USE OF LTFM DOLLARS AND SCHOOL BOARD AUTHORITY
Each year, school districts are provided a Regular Long Term Facilities Maintenance budget (RLFTM). This budget is designed to provide for the operational costs of the facilities as well as for repairs for more affordable breakdowns. Districts will pay for things like patching roofs, annual testing and inspections of items such as elevators and fire extinguishers, servicing equipment, renovating and protecting gym floors, painting, replacing doors, repairing broken pipework, repairing paving etc. from this budget.

New London Spicer has combined indoor facilities of 390,000 square feet. It has a remaining annual RLTFM budget of $383,000. This is equivalent to $0.98 per square foot. If you extend that out to your own home, a 1,800 square foot house would have an annual maintenance budget of about $1750 a year. Enough to do the simple maintenance things, but not enough for when something like a furnace or roof needs replacing.

New London Spicer has identified $40,600,000 in required reinvestment. However, the plan is to concentrate on essential improvements that prevent catastrophic failure. Current lead times on air handling equipment is at all-time highs, with the district not being able to replace critical components for a year or more. This plan has a budgeted estimate for critical infrastructure totaling $32 million covering all three facilities.

This reinvestment is not possible from RLTFM, and as such, the State of Minnesota grants school districts the ability to replace critical Health and Safety
infrastructure through a Board Authorized levy. This levy can only be used for improving and replacing items that do not meet current ventilation standards, or for the
abatement of hazardous material such as asbestos. It is designed to make sure that schools do not have to close due to failing equipment.

The New London-Spicer school board approved a large scale infrastructure project. There will be a tax increase for all properties in the district. The increase is based on the taxable value of the properties. An average priced home in New London-Spicer is rated at a taxable value of $250,000 and the increase for all proposed work would be $16.50 per month.

WHY DID THEY DO THIS NOW? – To manage the risks at the lowest tax impact. 

• The cost of delay is huge. Current forecasts show that it will continue to escalate at a rate way beyond inflation because of the increased demand and reduced supply of air handling equipment. Some HVAC equipment is increasing at 30% per year.
• This same project is forecast to be at least $39 million in two years’ time.
• The tax impact of this project is at its lowest today. It will only increase with delay.
• The actual tax impact could be lower depending on the chosen scope of work, bond issuance costs, and future growth in the district.