The Douglas County School District hopes for the best but is prepared for the worst at the November polls. On Aug. 17, the school board gave the …
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The Douglas County School District hopes for the best but is
prepared for the worst at the November polls.
On Aug. 17, the school board gave the green light to its finance
department to prepare for a $73 million issuance of certificates of
participation in case voters approve Amendment 61.
If the taxpayer initiative passes on Nov. 2, the district will
be poised to sign the debt issuance the following day, said Dan
Gerken, Douglas County School District Board vice president. The
certificates enable the district to keep the doors open at area
schools, despite the fallout from Amendment 61, Gerken said.
“The state’s interest-free loan program is going to go away (if
Amendment 61 passes),” Gerken said. “We will manage our cash flow
with $60 million of that (certificate of participation), when our
tax receipts don’t necessarily come to us at a convenient time to
meet our expenditures.”
The Douglas County School District is among those districts in
the state that each year takes advantage of Colorado’s
interest-free loan program to meet operating expenses, said Diane
Doney, the school district’s acting chief financial officer. The
loan is intended to help school districts meet operating expenses
at its fiscal year end as a matter of cash-flow management, Doney
In Douglas County, that loan is historically pulled by November,
to keep schools running until the tax receipts bring in a new cash
flow in the spring, she said. If voters approve Amendment 61, which
limits government debt, the state’s loan program will be
eliminated, and after Jan. 1, 2011, the school district will no
longer be able to issue certificates of participation, she
Although the debt issuance will cost taxpayers about $5 million
more than they would have paid for the state’s interest-free
program, it will serve two purposes — to keep the schools open and
keep DCSD in compliance with TABOR reserve requirements, Gerken
The Taxpayer Bill of Rights (TABOR) demands that the district
keep three percent of its cash in emergency reserves, Doney said.
Facing budget cuts that placed demands on its cash reserves, the
district is entering its second year of meeting that TABOR
requirement with a letter of credit for about $13 million. The
letter of credit has never been drawn on, but passage of Amendment
61 — with its debt limitations — will render the letter of credit
void and put the district in violation of the TABOR emergency
reserve requirement, Doney said.
With issuance of $73 million in certificates of participation,
the district will have $60 million in operating funds, and the
balance will go toward meeting the TABOR requirement. The school
board elected to move forward with certificates of participation as
the best of three options presented by the finance department,
Gerken said. The board faced the choice of a ballot question to ask
voters for the money, to issue the certificates of participation
through its DCSD Finance Corporation or to take no action and wait
for the November election results. If voters decide against
Amendment 61, the district will have no reason to issue the debt,
Doney said. Issuance of the certificates, however, doesn’t solve
the broader challenges of Amendment 61, Gerken said.
With its built-in debt limitations, the tax initiative makes it
impossible to build new schools and puts the district at the mercy
of the state, he said. The school board has taken an official
stance opposing the three tax initiatives in November, Proposition
101 to reduce vehicle fees, Amendment 60 to lower property taxes
and Amendment 61 to limit government debt.
If Amendment 61 is approved by voters, school districts
statewide will face the same challenges as DCSD, and the state will
be required by TABOR to fill in the shortfall. The expected result
is that the state will be forced to dedicate 99 percent of its
budget toward education, according to a study report issued by
Douglas County. Should that be the case, the DCSD board fears the
loss of local control in its decision-making powers, Gerken
“We are unequivocally against (the ballot proposals),” he said.
“We would be in a position where it would be several years before
we could even think about building another school in the county.
These initiatives are Draconian because they don’t allow us to
match our assets to our liabilities. It’s like telling someone you
have to pay cash for a house. This country would be nowhere near as
sophisticated an economy … if we couldn’t have a mortgage on a
house or even a loan on a car. It would totally slow down an
The school board asked the finance department to prepare the
certificates of participation and be prepared by October to present
the board with optional cost rates. Doney’s department is poised to
begin shopping the certificates on the bond market to find the best
rate for the district.
“We would be remiss if we weren’t planning ahead to mitigate the
potential impact if (Amendment 61) were to pass,” she said.
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