Dearest reader,
Yesterday, Lady B opened DeWitt Public Schools' November bond proposal and started following the numbers.
Part One looked at what happens to the district's existing debt millage with, and without the proposed $157 million bond.
Now for Part Two.
📌 THE $39.4 MILLION STATE LOAN
Buried inside the ballot language is another rather important number.
If the $157 million bond is approved, DeWitt Public Schools estimates that it will borrow:
$39,415,272
from the State of Michigan's School Bond Qualification and Loan Program.
And the estimated interest on that State borrowing?
$53,039,937.
Yes, dear reader.
The estimated interest is larger than the amount borrowed.
📌 Estimated State borrowing:
$39,415,272
📌 Estimated interest:
$53,039,937
📌 Principal + interest:
$92,455,209
That works out to approximately $1.35 in interest for every $1 of principal borrowed from the State.
The ballot also estimates that this State borrowing would be associated with a 10.00-mill levy for approximately 28 years.
And according to the ballot language, DeWitt currently has $0 in outstanding qualified loans from the State.
So why would State borrowing become necessary?
Let us follow the ledger.
DeWitt already has approximately $75.52 million in existing qualified bond principal outstanding.
The proposed $157 million would then be issued in three pieces:
📌 2027 — $17.61 million
📌 2028 — $100.01 million
📌 2030 — $39.38 million
Once the existing debt and proposed debt are layered together, the district's financing schedule projects annual debt-service payments climbing substantially.
Among the projected totals:
2027 — approximately $9.06 million
2028 — approximately $10.57 million
2029 — approximately $13.40 million
2030 — approximately $14.28 million
2031 — approximately $16.82 million
2032 — approximately $16.93 million
2033 — approximately $17.19 million
2034 — approximately $17.23 million
2035 — approximately $18.50 million
2036 — approximately $16.52 million
The School Bond Qualification and Loan Program allows qualified districts to borrow from the State when the required debt-service payment exceeds the amount available from the required debt levy.
In other words, the State loan can cover the gap.
But it is still a loan.
And it carries interest.
There is another assumption tucked into the financing plan that voters should understand.
DeWitt's projections begin with a taxable value of approximately $908.3 million and assume taxable-value growth of:
5.13% initially,
then 5% annually for several years,
and eventually 3% annually.
A growing tax base means the same millage generates more dollars.
So Lady B has a few questions.
📌 If taxpayers are projected to levy 10 mills, why does the financing plan still anticipate approximately $39.4 million in State borrowing?
📌 How dependent is this financing structure on the projected growth in taxable value?
📌 What happens to the State borrowing if taxable-value growth comes in below those assumptions?
📌 Why is approximately $39.4 million in estimated State borrowing projected to generate approximately $53 million in interest?
📌 And how clearly has the approximately $92.5 million principal-and-interest obligation associated with that State borrowing been explained to voters?
One very important accounting note:
Lady B is NOT adding the $92.5 million State-loan principal and interest to the total scheduled bond repayment and calling the entire amount an additional cost.
That would double-count portions of the underlying debt service because the State borrowing is being used to help make those bond payments.
The State loan is a financing mechanism for those payments, not another $39.4 million worth of school projects.
But the interest on that borrowing is real.
And when the ballot itself estimates more than $53 million in interest on approximately $39.4 million borrowed from the State, Lady B believes that number deserves its own page in the ledger.
Because voters shouldn't have to decipher municipal finance documents to understand what they are being asked to approve.
With receipts and respect,
Lady Budgetdown
DeWitt Public Schools
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