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Frequently Asked Questions

What is a Sinking Fund?

A Sinking Fund is a millage levied to support school safety improvements, technology improvements, and the repair and construction of school buildings.  It is a “pay as you go” system that does not require borrowing money or paying interest.  Under current legislation, a district can ask voters to approve a levy of up to 3 mills for a period of up to 10 years.


What is the district asking for?

The district is asking voters to approve a Sinking Fund levy of 2.2 mills for a period of five years.


How will this millage impact me?

A Sinking Fund levy is based on the taxable value of a home, which is usually half of the home’s appraised value.  A 2.2 mill levy equates to $2.20 per $1,000.00 of taxable value.  The table below is for illustration only.

Appraised Value

Taxable Value

Levy

Annual Cost

Monthly Cost

Daily Cost

$50,000.00

$25,000.00

2.2 mills

$55.00

$4.58

15 cents

$88,000.00

$44,000.00

2.2 mills

$96.80

$8.07

27 cents

$125,000.00

$62,500.00

2.2 mills

$137.50

$11.46

38 cents

$175,000.00

$87,500.00

2.2 mills

$192.50

$16.04

53 cents

Note: the average taxable value of a home in Escanaba is $44,000.00


How much money will this Sinking Fund millage generate yearly?

Based on the estimated taxable value of property in the district, the Sinking Fund millage will generate approximately $1.2 million per year.


What can a Sinking Fund be used for?

By law, a Sinking Fund can only be used for the repair or construction of school buildings, school security improvements, the acquisition and upgrading of technology, and the purchase of real estate.


What can a Sinking Fund not be used for?

Sinking Fund monies cannot be used for employee salaries, routine maintenance, supplies, textbooks, buses, and other similar expenses.


Why is EAPS asking voters to approve a Sinking Fund millage?

Currently, the district has to use the money it receives from the state to fund repairs, security improvements, and technology and the cost of instruction, programs, activities, and salaries.  Because the district prioritizes instruction and programs or activities that directly benefit students, it spends a minimum on repairs, security improvements, and technology.  With a Sinking Fund, the district can use Sinking Fund money to pay for repairs, security improvements, and technology while preserving more state funds for instruction, programs, and salaries.


What does EAPS plan to use the Sinking Fund money for?

The district has prioritized three areas:

  • School Security Possible projects include constructing secure entrances for all buildings, installing lockdown systems, and making camera system upgrades.
  • Technology Possible projects include improving our infrastructure, phasing in a program to provide a laptop for each student, and adding instructional technology in classrooms.
  • Repairs Possible projects include replacing leaking roofs, improving playgrounds, repairing parking lots, and making money-saving energy upgrades.


Will the Sinking Fund benefit the local economy?

Board Policy 6450 states: The Board of Education recognizes its position as a major purchaser in this community, and it is the intention of the Board to purchase materials and supplies of quality at the lowest possible cost through widespread competition.  The Board prefers to purchase within the District from established local merchants.

The district will continue to support this policy in its use of Sinking Fund monies.


What happens if a Sinking Fund millage is not approved?

If the Sinking Fund millage is not approved, the district will continue to use state money to fund emergency repairs or urgent capital projects while prioritizing instruction and programs/activities that benefit students.  Without the millage, major facility repairs will have to be paid for with operating funds that would otherwise go to instruction and programs/activities for students, or they may be deferred.


How do I know whether or not Sinking Fund monies are being used appropriately?

By law, Sinking Funds must be kept separate from other district funds.  Sinking Funds must also receive an independent audit each year, which is filed with the state.


Doesn’t Lottery money go to education?

In fiscal year 2016, contributions from the Lottery made up 6.3% of Michigan’s total School Aid Fund, equating to less than $500 per student. In addition, the percentage of Lottery proceeds going to education has been reduced over time, from 40% to around 29%.


Did we pass a bond recently?

The district passed bonds in 2001 and 2010.  All money from those bonds was spent on various projects for which the bonds were intended.


Has the district been responsible with bond monies?

The district has worked to ensure all bond monies were spent appropriately.  In addition, the district has regularly refinanced bond debt to take advantage of lower interest rates, saving taxpayers over $2.5 million dollars in the process.


What is the difference between a bond and a Sinking Fund?

A bond is a lump sum amount of money a school district borrows by selling bonds to pay for capital projects. Taxpayers pay bond money back, with interest, over a period of years.  It is similar to a home mortgage.

A Sinking Fund millage is a limited property tax used on a “pay as you go” basis to address repairs and improvements.  Sinking Funds have zero debt, and taxpayers do not pay interest when money from a Sinking Fund is used.


How many districts in Michigan have a Sinking Fund?

About one out of every three districts in Michigan has a Sinking Fund, including almost 20 in the UP.


When is the vote?

Voters will cast their ballots on May 8, 2018.  Absentee ballots will be ready on or before March 24, 2018.  The last day to register to vote for the May 8, 2018 election is April 9, 2018.


How will the proposal appear on the ballot?

The exact ballot language is as follows:

Shall the limitation on the amount of taxes which may be assessed against all property in Escanaba Area Public Schools, Delta and Marquette Counties, MI, be increased by, and the Board of Education be authorized to levy not to exceed 2.2 mills ($2.20 on each $1,000 of taxable valuation) for a period of 5 years, 2018 to 2022, inclusive, to create a sinking fund for the repair or construction of school buildings, for school security improvements, for the acquisition or upgrading of technology, for the purchase of real estate and all other purposes authorized by law; the estimate of the revenue the school district will collect if the millage is approved and levied in 2018 is approximately $1,209,339?


Feel free to contact us at (906) 786-5411 or sinkingfund@eskymos.com with any questions you may have.

 

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