No Goal? No plan? No millage. (Part 3)

Let's pretend your monthly mortgage payment (principle and interest) is $1,000 and you have only two more years to go before your mortgage is paid-off.

Will renewing the bond increase property taxes?

The answer is yes--but it won't increase your tax bill--yet.

Supporters of the bond seem to think taxpayers can be fooled into thinking the $23 million will appear from thin-air. They want voters to believe they have only to say yes to a $23 million handout, so why would anyone vote no?

Let's use an example to better explain how taxes will be increased, then later visit some legislation that may put Ferndale School District taxpayers at risk for having their taxes increased even more.

A simple example:

Let's pretend your monthly mortgage payment (principle and interest) is $1,000 and you have only two more years to go before your mortgage is paid off. That means that in 24 months your income will increase $1,000/month, or $12,000/year. That's a bigger pay increase than most people will ever see in their lifetime unless they change jobs.

Now, while still two years away you ask your banker for an $100,000 loan. Instead of increasing your monthly payment your banker simply adds 10 more years to the end of your mortgage. Now, instead of getting a $1,000 increase in two years you won't be getting it for 12 years. With interest included you'll have given your banker another $120,000 that would have gone into your pocket.

Did your mortgage go up or stay the same?

For the purposes of this article we'll skip considering that your house is only worth $200,000 and that it's twice as big as it needs to be, your utilities expenses are twice as big as they need to be, your carbon foot-print is twice what it should be, and you spend twice as long cleaning it than you would a home rightsized to your family's size. Given all that, does it make sense to borrow $100,000 in the first place?

How you may be at risk for increased monthly payments:

On December 14, a Detroit News editorial urged readers to keep school bond debt in-check. It starts:

Because of sinking property tax revenues, more and more school districts have turned to a state revolving loan fund to help them meet payments on bonds they sold for new construction or remodeling buildings. Obligations in that fund have shot up to $1.2 billion during the real estate crisis, or the equivalent of $60 per student, and are threatening to more than double in the next 10 years.

Using our example from above, if a school district has to pay $1,000/month to its bond holders but when property values drop and the district can only afford to pay $700/month, the state School Aid Fund lends money to the district to make up the $300/month difference.

The money for making up the difference between falling property values, the taxes they generate, and what school districts owe has ballooned to $1.2 billion--and because that money comes out of the school-aid fund, there is $60 less per-student to spend on books, curriculum, equipment, and teachers.  You know, the things that have a far greater impact on our children's education than decorating.

A problem under the existing rules is that school districts can roll their state debt into new bond issues for additional construction projects before the old bonds are paid off. State repayment thus can get extended past 30 or 40 years. The state, meanwhile, has issued general obligation bonds to raise the money it loaned the school districts and long since repaid the general obligation bonds.

That should sound familiar. The Ferndale School District hasn't paid off a single single bond since at least 1995, and the proposed bond will extend our indebtedness out 29 years--to 2041.

To keep school district bonds from eating further into per-pupil spending, Lansing is considering new legislation. 
Pending Senate legislation would rein in these practices not just by putting a $1.5 billion lid on the total the state could allow school districts to borrow. 
It also would require school districts involved in the state program to at least once a year recalculate the millage rate they use to pay off their construction bonds. A school district would have to raise its millage rate whenever necessary to meet the principal and interest payments on its bonded indebtedness.  
When asking voters to approve a bond proposal, the school district would have to notify them that the proposed millage rate wouldn't necessarily remain the same, but actually could go higher.

This is an easy law to support. It would require school districts to actually pay for their renovation projects without borrowing money from students. The bite is that when property values fall taxpayers may be required to pay more.

Our $1,000/month may go up when we can least afford it--when our property values are falling.

Given this background, it's more important than it has been that taxpayers hold their school boards and administrations accountable for student performance. The relationship between schools and property values is student performance and property values, and a strong inverse relationship between standardized test scores and foreclosure rates--the higher the scores the lower the foreclosure rate.

Without our district's board and administrators having a clear goal to increase our community's student performance, and a clearer goal for achieving that objective, taxpayers should vote no on the new school millage.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Debi February 26, 2012 at 04:49 AM
Well said! Part of the problem is many who are commenting don't understand the idea of RESPONSIBLE USE OF & ACCOUNTABILITY OF TAXPAYERS $$$$. I once heard it said that only taxpayers should be allowed to vote on anything that is going to be funded by taxpayer dollars - results might be quite different when it's their own $ that have to pay the bill. REALITY CHECK....LET'S TRY TO LIVE WITHIN OUR MEANS & QUIT BORROWING FUTURE MONEY TO PAY OLD DEBTS!
Brian Clark February 26, 2012 at 05:45 AM
Mr. Gagne, I don't understand this paragraph: "The relationship between schools and property values is student performance and property values, and a strong inverse relationship between standardized test scores and foreclosure rates--the higher the scores the lower the foreclosure rate." I'll take a guess: You're saying that if the test scores went up, the demand for homes in the area would go up, which means the value of those homes would increase, which means the district would generate more tax revenue?
Thomas Gagne February 26, 2012 at 06:20 AM
Brian, that could have been better written. You did interpret it correctly. There's nearly a direct relationship between MME/ACT scores and property values, and an inverse relationship to foreclosure rates--at least in the cities Ferndale, Hazel Park, Oak Park, Berkley, and Royal Oak.
Sue Talley February 26, 2012 at 01:39 PM
And let's say you need a new roof, and the water heater is starting to leak, and that furnace is really inefficient and is likely to need to be replaced in the next couple of years, oh, and you haven't had money to update the kitchen since you bought the house 28 years ago. And, now thta there is so much demand for electricity for all of our technology at home (TV, computers, chargers) the electrical service needs to be replaced. You have enough money to pay the regular upkeep of your house but not enough to make these repairs and improvements. What do you do? You can't let the house fall apart (your neighbors wouldn't be very happy if your house was dragging their property values down) , and you'd like to maintain at least a certain standard of living for your family. My kids got a great education at the Ferndale schools (graduated 05 and 07). The current and future children deserve to have a learning environment that facilitates learning. The people and the schools are part of what bonds (intentional pun) a community together - we need to be proud of how we treat our children. The great thing about this bond (besides what it will accomplish for the schools) is that if won't feel painful - it's just continuing on at the same rate. I don't have any more school age kids, but I will continue to support our children and teachers, our community and our house. VOTE YES!!!
Fed Up February 26, 2012 at 03:50 PM
It is sad that the Ferndale Patch allows Tom Gagne to use a Patch blog for his anti-Ferndale rhetoric. Here is a guy that was soundly rejected by Ferndale voters not once, but twice, and instead of being ignored as a has-been, he's given a spot on the front page to tell us everything he thinks is wrong with our city and our schools. He deliberately twists facts about school enrollment, what work was done on millages, and the effects the new bond will have on our schools. He suggests deep concern for our school district. When was the last time anyone saw Mr. Gagne at Board of Ed meeting? Where was he during the public meetings of the operations committee last summer? When's the last time you saw him at a school function? Unless there's a camera around or a reporter to write down his brilliant insights, he's nowhere to be found. Maybe he's in Royal Oak, supporting his kids school of choice. Don't get me wrong. Anyone in Ferndale can send their kids wherever they like. It's your God-given right as an American. But don't go around bad-mouthing our schools and our kids and our teachers and tell me you're just trying to make things better. Gagne is a bully who wants attention, and what he's bullying is our kids and our schools. Ferndalians should not stand for it. I'm voting YES on Feb 28, and so should you. Until Gagne steps away from his computer and actually gets involved with the city and schools he professes to care about, I suggest we ignore this bully.
Thomas Gagne February 26, 2012 at 04:08 PM
Sue, you're analogy is spot on except for the part you skipped-over--that the numbers suggest our house is twice as big as it needs to be. Its time to down-size. Or perhaps move-in with the neighbors, e.g. weigh whether consolidation with another district isn't a prudent option.
Thomas Gagne February 26, 2012 at 04:34 PM
Fed up, do you have an alternative interpretation of numbers? Did you look at the numbers? Have you attempted correlating census data with school data? What hard questions have you asked the administration, and what was their response? Is it really your opinion that viewpoints different from the majority's are bullying? Is it really your opinion that online properties like Patch shouldn't publish differing perspectives? If you can find an error in my math (my spreadsheet is public), or in my sources (also in the spreadsheet), or come to a different conclusion from the same data I think you should publish your opinion and not be afraid to put your name on it. Or, Ferndalians should take your anonymous advice and bury their heads in the sand and ignore or shout-down differing opinions. Just like many Detroiters do when they defensively proclaim they don't need any outsiders' opinions and can handle it on their own--all they need is our money.
Ferndale Resident February 26, 2012 at 04:44 PM
Although I disagree with Mr. Gagne on many things, I don't see him bullying anyone. He simply has a differing opinion on how things should be handled. It's not like he's intimidating people with a gun to the head telling them to vote NO or anything.
Kay Watson February 26, 2012 at 06:23 PM
Why, when you don't publish them?
Kay Watson February 26, 2012 at 06:24 PM
I did but it wasn't published.
Christine M. Kole February 26, 2012 at 06:51 PM
Ferndale tax payers are not "fools" and know full well that funding does not come from "thin air". Stop insulting them and the dedicated parents who are getting the bond information out to the public. No, the district does not need funding for "decorating"! Are the Gagne kids at risk of asbestos exposure at their out of district schools? Our district has downsized, and parents who insisted that their kids remain in their old schools and nothing be changed have fled the district. We can't have it both ways. Gary Meier has tried to create a leaner, more efficient Ferndale School District. Standardized tests don't tell the entire story, and they are a plague to instructors in every district. Kids miss recess time because their terrified teachers are teaching to the tests and want their class to measure up. I find it irritably interesting that Mr. Gagne and others so concerned about the bond issue have no children in our schools. Please move away from your computer. Better yet, please just move.
Elizabeth Pfleger February 26, 2012 at 11:48 PM
Mr. Gagne. I understand that Ferndale schools are not a good fit for everyone. I am glad that you are pleased with where your children are. I bet that when there is a millage for the school district your children go to you would hope that the community would care enough to vote in favor of that millage so that your children could benefit from those improvements. Please put yourself in that position for a moment. There are wonderful things happening in the Ferndale District. There are wonderful teachers. There are lots of parents who are very pleased with the education their children are getting. There are also wonderful kids. Please do not make the bond about your disappointment in the Ferndale district. Make this bond vote about helping our community schools stay current with the needs of our Ferndale School District Children just as you would hope your school community would do for your children.
DougS February 27, 2012 at 05:32 PM
Interesting how you cannot accept the opinion of someone different than your own. Just because Mr Gagne does not have children in the district, does not mean he is not impacted by it. It would not be suprising that most taxpayers in the district do not have children in the schools. Please consider this, every 10 years the school distict has come begging to the citizens of ferndale claiming the schools are falling apart, and need more money, often asking to fix the same thing they asked to fix in the last bond. Now they want a bond that matures in 2041. What happens in 2022 when the buildings need a new roof, or the new efficient heating system dies, or the computer technology is obsolete (which it would be in 3 years of buying)? Then what, another bond until 2065? Think about this, you are asking to borrow to educate children whose are not even born yet, and by the time they graduate (assuming they will) the loan still won't be paid off for another decade.
Debi February 27, 2012 at 07:13 PM
@ DougS: BRAVO!! This has been such a long, played out scenario every few years, that it might start to look like we are being played! Kind of like the old argument of fixing Medicare & Social Security - which will never happen because once they fix the problem they don't have any thing to gripe about. Ferndale School District, still whining about the same issues for at least 20 years, has not used the already approved & allocated taxpayer $$$ to fixi the problems. Once these problem areas are taken care of, they can no longer come begging for more $$$. THEN THE REAL PROBLEM OF NOT PROVIDING A QUALITY EDUCATION WOULD HAVE TO BE ADDRESSED!!! VOTE NO! Tuesday, February 28 - THANK YOU!
Ardy February 27, 2012 at 08:34 PM
When Royal Oak was going through its bond fissy fit a few years ago; that town tore itself apart. The issue was that the R.O. school district asked the residents to approve a bond that was horrifically expensive. The Vote No rallying cry was "why should we pay this amount for kids from other Cities, like Ferndale, Detroit, Oak Park and Southfield?" At that time, R.O. had one of the highest percentage of SOC kids in the region. After voting down bond after bond that had smaller and smaller amounts, the R.O. School district basically told the residents: OK, look we hear you, we will limit SOC to a few slots in a few grade levels in elementary schools, grandfather in the kids who are already here, close some schools/consolidate, and replaced the health hazard (Northwood). The bond amount for this work was the lowest one proposed. The voters approved it; ergo, R.O. is where it's at right now. Mr. Gagne had his kids in that district at that time; still does. He was part of the SOC problem in that district at that time; I bet ya he sure wasn't saying close to what he's saying about Ferndale district now. He and his family have academically benefited from other taxpayers paying for upgrades at schools where his kids attend. How much more hypocritical can a person get?
Debi February 27, 2012 at 09:37 PM
BRILLIANT IDEA: All of you that support this bond issue - defend the merits of this proposal if there are any! Stop trying to distract from the facts by attacking the person who is saying things that you don't want to hear! This will be a much more mature approach to getting your point across - instead of name calling, bringing their children into it, character assination, telling people to leave their computers, & even telling them to move! These type of comments remind me of conversing with a kid!
Ardy February 27, 2012 at 09:44 PM
I think that what you are woefully excluding is that this is far from an attack; this is an evaluation of Mr. Gagne's credibility -- which in this case is lacking. Remember; none of this would be happening at this point if he did not throw himself into this crusade. Facts are facts, Debi. You are very welcome to not like them but when they are presented getting upset over it only degrades your credibility as well.
Debi February 28, 2012 at 12:38 AM
@ Ardy: On the contrary, I'm not upset at all. I like to have intelligent discussions that are based on facts. So far, the supporters have only been using emotional appeals, worst case scenarios, and/or personal assaults. What you are confusing is that Mr. Gagne is not running for public office. We are not voting for or against Mr. Gagne. The REAL issue here, is Mr. Gagne is presenting facts & figures that you don't want people to believe. If you have FACTS that contradict Mr. Gagne's research, please present them to the rest of us. Until then, an educated decision is one backed by actual numbers, not by emotions or threats.
Thomas Gagne February 28, 2012 at 03:03 AM
Ardy, I searched around and wasn't able to collaborate your recollection of the RO bond debate. I did find one source that listed among the reasons for the no vote (in addition to higher taxes): How can the bond be justified with declining enrollment? Why isn't there a sinking fund? What is the ratio of administrative personnel to students, buildings, and budget? I also read the debate had its moments of acrimony between some of the less gentlemanly of participants, but ours has been mostly civil and based on data, don't you think?
Audrey Langley February 28, 2012 at 03:38 AM
The facts and figures are tiresome and for the most part, moot to parents that have children in the district and are vested in their schools and communities. Why would I want to take advice about fiscal responsibility from anyone that purposely pays almost $4 per gallon on gas to drive their children to Royal Oak Schools every single day for an education they could receive in their own neighborhood? Really.
Matthew Nowaczok February 28, 2012 at 03:47 AM
@Debi - I think that Mr. Gagne has been thoughtful in his opinions, however, he only provides a hypothetical example above and cites an editorial from Nolan Finley. Accordingly, referring to his opinions as FACTS maybe a little much. BTW - I am voting Yes tomorrow! I believe we need to keep our facilities top-notch if we want to retain Ferndale residents in our schools. Many arguments can be made about decisions made in the past, however, I want to look to the future to ensure that the children of Ferndale have the facilities that will make them successful in the future. I believe that this is an investment worth making (especially when my monthly expenditures spent on the schools remains the same)!!!
Thomas Gagne February 28, 2012 at 01:43 PM
C'mon, Audrey! We're still Ferndalians. With 186 students going to Berkley and 135 heading to Royal Oak, do you really think we're not car-pooling! ;-)
Ardy February 28, 2012 at 07:08 PM
"Ardy, I searched around and wasn't able to collaborate your recollection of the RO bond debate." I'm not surprised in the least; either your research skills are as weak as they appear or you're just playing dumb. I get the feeling after asking around regarding your interaction/s with the RO district that you know that is exactly how it went down. However, I guess there is always a chance that you were completely oblivious to what happened; using past observations of your commentary on any subject it is completely within the realm of plausibility.
Ardy February 28, 2012 at 07:15 PM
"I like to have intelligent discussions that are based on facts." Hmm. I guess that explains the multiple inane rants from your keyboard. The facts are: His kids benefit from higher taxes that the residents of Royal Oak pay. Gagne's kids were in the district at that time the bond issues went down. Gagne's kids are part of the problem Royal Oak was having with "paying higher taxes for other cities kids" Gagne's complains about how there is declining enrollment, when his family contributes to the declining enrollment problem. I mean, let's get real and serious here. The guy is just one of those complainers about absolutely everything in this City. Pardon me, but I get a little sick of hearing how bad things are supposedly going around here from people like Gagne, House, et. al. , when this City has completely transformed itself from basically a #@! hole to something really special over the last 15+ years. Geez ... give me a break!
becky hammond March 03, 2012 at 07:59 PM
I googled "what raises property values" and get many hits, and can't find school test scores. I find that walkable neighborhoods, curb appeal, the way the house SMELLS, are mentioned; I find lists of improvements that are critical, but I find that, obviously, only people with school-age kids even potentially put test scores on their lists. By the way, it is not remotely the job of our kids to improve our home's values. It's especially not the job of anyone else's kids to improve your house's value. What are we coming to? It's also reasonable to put much more weight on the opinions of those invested enough to be directly involved. I and many other residents don't lend much credence to views of people removed from the situation. Same way I won't judge churches by the opinions of atheists, won't ask someone who doesn't own a car which repair shop is best, won't vote for a politician who hates government so much he/she wants to drown it in a bathtub. Credible people are involved people.
Thomas Gagne March 03, 2012 at 08:23 PM
"I and many other residents don't lend much credence to views of people removed from the situation." Neither do many Detroiters. I think a willingness to consider all viewpoints, especially objective ones, is a better measure of open-mindedness.
Thomas Gagne March 04, 2012 at 02:50 AM
Becky, you should have looked harder. http://www.biggerpockets.com/renewsblog/2011/04/06/school-districts-real-estate-prices/ "'Without a doubt the 'right' school district increases value by 12 to 14 percent in my area even in today's market,' said Maria Picardi-Kenyon, a long-time Realtor located in New Jersey. 'I've spoken with many clients who are convinced that a preferred school district provides as much as 20 percent or more value to a home.'" http://investor.move.com/releasedetail.cfm?ReleaseID=500445 "State assessments, independent ratings from websites like GreatSchools and Education.com and annual magazine rankings of America's top high schools have not only made it easy for parents to factor school test scores and parent-teacher ratios into their buying decisions, they've cemented the relationship between home prices and school quality." http://www.qualityeducation203.org/cms/index.php?option=com_content&view=article&id=76:good-school-mean-high-property-values


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