibility to the site drop off areas. Renovation to support the relocation of the office is proposed so it is directly adjacent to the main entry and will require visitors to check-in prior to having access to the remainder of the building. The offices at North and Northwood Elementary are positioned well in the buildings, however they are not directly connected to the secure vestibule. Renovations will correct this disconnect. Fire Alarm System Replacement – The current fire alarm systems at Central Elementary and Northwood Elementary are out of date and difficult to service. The proposed fire alarm systems at these buildings will provide enhanced emergency communication with students and staff that meets today’s code requirements. Educational Environment Upgrades Impacting the environments that directly affect all students within the district is the main focus of our bond proposal. The bond scope seeks to provide upgrades that improve student comfort and ultimately have a direct relationship to student performance. Thermal Comfort and Air Quality Improvements - Mechanical systems will be upgraded to provide air conditioning, creating year-round comfort for students and staff. New temperature control systems will be installed to provide greater monitoring and adjustment of the mechanical systems. The new mechanical systems will improve ventilation in our buildings providing better air quality throughout for healthier environments for our students and staff. Energy Efficiency Upgrades Energy savings improvements allow the district to divert funding from operational costs toward items that will directly affect education and have student impact. The proposed bond scope includes a number of infrastructure and energy efficiency upgrades. Roof Replacement – As roofing replacements are undertaken at multiple buildings in the district, we will evaluate and update the amount of roof insulation so that work is in compliance with the latest energy codes. This will result in a better performing building envelope and will have a positive impact on the overall facility energy use. Window Replacement – Window replacement at Central Elementary will involve replacement of single-pane inefficient windows with better performing window systems that include thermally broken frames and high performing low-E insulating glass. Select windows are also to be replaced at North and Northwood Elementary and will have a positive impact on energy use. Temperature Controls Systems Upgrades – As part of the mechanical systems replacement, we will look at installing higher-efficiency equipment. Along with the mechanical equipment upgrades, we will replace building-wide temperature control systems. This replacement will allow for greater monitoring and control over energy use when operating our mechanical equipment. Infrastructure Upgrades As we work to achieve improved thermal comfort (consistent heating and the addition of air conditioning) in our buildings, these projects will require upgrades to select infrastructure elements to support the new mechanical equipment being installed. Electrical Infrastructure Upgrades –Central, North, Northwood elementary schools and Parchment Middle School will have their main electrical services replaced to address the new demands of providing cooling in these buildings.The High School electrical service is adequate for the mechanical upgrades being proposed there. The electrical transformer size will also be increased at the three elementary buildings as part of these upgrades.

Total Bond Amount = $36,400,000 Amount Available for Projects = $36,174,815 Election/Issuance Costs less Interest Earnings = $225,186

The budgeting that has been provided for the proposed bond scope is based on current market conditions with an inflation of approximately 3% per year. Going forward, the costs include typical yearly escalation factors and construction contingency funds for unforeseen conditions that are encountered during construction. The district will work to preserve the projects as originally presented to the community during the pre-bond planning phase. In the event unexpected market conditions arise, the district intends to implement projects in order of highest priority to lowest priority and will be fully transparent about any change in plans that may be necessary due to elements outside of their control.

The amount of work being proposed in the bond proposal is significant. As such, our Construction Management partners believe it to be the best practice to stagger the implementation of the projects. This will allow for greater contractor participation and will not overstress the local construction market which currently is struggling with labor availability. Greater participation of bidders means greater competition and hopefully better bid results that will benefit the school district.

Yes, representatives of local law enforcement and emergency management organizations will be brought in early into the design process to gain feedback on how the facilities designs best support access and response for emergency personnel.

School buildings are constantly in need of facility updates. As we move into the future, the district will monitor opportunities for generating funding for necessary facility improvements. There is no specific timing that has been identified, however we would anticipate a future opportunity to exist in 8-10 years to seek voter approval of another bond. The timing will be dependent upon property value changes and other variable. As these future opportunities arise, the district intends to continue to be transparent with the community and will seek feedback on potential approaches.