May 2017 Bond Information

On May 16, 2017 voters may be asked to consider a bond addressing three areas:

  • Enrollment Growth

The current growth trend predicts that the district’s student population will increase 24%, which equates to 1,100 additional students, in seven years. Without new construction and renovation, the district could need 56 modular classrooms, where one fifth of the student population would be served in temporary classrooms by 2023
Proposed Solution: Expansion of Hermiston High School and the addition of a new elementary school on district-owned Theater Lane property.

  • Safety & Security

In 2015, Hermiston Police Department conducted an independent safety audit of the district’s schools. However, both Rocky Heights and Highland Hills elementary schools, due to their design, age, and lack of life-safety alert systems, are inadequate to meet current safety standards.
Proposed Solution: Replace Rocky Heights and Highland Hills elementary schools at their current site, as well as improve emergency access and parking at HHS.

  • Aging Infrastructure

Rocky Heights Elementary, Highland Hills Elementary, and Sandstone Middle schools’ utility mechanisms are in need of repair due to failing infrastructure or core components. Roofs, mechanical units, and utility mechanisms need replaced.
Proposed Solution: Replace Rocky Heights and Highland Hills elementary schools at their current site, as well as address deferred maintenance and obsolete, failing heating and cooling systems at Sandstone Middle School.

Proposed 2017 School Bond Information

Projects in order of priority if the bond passes:

  1. Replace Rocky Heights Elementary School, on same site
    Approximate cost $20,150,000
  2. New elementary school on district-owned Theater Lane property
    Approximate cost $22,050,000
  3. Expand Hermiston High School; safety/access improvements
    Approximate cost $28,525,000
  4. Fairgrounds improvements
    Approximate cost $1,550,000
  5. Address deferred maintenance and obsolete, failing heating and cooling systems at Sandstone Middle School
    Approximate cost $2,588,000
  6. Replace Highland Hills Elementary School, on the same site
    Approximate cost $20,150,000

Below is an itemized list of proposed projects with associated costs:

Proposed bond itemized list w associated costs

Q: Why doesn’t the district use its general fund budget to pay for school replacement and major repairs?
A: The district’s current general fund operating budget is $52 million, where 70% is spent on teaching and student resources; 8.7% on buses, food service and maintenance; 5% on building support services; 5.2% on District Office support; and 3.2% on business and technology services. Despite the fact that Hermiston School District ranks 57th for Senate Bill 447 grant funding and its demographic is favorable to receive $4.0 million from the state, capital construction projects to address current needs would still require local authorization through the issuance of voter-approved bonds.

Q: If the district is facing capacity issues, why was capacity not addressed in the 2008 Bond?
A: Additional capacity was added during the 2008 Bond. Each new school (Armand Larive Middle School, Sunset Elementary, and West Park Elementary) was replaced with much larger campuses, accommodating an additional 500 students. However, since the passage of the 2008 measure, the district has grown by over 600 students, consuming the additional classroom space created.

Q: Why is an additional elementary school needed rather than just renovating Highland Hills and Rocky Heights elementary schools?
A: While an expanded Highland Hills and Rocky Heights building will provide additional classroom space, it will not provide sufficient capacity for current and projected future enrollment.

Q: Why doesn’t the school district purchase more portable buildings to handle enrollment growth?
A: The School Board supports the use of portable classrooms for temporary and short term enrollment fluctuations. However, growth of an estimated 1100 additional students by 2023 would necessitate 46 additional portable structures to the current 34. These faculties are not conducive or physically suited to serve as permanent capacity solutions.

Q: If the bond measure passes, would any money from the election go to teacher or administrative salaries?
A: No. This election is a capital referendum. Expenditures are specifically limited by law to construct new schools, renovate current facilities, or acquire property for additional district needs.

Q: If the bond measure passes, given the fast-rising cost of construction, is this bond enough to complete all promised projects?
A: Over the last three years, construction costs have climbed about 1% per month or 12% per year. The district’s bond estimates were reviewed in early 2016 and adjusted to reflect anticipated inflationary cost escalation. The bond package also includes an 8% reserve fund to respond to unforeseen situations. The district is pursuing an aggressive construction schedule to move projects forward as quickly as possible, while costs are lower.

Q: How can I be assured, if the bond measure passes, that bond proceeds will be spent wisely and on that for which I vote?
A: State law requires that all bond proceeds be spent for only those activities specifically authorized in the ballot question presented to voters. To assure this, the district would establish a separate account to manage the funds and a special accounting structure to track every monetary transaction. Further, the district would establish a citizen’s Bond Oversight Committee to periodically review construction activities, change order management, and authorize changes to project scope or budget, based upon direction from the school board. The community can expect regular communications in the form of newsletters and web updates for each project.

Q: Why did the district pay to move and renovate a new District Office space, rather than pay to expand schools?
A: The district leased a district office complex in the summer of 2015 as a cost efficient means to free up classroom space for students, rather than procuring additional modular facilities for the high school. Renovations to the complex were covered by the property owner, as part of the build-to-suit lease agreement negotiated for the district.

Q: If the district needed funds to expand the high school campus, why were funds used to build Kennison Field?
A: Monies used for Kennison Field and Bulldog Stadium were the result of a larger than anticipated State reimbursement grant related to the 2008 Bond, along with federal grants and private contributions. No funds from the 2008 bond were used for the Kennison Project.

Q: When will the bonds authorized in the 2008 election be paid off?
A: The proceeds from our 2008 authorization were sold in four issues with various maturities out to June 2029.

Q: When will previous bond issues (prior 2008) be paid off?
A: In June of 2013, we paid off the remaining debt from our 1994 issue (primarily used for the construction of Sandstone Middle School). And in June 2019, we anticipate completing payment on our 1999 issue (primarily used for the Hermiston High School renovation and the construction of Desert View Elementary School).

Q: What is the financing term being considered for the proposed May 2017 bond referendum?
A: The proposed bond is not expected to mature until the 24 year maximum resolution allowable.

Q: What effect will new residents and businesses to our community have on tax rates?
A: New residents and businesses to our community share in the tax burden. Since 2008, the taxable assessed value (includes businesses and residences) has grown by 48.12% from $1.36 billion to $2.01 billion; an average growth rate of 4.56% annually. Our financial modeling assumes a modest growth rate of 3.0% per year for the next 4 years, and 2.75% per year thereafter.

For more information from our underwriter, including a detailed tax rate analysis, click here.

Senate Bill 447 (SB 447) became effective on July 27, 2015. Its primary goal is to encourage communities to pass local school district general obligation bonds to address the deferred maintenance problems present in Oregon’s schools.

SB 447 enables Oregon Department of Education (ODE) to work in partnership with school districts to more effectively address the facility needs of Oregon’s schools. ODE will provide technical assistance, information, and grant programs that will support school districts in addressing their local facility needs.

The Oregon School Capital Improvement Matching Program (OSCIM Program) allocated $126.2 million in state-issued general obligation bonds for the 2015-17 biennium. The OSCIM Program will match district’s local general obligation bonds between $4 million and $8 million, depending on the average daily membership weighted (ADMw) funding formula.

Additional information:
Overview of SB 447
ODE on SB 447
Funding formula and priority list
Explanation of priority list
FAQs on SB 447

Hermiston School District commissioned Elesco Limited of Bend, Ore., to provide an economic impact analysis of the district’s proposed $104 million construction bond. The 10-year analysis utilized the current proposed construction budget, which totals more than $108 million, inclusive of the potential state matching grant funds.

According to the study, a total of 540 direct sub-contractors are expected to be used over the four-year construction phase, resulting in over $24 million in direct labor income. In addition to the direct income, an additional 250 jobs are expected to be created, as a result of indirect and induced effects, bringing total construction labor income for the projects in excess of $34 million.

The remaining $83 million project budget is expected to be utilized to purchase capital construction materials and supplies. Based upon Elesco’s use of the nationally recognized IMPLAN model, Umatilla County is said to be approximately 75 percent self-sufficient in the construction sector, and it imports about 25 percent of commodities through trade with other counties. This means that approximately $63 million in district construction-related purchases is expected to remain in the local Umatilla County economy.

In addition to the construction cost, the district expects to increase employment by approximately 95 individuals, 20 of which would be directly related to the construction. While payroll costs will be escalating, other operating, maintenance, repairs and overhead expenditures are expected to see only slight increases, primarily due to the new buildings being more efficient and requiring less repairs. The district saw significant savings in maintenance, repairs and overhead from the schools built during the 2008 school bond.

Combined, the analysis reveals that, over the ten-year time span, the district is expected to spend nearly $187 million on new construction related purchases, over 78 percent more than the original community bond request.

Elesco’s Economic Impact Report
Economic Impact of Proposed Bond

First Community Attitude Survey Results:
The first community attitude survey was conducted between April 25-30, 2016 to gauge community sentiment for the proposed bond, project priorities, key messages and tax rate. The results were shared with the Board of Directors at its May special meeting/work session.

The survey confirmed the priorities for the district: replace Rocky Heights Elementary School, build a new elementary school, expand Hermiston High School, conduct other district wide improvements, and replace Highland Hills Elementary School.

In a side-by-side comparison, voters were asked to consider a smaller package recommendation of $84 million, which would eliminate the replacement of Highland Hills Elementary School. The $104 million bond measure was 11 points more favorable than the smaller package, with the strongest support coming from 35-44 and 18-24 year olds.

To view the executive summary of the first community attitude survey, click here.

Second Community Attitude Survey Results:
The second community attitude survey was conducted between October 3-7, 2016, 373 registered voters were surveyed by The Nelson Report, in order to gauge community sentiment for the proposed May 2017 bond. The Superintendent of Schools, Dr. Fred Maiocco, shared the results of the second community attitude survey with the Board of Education at its October special meeting/work session on October 24.

According to an executive summary, 46 percent of voters (down 1% from 47% in May) were favorable to the $104 million question. That level of support grew to 61% favorable when voters learned that the proposed bond would protect the community’s investment in its schools; the bond included substantial safety and security upgrades, reduced operating costs, and with continued growth new residents and businesses would assist in paying for the bond measure if it passed.

The survey also confirmed the most urgent priorities for the district: replacement of Rocky Heights Elementary School, expansion of Hermiston High School, replacement of Highland Hills Elementary School, and building a new elementary school on district owned property off of Theater Lane.

To view the executive summary of the first community attitude survey, click here.