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PCM voters pass $10M bond

PCM gets good financial news from S&P

Published: Friday, April 29, 2016 12:32 p.m. CDT • Updated: Friday, April 29, 2016 12:57 p.m. CDT
Caption
(Mike Mendenhall/Daily News)
John VanZee, of Mitchellville, and wife Kathy, made their way to the polls to cast their ballots on the PCM bond referendum in February.

MONROE — As the final month of school draws near, activity is not slowing down at Monroe Elementary School. Once the students leave for the summer, work is scheduled to begin on mechanical, security and fire sprinkler upgrades at the building.

Once the year-end bell rings, PCM Community School District’s $20 million three-year renovation project will have officially begun.

A $10 million bond was passed at the ballot box in February to finance nearly half of the district’s building renovation and expansion plans.

The $10 million will help finance approximately $20 million in renovations and additions to all PCM’s school building facilities in Prairie City and Monroe. The district will pay for the remainder of the master plan with cash on hand and other existing revenue.

As the district conducts pre-construction and design work with DCI Group on Phase I, PCM has received good news on the financial front. The school board gave its OK April 14, authorizing the district to advertise the electronic sale of the $10 million in bonds in a 5-0 vote. Bids for the bonds will be accepted by the superintendent’s office until 10 a.m. May 2 when they will be publicly opened. The sale and awarding of the bonds will happen the same day during a school board meeting.

According to a letter sent to district business manager Tami Thomas April 1 from Standard and Poor’s Rating Services, the district has received a “stable” AA-rating for its upcoming $10 million bond sale. This should keep the interest rate on the bonds — and thus the district’s repayment — low.

S&P is one of the prime credit rating agencies worldwide. The firm based the district’s positive bond rating on five factors:

• A stable local economy with access to the broad and diverse Des Moines metro area economy.

• Strong incomes and very strong market value per capita.

• “Very strong” general fund revenues.

• Stable to slightly increasing enrollment, which is directly tied to state aid.

• Moderate overall debt burden.

PCM superintendent Brad Jermeland announced the district’s S&P rating in an April email.

“We are pleased to share that the school district received a AA- rating,” Jermeland said. “We have been told this is a very good rating.”

S&P said PCM’s median household effective buying income is strong, sitting at 117 percent of the national level and per capita the EBI sits at 101 percent. Taxable value for the 5,804-resident district has grown 4.4 percent since 2015, to an expected $260.1 million in 2017.

The big thing for S&P was enrollment. This is a key driver of state education funding in Iowa, and PCM’s enrollment total of 1,069 in 2015 is a 3.2 percent increase since 2010. The district’s available fund balance at the end of fiscal year 2015 — the S&P survey’s benchmark — was $2.1 million at 19 percent of general fund expenditures. PCM reported a slight deficit operating result at 1 percent of expenditures in 2015.

“Management projects slight increases to continue,” the S&P report reads. “The district is roughly break-even in regard to open enrollment.”

The credit agency also scored PCM’s outstanding debt as “moderate” with an overall net debt of 3.8 percent of the district’s market value, $3,268 per capita. But 42 percent of the district’s direct debt is scheduled to be paid off within 10 years, according to the report.

A preliminary chart presented to the board in December 2015 shows the facilities project beginning with the upgrade designs for Monroe Elementary School. The building’s mechanical, security and fire system construction would begin in summer 2016, with mechanical continuing into November 2016.

Although most construction would take place during the summer, work on the PCM Middle School and Prairie City Elementary additions would take place over much of the 2016-17 school year. PCM High School’s building addition and mechanical, electrical and plumbing is also slated to take place while school is in session in SY 2017-18. DCI reps said in December this would help maintain the project flow and keep costs down. But the most intense work would happen during the summer of 2017.

Contact Mike Mendenhall at mmendenhall@myprairiecitynews.com

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