How Will Prop 3 Affect Rockwood's Existing Debt?

As a result of strategic refinancing and aggressively paying down our debt, we are in a position to reallocate tax dollars from principal and interest expense (Debt Service Levy) to the district’s operating expenses (Capital Projects Levy) and address the immediate safety, technology and facility needs across the district. Moving to a pay-as-you-go funding method for annual items has been part of the district's long-range financial plan since 2014. By law, we need to ask voter permission to reallocate these funds for a different purpose. Prop 3 would allow us to do so without raising the overall tax rate.

No, we will pay our existing debt within the current maturity schedules and the planned Debt Service Levy of $0.14, if approved, will be sufficient to satisfy those obligations. Reducing the amount of money that is going toward debt will not change the amount we pay in interest. Our interest cost on existing debt is fixed. We are always looking to save taxpayer dollars. In fact, Rockwood is proactive in looking to reduce its interest cost in the form of refunding or prepayments if the interest rate environment is favorable to do so. Rockwood has saved over $13 million taxpayer dollars in refinancing since 2009.

We are always looking to save taxpayer dollars. In fact, Rockwood is proactive in looking to reduce its interest cost in the form of refunding or prepayments if the interest rate environment is favorable to do so. Rockwood has saved over $13 million taxpayer dollars in refinancing since 2009. Here are recent examples of refinancing and what it saved taxpayers:

FY16 - $38.9 million refunding of existing debt, saving $3.6 million dollars;

FY18 - $26.7 million refunding of existing debt, saving $1.3 million dollars;

FY22 - $16.0 million prepayments and defeasance of existing debt, saving $4.1 million dollars.

The reallocation of the tax levy from Debt Service to Capital Projects will establish a funding stream for district safety and security upgrades, technology device and infrastructure refreshes, and facilities maintenance to fund these purchases without issuing bonds and incurring debt. This will result in both the avoidance of interest expense and more efficiencies in facilities management.

The Rockwood School District has paid over $40 million in interest expense over the past five years. Interest expense will continue to be incurred on bond debt that is already outstanding. However, no additional interest expense will be paid on purchases made with Prop 3 funding. The remaining debt service levy will still allow us to pay our remaining debt obligations on schedule with interest expense over the next five years on existing bonds around $14.5 million.

Rockwood’s existing debt is set to be paid off in 2038-2039. The debt service levy would only be reduced if the district didn't incur any additional debt or issue any new bonds over the next 15 years. If Prop 3 fails, asserting the tax rate would go down is not realistic because the district has to maintain 37 buildings at a cost of more than $30 million each year, so the need will always be there.

The average age of our schools is 47 years old and our cycle maintenance addresses 37 buildings that cover more than 3.8 million square feet across the district (the equivalent of three Busch Stadiums or 66 football fields). It costs approximately $30 million annually to address the safety, technology and facility needs across the district.

Imagine buying a 47-year-old home and not expecting to do any maintenance on it for 15 years. That is simply not realistic.

Funds from the last bond issue (Prop T) passed by voters in 2017 were depleted by projects completed this summer. If we don’t have dedicated funding, we would need to continue to go to the voters for bond issues, which (if passed) would accrue additional interest.

Also, paying for significant new additions to district facilities, whether it be a large building addition or a new building, generally requires a bond issue for adequate funding. There are no current plans for significant new additions to our facilities. However, we simply cannot predict that there won’t be a need for additional facilities over the next 15 years when there will be a need for a bond issue, which would also prevent the Debt Service levy from decreasing.

The levy transfer is reallocating tax dollars the district already receives from debt service to capital projects that allow for effective long-term safety, technology and facility maintenance planning without incurring additional debt and paying interest. This will not affect the overall tax rate and is not a tax rate increase.  Prop 3 is about transitioning to a dedicated funding stream to ensure 100% of the revenue received goes back into our buildings through safety, technology and facility maintenance needs without increasing the overall tax rate.