BEATRICE – The Beatrice Public School District is looking at a new option to build a prekindergarten through fifth grade school…without needing additional property taxes. Under a state law that allows formation of interlocal agreements, District 15 would partner with Educational Service Unit Number Five, in which the school district would make lease payments from its current budget and operation and maintenance savings to pay off a bond issue for a single site school.


The Beatrice School Board Tuesday night met with school and bond attorneys to discuss the option. Attorney Michael Rogers with Gillmore Bell is a bond lawyer. He says the method involves the Interlocal Cooperation Act, used frequently by local governments. It allows formation of a new administrative entity, which could issue bonds.


"That entity would issue bonds and build a PK Five building and lease it to the school district....not lease-purchase...for a period of time that you would expect to renew multiple times. The bonds would be payable from the revenue received by this newly-formed entity....so they'd be lease revenue bonds issued by the local entity...and the entity would lease the project to the school district. The school district would actually not own the building...it would be the interlocal agency that's controlled by the school district and ESU Number Five."


The examination of the new option follows a series of public forums on elementary facility needs. Both the Beatrice School Board and the ESU Number Five Board would act on the arrangement in November.


The school district has been unable to achieve voter approval of a property tax-backed bond issue twice, for a new elementary school....in 2015 and 2016.
"There's concern about raising taxes, so living within the means of that dollar-five tax levy is important to people in the school district. The idea here is the interlocal agency itself would not have the power to raise taxes, or get any tax raising power from the district or ESU."


A lease-purchase option was under consideration by the school district, but administration and board members are concerned that the law could be changed by the Nebraska Legislature, and such a method requires several lease purchase agreement periods of seven years each.


Beatrice School Board member Eric Trusty said creating a separate entity is a creative way to get a new school without worsening the property tax load.


"We've gone for a bond a couple of times. We've also seen other school districts within our ESU, even, recently have gone out for bonds and they've failed. We've pretty much heard from the entire community that we don't want higher taxes. We're going through things with the county, and obviously the fire station with the sales tax. What I like about this is, we're not asking for additional taxpayer money and we believe we can finance this."


One potential downside to using the interlocal cooperation act is that the bonds are not backed by dedicated property tax funding, increasing the risk somewhat of the issue.


Superintendent Jason Alexander says a draft proposal of the interlocal agreement with the ESU has been formulated that both boards can act upon.
"We've done our due diligence and that's kind of what we promised our community when we had this first meeting. I think we've tried to go out and find that best option."


The size of a bond issue and specifications on a school building have not yet been set. Alexander says under a best-case scenario, acquiring architectural and construction management for the project would be likely no earlier than next May or June.