Cape schools gain from federal stimulus program

The Cape Girardeau School District could pay off its latest bonds ahead of schedule, saving potentially millions in interest costs, once it tallies the discounts available due to federal efforts to combat the recession.

Voters in April passed a $40 million bond issue to finance construction of new classrooms at Cape Girardeau Central High School and a new Franklin Elementary School as well as additions and repairs at several other locations. On Friday, the district learned the federal government will pay the interest on $4.2 million of the bonds through the Qualified School Construction Bond program included in the 2009 economic stimulus bill.

The district will also use Cape Girardeau County's allocation of $3.38 million worth of Recovery Zone Economic Development Bonds, which carry a 45 percent discount on interest rates, and is in line for $26.7 million worth of Build America bonds, which carry a 35 percent interest rate discount, superintendent Dr. Jim Welker said.

While final figures aren't in -- the Cape Girardeau School Board will receive details during a special meeting Tuesday -- Welker said it appears the district will see substantial savings. "Probably it won't take as long to pay off because of that," Welker said. "The tax rate would remain the same, just not take as long to pay off."

When voters were asked to approve the $40 million bond issue, they were told tax rates would not change and that it would take until 2030 to retire the district's debt. Property owners in the district pay $4.16 per $100 assessed valuation, with 69 cents of the levy dedicated to debt payments. The debt service levy by law is adjusted to raise enough money to pay debt, but if it is produces too much money the funds cannot be transferred to district operations.

The promises about taxes and time to pay the bonds were based on the district paying the full market interest rate, Welker said.

Obtaining the discounts will not, however, mean the district has additional money to spend on the building program, said Neil Glass, director of administrative services. The first projects, for new roofs at Alma Schrader and Clippard elementary schools, are expected to be advertised for bids in late June, Glass said.

Cape Girardeau was one of 60 school districts to receive an allocation of interest-free bonds from a $146 million pool available to the state. The federal government will reimburse the district for the interest costs.

The reimbursements should save each district about $500,000 for every $1 million borrowed over the life of the bonds, said Roger Dorson, coordinator of school administrator services for the Missouri Department of Elementary and Secondary Education.

For Cape Girardeau, that will mean savings of about $2 million, money that will not have to come from local taxpayers to retire the debt.

"It is a big deal," Dorson said. "It can save a lot of money."

The district allocations were announced by Gov. Jay Nixon in a news release. In the release, Nixon said the program "demonstrates that timely, taxpayer-endorsed investment in critical capital needs is a smart move, particularly when incentives reduce costs."

rkeller@semissourian.com

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301 N. Clark Ave., Cape Girardeau, MO