District authorizes money for payout

The Sisters School Board has voted to allow the school district to use proceeds from the sale of the 30-acre Lundgren Mill property to pay the approximate $1.2 million it owes the Oregon Department of Education (ODE) for a disallowed homeschool program at Sonrise Christian School (now Sisters Christian Academy) and to repay the $2.1 million plus interest that it owes from the Full Faith and Credit obligations it issued last spring.

At the Tuesday, March 11 school board meeting, board members approved unanimously the adoption of a new Lundgren Mill resolution that supersedes prior resolutions: "In light of the extraordinary circumstances being faced by the district, the board hereby authorizes the use of the Lundgren Mill proceeds to include the payment of the ODE obligation and the Full Faith and Credit obligation."

Through this action the board hopes that school programs will not be cut.

The use of Lundgren Mill proceeds was laid out in 2004. At that time the school board resolved that proceeds from the sale of the Lundgren Mill sale would be allocated at a rate not to exceed $100,000 a year except for "extraordinary circumstances."

The school board sold the Lundgren Mill property for $3.2 million in June of 2005, with a payment of $1.2 million down, to be followed by three payments of $700,000 plus interest. The final $700,000 plus interest payment is due October 1 of this year.

The district has already spent approximately $1.5 million of the funds it has coming from the asset. It has spent the money to repair the roof at the elementary school, to pay off the debt it incurred to finish the high school construction project, for the middle school remodel, to cover cost overruns on the administration building's remodel project and to pay for 18 additional capital improvement projects.

This leaves the district with some $1.7 million plus accrued interest to use to pay down over time the $3.3 million plus interest that it currently owes. According to rough calculations made by board member Christine Jones, if the decision is made to use remaining Lundgren Mill proceeds and interest to pay down ODE and full faith and credit debts, the account will be completely exhausted by the end of 2016 and the debt will still not be payed off in full.

Where to acquire the additional funds to pay off the debts from that point on has not yet been explored.

Using the Lundgren Mill proceeds to pay down the ODE debt and full faith and credit obligations also leaves no funds in this account to pay for extraordinary capital expenditures as they evolve from year to year.

The practice also provides no funding for the current long-term facilities plan that the recently established Facilities Task Force is in the process of crafting.

"I think what is important is that we have a plan that will get us through the next few years without having to make huge cuts in what I call our educational programs," said Jones.

"I think that to the extent that we are using Lundgren Mill to pay back part of our full faith and credit loans, although right now we can use the unspent principal of the full faith and credit loan, and that we can use it to repay the ODE, we've just given ourselves a bit of room of maneuver to see what will happen in the next biennium with the state spending, what will happen to our own economy here in Sisters, to enrollment, etcetera and put in place a long-range plan that gives the facilities committee a chance to see what our long run capital expenditure needs are," said Jones.