Letter: Zahm: Bond Opponents Teaching with Misinformation

In a letter to MyRye.com, resident and former Board of Ed member Bob Zahm says those opposing the school bond this Tuesday, December 13, 2011 have been waging a campaign of misinformation. Zahm gets to the same conclusion, but says residents need the real facts to decide for themselves.

What do you think? Leave a comment below.

Zahm's letter:

We’ve had more than enough misinformation coming from “The Committee” opposing the proposed $20million bond. 

“The Committee” says that taxes will increase 33% over the next 5 years.  This figure is wrong in two ways.  First, the actual forecasted increase is 25%.  Second, implying that the increase is due solely to the proposed bond ignores the real spending drivers — employee contracts and NYS-mandated costs.

Calculation of the 25% rate is shown in the following table.  [The District’s recently reported forecast increase of 23% omitted the compounding impact of multiple-year increases.]  While still problematic, the 25% figure is correct and significantly lower than “The Committee’s” inflammatory figure.

“The Committee” also wrongly implies that the forecasted increase is due to the bond proposal.  The actual expected increase in taxes due to the proposed bond is about 2% or $6,000 over 20 years for the “average” Rye homeowner.  While that sounds like a lot ($1.3million / lab classroom seems exorbitant to me), it is the real figure and what voters should use to determine if the proposed bond is affordable.

“The Committee” also says enrollment has virtually leveled off.  The District’s published enrollment forecasts show a 9% increase over the next 5 years in the MS/HS.  I wish my income would “level off” in the same way, but I guess “The Committee’s” definition of leveling off is different from mine.  Clearly additional classrooms are needed.

Separately from “The Committee”, former Mayor Dunn has referred to a “former school board Trustee” having identified $15.9million in District reserves.  Mr. Dunn says that the reserves could be used to pay for “some or all of the proposed improvements”.  Following Mr. Dunn’s suggestion would be a financial disaster.  Why?  Because it would cost Rye taxpayers all NYS construction aid – by my estimate, that’s about $2million.

If you trust my math, you can skip the following paragraph.
[NYS reimburses approved, bonded construction expenses at a rate of 14%.  NYS has not yet said what would be approved in the proposed bond so an exact calculation can’t yet be made.  But to drive the analysis further, I generously discount NYS’ 14% aid rate to 10%.  10% of $20million is $2million.]

I have recommended that the District issue callable bonds so that they can be pre-paid from reserves.  Doing so would give Rye taxpayers both $2million of NYS aid and avoid unnecessary interest expense lowering the effective cost to Rye tax payers versus what the District has reported.  Paying for the HS construction program directly out of reserves / cash flow would cost us $2million and be fiscally irresponsible.

Of course, a 25% increase in taxes over 5 years is unsustainable, even for “wealthy” Rye.  But that problem won’t be fixed by nixing the bond.  It will be fixed by the District using its reserves appropriately, tightening expenses (including employee contracts), and by NYS fixing unfunded mandates – including moving to a defined contribution retirement plan. 

But none of these areas will be affected by the $20million bond vote.  Some will be affected by the next schools budget.  And if you want to make sure spending is kept “tight”, then speak up during budget preparation and be prepared to vote “No” on the budget.  But the bond vote is a separate matter that is almost immaterial compared to other expense drivers in the Rye schools.  Let’s get the facts straight so that Rye can make a smart decision.