PART TWO: THE $288 MILLION THAT ISN'T THE LAST NUMBER
Dearest reader,
Yesterday, Lady Budgetdown introduced you to a rather long relationship.
Chippewa Valley Schools.
Michigan's School Bond Loan Fund.
Beginning date: 1967.
And now?
Chippewa Valley is asking voters to authorize another:
$288,000,000 in bonds.
That is the number you will hear.
That is the number you will see.
That is the number printed in the ballot language.
But Lady B received 140 pages for a reason.
Because when we open the district's own application to the Michigan Department of Treasury and follow the financing assumptions all the way through the ledger...
$288 million is not the last number.
Not even close.
So fetch the spectacles.
We have some math to do. 👓📜
According to Chippewa Valley's own Treasury application, the proposed bonds are modeled using a 25-year term and an estimated 4.75% average interest rate.
Under those assumptions, the application estimates:
💰 Proposed bond principal:
$288,000,000
💰 Estimated interest on those bonds:
$219,936,638
Already, our $288 million proposal has become approximately:
$507,936,638
in principal and estimated bond interest.
But remember yesterday's rabbit hole?
The state loan program?
Well.
We aren't finished.
The district's financing model also anticipates approximately:
$31,063,179
in additional borrowing from Michigan's school loan program in connection with the proposal.
And the application estimates approximately:
$20,646,936
in interest associated with that state borrowing.
That $20.65 million is in addition to the estimated $219.94 million of bond interest.
Which brings us here:
$288,000,000
proposed bond principal
* $219,936,638
estimated bond interest
* $20,646,936
estimated state-loan interest
= $528,583,574
There it is.
$528.6 MILLION.
That is the proposed $288 million principal plus the estimated interest figures contained in the district's own Treasury application.
And before anyone starts warming up their keyboard...
No.
Lady Budgetdown is not saying Chippewa Valley is issuing a $528.6 million bond.
It isn't.
The proposed bond principal is $288 million.
The $528.6 million figure is what you get when you take that $288 million principal and add the application's estimated bond interest and estimated state-loan interest.
Those are different things.
And Lady B rather likes things in their proper columns.
But there is another number on this application.
And this one deserves its own cup of tea.
Treasury asks for the district's current and proposed bond debt plus its School Bond Loan Fund balance.
Chippewa Valley's application reports:
Current outstanding bond principal:
$323,265,000
Proposed bond principal:
$288,000,000
Estimated SBLF balance:
$33,286,048
Total:
$644,551,048
Yes.
Six hundred forty-four million, five hundred fifty-one thousand, forty-eight dollars.
Now put the pitchfork down for one moment, dearest reader, because this distinction matters too.
$644.55 million is NOT the estimated cost of the proposed $288 million bond.
It is the Treasury application's measure of current and proposed bond debt plus the estimated SBLF balance.
Different number.
Different question.
Different column.
Same 3881.
And THIS, my lovely little ledger watchers, is precisely why Lady Budgetdown asked readers across Michigan to FOIA these applications.
Because there is nothing inherently mysterious about these numbers.
They simply aren't the numbers most voters ever see together.
A voter hears:
$288 million bond.
The Treasury application shows the financing underneath it:
$288.0 million in proposed principal.
$219.9 million in estimated bond interest.
$20.6 million in estimated state-loan interest.
$528.6 million when those three figures are combined.
And $644.55 million in current and proposed bond debt plus the estimated SBLF balance.
Oh, and remember that $31.06 million in additional anticipated state borrowing?
That brings us right back to Part One.
Chippewa Valley's application lists its School Bond Loan Fund beginning date as 1967.
Its estimated SBLF balance at the election date is $33.29 million.
And while asking voters for another $288 million in bonds, its financing model anticipates borrowing approximately another $31.06 million through the state program.
Suddenly that little date from yesterday doesn't seem quite so little, does it?
Now, Lady B needs to place one very important receipt on the table.
These are estimates and financing assumptions.
They are not a crystal ball.
Interest rates can change.
Taxable values can change.
Borrowing needs can change.
Actual financing can differ from projections.
But Lady Budgetdown didn't invent these assumptions.
She didn't estimate them.
She didn't model them.
Chippewa Valley put them in the application it submitted to the Michigan Department of Treasury.
Lady B merely opened the ledger.
And next?
We stop talking about how the money is financed.
We start asking:
WHAT ARE WE BUYING?
Because those 140 pages don't just tell us how Chippewa Valley proposes to finance $288 million.
They tell us where the money is supposed to go.
Construction.
Remodeling.
Technology.
Furniture.
Site work.
Architectural and engineering costs.
Construction management.
Contingencies.
And one proposed elementary-school project carrying a price tag of approximately...
$55.5 million.
Oh.
And did I mention the district projects fewer students five years from now than it has today?
🐇
That rabbit hole is next.
For tonight, dearest reader, remember one thing:
The number on the ballot tells you how much principal a district is asking permission to borrow.
The financing documents tell you the rest of the story.
With receipts and respect.
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