Arcadia schools could lower mill rate with defeasance, successful referendum

The Arcadia School District could lower its mill rate by more than $2 per $1,000 in property value next year even with a successful referendum and continued debt defeasance payments, according to numbers shared at last week’s school board meeting.

As the district prepares to share informational documents on the upcoming $750,000 operational referendum that will face voters in April, Superintendent Lance Bagstad asked the board if they would like to continue using defeasance to prepay debt.

Three options were presented to the board last Monday, all of which would see a decline in the district’s mill rate:

• $0 in defeasance, dropping the mill rate from $10.78 to about $5.50 per $1,000 of assessed value.

• $1 million in defeasance, dropping the mill rate to about $7.50.

• $1.5 million in defeasance, dropping the mill rate to about $8.35.

The board agreed that defeasance payments are good for taxpayers in the long run—they will move forward with the $1.5 million in defeasance for referendum documents, which would mean about a $2.43 decrease in the mill rate.

The board could still decide to pay less in defeasance later, but the district wants to have a clear picture as they plan for referendum communication.

The district could spend up to $40 million in construction for a new elementary school without raising the current mill rate according to previous board discussions, but a recent survey showed residents aren’t in favor of a new building right now. 

By continuing to pay defeasance, that dollar number could continue to grow.

“I think it’s time to talk about do we continue paying down debt to look at maybe somewhere in the future where we’re sitting at 50 or $60 million,” Superintendent Lance Bagstad told the board.

“Or do we say ‘You know what? If we’re not going to get more than 40 percent of our community to support a facility, we then need to probably say, what are we going to do with that mill rate and how are we going to look at it.”

Possible uses for the referendum money include roof replacement, technology upgrades, boiler upgrades, window replacements, salary raises and a new bus.

Bagstad said people should stop seeing taxes to pay for schools as a burden, calling it an investment. A lot has changed in education from when most residents were in school buildings, and they need to keep that in mind, Bagstad said.

He pointed to a bus that used to cost $35,000 35 years ago, saying it would cost $135,000 now.

“We need to begin a discussion and maintain a discussion that investing in our public schools is investing in our future and it’s investing in the economy of our local communities. That’s what it’s about,” Bagstad said.

Board member Brian Steinlicht was in favor of continuing defeasance payments but feels the board needs to communicate that they are lowering the mill rate, not necessarily tax bills — if a resident’s assessed value increases, their tax bills could still go up despite the district taxing them less per $1,000.

“The conversations that I’ve had with the public, nobody cares about the mill rate at all.” Steinlicht said. “They care about their tax bill.”

Board vice president Randy Nilsestuen was in favor of continuing defeasance also.

“I’m leery about abandoning this defeasance at all,” Nilsestuen said. “It feels like kind of a one time shot (to abandon), and then you’re going to be in a situation where you’re going to be raising it (mill rate).”

Bagstad told the board he feels that the district is doing what is best for kids despite budget issues that included the district operating with a deficit this year.

“I want to emphasize the information that the public needs to know and that you. ... need to be armed with is the fact that this $750,000 can have a real drop in the mill rate even by passing the referendum,” Bagstad said. 

“That should be a heck of a selling point to do what’s right for kids.”