POCATELLO — With voters set to consider passing a $45 million bond to make improvements to Highland and Century high schools on Nov. 7, a local government watchdog group is taking issue with language suggesting the measure’s passage will carry a “net zero tax impact.”
Heather Disselkoen of Pocatello for Accountable Governmental Entities, or P.A.G.E., says the watchdog group is not advocating for or against the $45 million bond but wants the public to be aware of what P.A.G.E. thinks are two major elements surrounding such a significant ask from local taxpayers.
First, P.A.G.E. wants the public to know that if the bond fails to achieve the supermajority of voter support it requires for passage, there will be a significant property tax reduction for homeowners in School District 25. The bond’s failure equals a big property tax cut.
Secondly, P.A.G.E. is pointing out that Pocatello Mayor Brian Blad, who serves on the board for the state insurance provider for School District 25, in June said the district would be receiving a payout of $65 million once the insurance claim associated with the devastating April 21 fire at Highland is completed. The $65 million is more than twice the amount district officials have said the district would receive from the state insurance provider to restore Highland following the fire. Blad now says he misspoke when he made the $65 million comment during a June city budget meeting.
The proposed $45 million bond will provide funding for the renovation of Highland High School with enhancements including repairs to damaged facilities, construction of additional classrooms and an expansion of the gym, activity space and auditorium. The bond will also expand and construct additions and improvements to Century High School’s gym facilities.
INSURANCE CLAIM FOR HIGHLAND HIGH SCHOOLPart of P.A.G.E.’s concern surrounding Blad’s assertion that the potential payout from the district’s insurance provider, Idaho Counties Risk Management Program, will be $65 million is that the district has said during its educational campaign for the bond that it estimates the insurance replacement settlement will be $25 million.
“We just want an explanation for why Blad said insurance will pay for restoring Highland High School,” Disselkoen said. “The district is saying that it was not underinsured and that the estimated $25 million would be enough to replace Highland to what it was prior to the fire. The reason they are asking for the bond is to complete the improvements but Blad’s statement was made before any of those decisions about those specific improvements were made.”
In June, while addressing the Pocatello City Council during a budget development meeting on a topic surrounding increases to the city’s insurance costs (the city of Pocatello is also insured by ICRMP), Blad said, “(The school district’s) estimate is that (Highland) was insured for $20 million and it’s going to be a $65 million replacement and so when you start looking at things like that luckily insurance is going to cover the whole $65 million but (Highland) was only insured for $20 million.”
When contacted by the Idaho State Journal for this article, Blad said he “simply misspoke” when making that comment in June.
“I don’t know how much ICRMP is covering,” Blad told the Journal during a recent phone interview. “I can tell you that I sit on the ICRMP board and so I have more of an insight but we don’t know what the total loss is yet. ICRMP is writing checks for cleanup and replacing stuff in smoke-damaged areas (at Highland) but at the end of the day the hope is that ICRMP will cover all of the costs.”
He continued, “My guess is that Highland was insured for about $20 million and that’s probably what ICRMP is going to cover.”
When asked to respond to Blad’s June statement that the district would be receiving $65 million from ICRMP, School District 25 spokesperson Courtney Fisher explained via email that the district is insured for full replacement value, a type of policy that pays the amount needed to repair a property at today’s prices as opposed to what the property is worth minus depreciation, and is working closely with ICRMP to sift through multiple layers of its insurance policy.
“Approximately 57,000 square feet of structure was destroyed by the fire,” Fisher stated via email. “The construction managers and design team selected for the rebuild have provided preliminary estimates using the original footprint of the impacted building areas. Given the current costs associated with construction and with consideration for instructional and activity spaces, as well as providing upgrades to meet all existing building codes, the estimated cost is $457.45 per square foot for an estimated total of $25 million (per Bateman-Hall). Insurance will also pay all costs to replace contents (supplies and equipment) and pay for all costs associated with demolition and restoration. The school board is committed to passing through all facility replacement funds to the rebuild and offset bond payments.”
Fisher explained the insurance claim involves multiple components, including cleanup, code upgrades, contents, rebuilding and other extra expenses.
“The insurance claim is ongoing,” Fisher stated via email. “Therefore, the district does not know the total amount of the insurance settlement claim. The $25 million is what the district estimates for rebuilding Highland High School, which is just one of the components of the overall insurance claim. As previously communicated, every dollar received in this claim will be directed to restoring Highland High School.”
The Journal filed a public records request with ICRMP in August requesting the insurance payout amount for Highland and was told by ICRMP that “it will be about a year before the claim is finalized.”
“By asking for a $45 million bond without ICRMP rebuild insurance numbers, not including demolition or contents coverage, which is separate, the district opens the door for collecting more taxpayer money than may actually be needed for the Highland High School rebuild and expansion project,” Disselkoen said. “In the event it were to receive an insurance rebuild payout greater than the estimated $25 million, does that then create the possibility that bond money may then be used for other purposes not yet disclosed? Since the district has based its bond language and ask on a $25 million insurance estimate and stated every dollar received from the claim will be directed toward restoring Highland High School, if an insurance payout in excess of $25 million is received they should also commit to return any extra tax revenue collected via an approved bond back to the taxpayer through applying the excess to the debt. Without this commitment from the district administrators and Board of Trustees, the public may be unknowingly providing funding for other currently unidentified projects.”
While P.A.G.E. finds it troubling that the local community is being asked to support a large bond without knowing how much the district will receive in insurance money, the watchdog group is equally concerned that voters may be unaware that state money intended to provide local homeowners with property tax relief would be used to offset the added cost of the bond if it’s approved on Nov. 7.
If the bond is not approved by local voters, P.A.G.E. points out that those state funds would be used for what they were intended for: A big property tax cut.
POTENTIAL TAX IMPACTS
If approved, the $45 million bond is estimated to carry an interest rate of 3.71 percent annually for 15 years for a total of about $14 million in interest, which would bring the total cost of the bond premium and interest to about $59 million.
However, because of Idaho’s bond levy equalization program, which provides state appropriations to subsidize a school district’s bond payments, District 25 estimates a savings of about $16.5 million over the life of the bond, which would reduce the net total bond cost to about $42.5 million with an estimated annual payment of about $2.83 million.
The estimated average annual cost to the taxpayer for the proposed bond is $37 per $100,000 of taxable assessed property value.
The bond resolution that will appear on the Nov. 7 ballot also states “the actual estimated tax impact of the bond is $0 per $100,000 of taxable assessed value, per year, based on current conditions.”
In addition to the state bond equalization program, District 25 anticipates it will receive school district facilities funds from the state “in an amount each year that will exceed the annual payments on the bonds,” which would bring the net tax impact of the bond to $0 because of the recent tax cut legislation.
“Our biggest concern is that the language that will appear on the ballot is that the bond will have an estimated net zero tax impact,” Disselkoen said. “We felt like that didn’t go far enough to communicate what the bottom line tax impact will be for local taxpayers.”
As part of property tax legislation passed in March, known as House Bill 292, School District 25 will be receiving about $4.56 million this fiscal year to use toward school facilities costs. The $4.56 million awarded to School District 25 is part of $106 million that school districts throughout the state will receive, which is being distributed based on average daily attendance.
The $106 million awarded to Idaho school districts is part of an overall property tax relief amount of $300 million this year that Gov. Brad Little announced in July after the state ended the previous fiscal year with a budget surplus.
The relief was touted by Little and the Idaho Legislature amid rapid increases in property values due to the state’s record growth over the past few years.
School District 25 recently released a document titled “Understanding Pocatello-Chubbuck School District 25’s tax impact,” which details the tax impacts associated with the district’s current supplemental and school plant levies as well as the impact created if the $45 million bond passes and how relief money associated with House Bill 292 would affect the district’s payments on those levies and the bond.
The $4.56 million awarded to School District 25 this fiscal year resulted in a tax break for local residents of about $60 per $100,000 of taxable property value, according to the district’s tax document.
The district estimates it will receive about $3.83 million in school plant facilities money in fiscal year 2024 as a result of House Bill 292, according to the district’s document. That would provide local homeowners with a tax break in 2024 of about $50.57 per $100,000 of taxable property value if voters reject the bond next month, the document stated.
In fiscal year 2025, the district estimates the school plant facilities tax relief money it will receive from the state will be about $6.17 million, which would result in a tax break for local homeowners as high as $76.68 per $100,000 of taxable property value if the bond is rejected.
“House Bill 292 was promoted as being a tax relief bill,” Disselkoen said. “It’s our opinion that House Bill 292’s priority was taxpayer relief. So for people who choose to vote for the bond that means you are relinquishing some of that taxpayer relief in support of the bond.”
Disselkoen said P.A.G.E. is also concerned about the “current conditions’’ notion that is associated with the district’s net zero tax impact messaging. She said voters should understand that the bond comes with a 15-year term.
Additionally, House Bill 292 only guarantees property tax relief through fiscal year 2026 and it remains unclear whether the program will be extended after that three-year term has expired.
The state tax relief money that was distributed this year was only available because Idaho ended last fiscal year with a budget surplus and there are no guarantees that the funding will remain at the same level in the future.
“I don’t think there are any guarantees, although what we have been told is there are plans for this program to continue,” Disselkoen said about House Bill 292. “The funds that are available in that school facilities fund distribution are going to vary because it’s all dependent upon legislative allocations.”
She continued, “P.A.G.E. plans to contact members of the Idaho Legislature to advocate for any necessary revisions to Idaho Statute 33-911 (created as a result of House Bill 292 passing) and/or to other legislation in efforts to continue improving district bond ballot communication requirements so that the public receives full transparency without any misleading language and without potentially confusing legal qualifiers that may mislead some voters. Voters must be provided clear understanding in order to make their decisions.”
ADDED CAPACITY AND DISTRICT 25 ENROLLMENT
Some in the community are also concerned that the district has said the improvements to Highland and Century are needed to accommodate added student capacity at both schools despite the fact the district’s student enrollment has remained stagnant or declined in recent years.
An informational video about the proposed bond posted to School District 25’s YouTube page on Tuesday says both improvement projects at Highland and Century will “expand the capacity of both high schools to meet the educational and extracurricular needs of both high school student populations.”
When the school district was considering whether to propose a bond to rebuild Highland High School with improvements or one that would allow for the construction of a new high school altogether, it stated on an informational fact sheet that “(School District 25’s) enrollment has held steady or slightly declined from approximately 12,500 learners over the past 13 years.”
According to a graph included on that fact sheet, School District 25 boasted around 14,000 students around 1994. That number had dropped to about 11,750 students by 2004, the graph shows. Student enrollment hovered in that 11,750 range until about 2012 when it increased to around 12,500 students, according to the graph. Between 2012 and 2023, the district’s enrollment remained stagnant or decreased, the graph shows.
When asked to provide any data that suggests extra student capacity at either Century or Highland would be needed considering the district’s student population has declined or remained stagnant over the past decade, Fisher stated via email, “The Board of Trustees has taken into consideration the public input survey results from June 2023, which informed their decision-making process as they considered five possible options for a rebuild. While enrollment over the past few years has remained essentially the same in the Pocatello-Chubbuck School District, the board continually monitors and evaluates the building and growth currently taking place across our community.”
She continued, “Likewise, plans for additional subdivisions are sent from Bannock County Zoning and Planning on a weekly basis. The board is doing its due diligence to ensure that the community’s educational needs are being addressed into the future. By so doing, future bond requests may be reduced.”
Currently, local voters can cast their ballots on the bond early at the Bannock County Elections Office through Nov. 3. Polling locations will be open from 8 a.m. until 8 p.m. on Nov. 7 and a complete list of those locations is available on the Bannock County Elections website, bannockcounty.us/elections.
Fisher says that if the bond fails next month then “The Board of Trustees will determine how to proceed once the election has concluded, however, the earliest date to run another bond is May 2024.”
She continued, “The board has a meeting scheduled on Nov. 8 to discuss the results of the election and determine the next steps moving forward, which are dependent on whether the bond passes or fails.”