Brandywine officials say district could benefit from sinking fund
Published 9:28 am Thursday, October 8, 2015
Hours after the school board authorized spending half a million dollars on roof repairs, Brandywine school officials discussed the potential need for an additional source of revenue to pay for similar expenses in the future.
Supt. John Jarpe and business manager Kathy Holy both said the district could benefit from a sinking fund, which is a type of tax collection that can be used for major repairs and renovations.
“It (sinking fund) really helps in terms of your long-term planning — you don’t have to continually rely on your fund balance,” Jarpe said. “It is a good resource for any school district to have in terms of budgeting and needs.”
Holy said many local school districts have a sinking fund, including Niles Community Schools, Buchanan Community Schools, Cassopolis Public Schools and Berrien Springs Public schools, to name a few.
Voters must approve a sinking fund in an election.
Because Brandywine does not have a sinking fund, Holy said the district uses its fund equity — or savings — to pay for major repairs, like the $562,258 roof fix project approved by the board Wednesday morning.
The problem with continuing to use fund equity for such projects, Holy said, is that the fund equity will eventually run out.
Brandywine’s fund equity at the end of last year was $3.9 million, or 32 percent of the district’s annual operating expenses. Board policy, she said, states that fund equity must stay at or above 20 percent.
Brandywine actually has one of the highest fund equities in the area when looking at percentage of yearly operating expenses, just behind Edwardsburg, which also does not have a sinking fund.
“You need to have that bigger fund balance if you don’t have the sinking fund to take care of these projects,” Holy said.
Holy is projecting that the district’s fund equity will decrease greatly in the next couple of years due to a few major maintenance projects, including an estimated $1.9 million roof repair to all buildings in 2018.
“It is very important to us that we keep our buildings maintained well so that our students have a safe environment to learn in,” she said. “You can see where a sinking fund would help greatly in maintaining the district.”
Jarpe said district officials and the board would continue to discuss the possibility of pursuing a sinking fund in the next couple of years.
“We need to see if we can realize any kind of savings out of some of the existing bonds we have, get a feel for what the community is able to support — there is a lot of discussion that goes into this,” he said. “We certainly aren’t going to put something on the ballot right away.”
Holy said a 1 mill sinking fund would generate about $270,000 a year for the district and cost the average homeowner about $50 a year.
Hoekstra Roofing, of Kalamazoo, was contracted Wednesday to repair portions of the roofs at Brandywine Elementary and the middle/senior high school.