The Hayden-Winkelman School Board has once again sought relief from high property tax rates from the Arizona State Legislature and while help may come from that corner, it might not take the form the district originally sought.
Last year, the state paid off $3.2 million of the callable portion of the $11 million owed by the school district for bonds sold in the early 1990s, allowing the district to lower its 2004 secondary tax rate from $23.7 per $100 assessed value in 2003 to $15.97 per $100 assessed value in 2004. This year, with some help from the legislature, the district hopes to see the secondary property tax dip down into the single digits.
"This situation looks much better," said HWUSD Superintendent Jeff Gregorich. The rate, he added, "is going in the right direction."
The district’s lawyers have negotiated a deal with the bond holders to save district taxpayers a significant amount of money in the future. According to the agreement, the district would make three payments of approximately $415,000 each from property tax revenues. The first of these three payments has already been paid. After the three payments in July 2005, January 2006 and July 2006, the district would make a final $1,865,382 payment to the bond holders on Oct. 1, 2006 and the bonds would be considered paid in full. The final $1.8 million would come in the form of a loan from the Arizona State Legislature.
At least that is what the district requested from legislators.
Instead, the recommendations made to a joint study committee by the Arizona Tax Research Association and later adopted by the committee called for an assessment of the district’s "gross financial mismanagement," disincorporation of the Town of Hayden and consolidation of the Hayden-Winkelman Unified School District with the Ray Unified School District. The funds needed to make the final payment, it was recommended, should be withheld until the Hayden Town Council and H-W School Board adopt resolutions by the end of 2005 to send the matters to voters.
"We’re hoping (the full legislature) will look past these stipulations," Gregorich said. The money requested this year, as well as what was given to the district last year, is being viewed by the district as a loan, which "the district would pay back in full with interest" to the state through a lower secondary tax rate.
The recommendations from ATRA adopted by the committee would have the state government forgive the loans completely should the district consolidate with Ray and the Town of Hayden disincorporate.
A little history
Where did all the debt come from?
District voters were asked to approve the sale of $3.5 million in bonds in March 1993, which they did 206-128.
Proceeds from the bonds were used to purchase computers, carpet and air conditioning for computer labs as well as upgrading electrical systems. Asbestos tile in the halls was covered and the boiler was replaced. Chemistry and biology labs were upgraded so that each lab table had access to electricity, water and gas. The Wolf Den got a new kitchen and tables. Two new buses were purchased and the junior high gym floor and roof were replaced and fixed.
The primary school received the most help from the bond. Rooms were gutted and rebuilt. Air conditioning was installed and plumbing and electrical was brought up to code. Restrooms were made compliant with the Americans with Disabilities Act and every classroom was connected to a satellite dish.
According to election materials at the time, the bonds were expected to increase taxes a total of $9.30 a year on a home with a market value of $10,000; $27.91 a year on a home valued at $30,000; and $46.52 a year on a home valued at $50,000.
That certainly would have remained true had property values not taken such a drastic dip.
To add more fuel, district voters approved the sale of another $5 million in bonds in 1994 and a capital appreciation bond in 1995. Ten years later, the district is still paying principle and interest on these bonds.
The district’s financial woes stem from a drop in the assessed value of property in the district. With the floods of 1993 and the drop in copper prices, property values have dropped 86 percent in the past 10 years. When the bond issues were presented to voters, the district’s property values were assessed at $50 million. Now, property values stand at less than $7 million.
"People in the community passed the bonds to help students," Gregorich said. "At that time, that was the way schools were built or renovated."
Five years later, the Arizona State Supreme Court forced the legislature to reevaluate the way school district buildings were funded, leading to the formation of Students FIRST (Fair and Immediate Resources for Students Today), a school capital finance program funded by sales tax revenues rather than property taxes.
"(Hayden’s) schools were older than Ray’s," Gregorich said. District voters agreed that the students needed the improved school buildings. "(The bonds) were affordable at that time," he added.
But times changed. In the past 50 years, there have been ups and downs in the copper market, Gregorich said. There has never been as extensive a drought as has occurred in the late 1990s and early 2000s.
"The economy has changed," Gregorich said. "There is hope for this community."
Copper prices are on the rise, this week at $1.8479 a pound. The rise in copper prices should mean that the district’s assessed property values too should be on the rise.
Academically, the Hayden-Winkelman Unified School District is doing well, Gregorich told the joint committee when he testified last month. The district was selected as one of seven "outperforming" districts in the state by the Standard and Poor Education Evaluation Service.
"The Hayden-Winkelman School District is doing some good things in the classroom and our students are meeting high academic standards," he told the committee. "We are a school district that is making incredible gains academically and will continue to provide a quality education for our students."
The settlement, he concluded, "will bring new hope to our community which has had little over the past few years."
Local representatives Cheryl Chase and Pete Rios served on the joint committee.
The committee’s recommendations have been sent to the House and Senate for their consideration.