HURON — When the Huron School Board voted unanimously to approve the resolution that authorized the issuance of up to $11.5 million in Capital Outlay Certificates for a handful of projects in the school district, it was following a pathway what has proved successful for nearly 20 years.

“I joined the school district in 2000,” said district Business Manager Kelly Christopherson, “and the first large project we did was the addition to and remodeling of Huron Arena.”

That $2 million Capital Outlay Certificate provided for the addition that included the new locker rooms, an Arena-wide bathroom remodel and made it more feasible to connect Huron Arena to the new Huron Event Center.

Updating the locker room situation allowed Huron Arena to remain as a feasible venue for state tournament games.

But what exactly are Capital Outlay Certificates (COC), and why are they important to the school district.

As Christopherson offered a refresher to the school board at the Oct. 28 meeting, he noted that COC are debt, which are sold and the proceeds are used to provide money to purchase things – tangible assets – such as repairing a building, a new crop of electronic devices or new construction.

COC are re-paid through the district’s Capital Outlay Fund (COF). The money arrives in the COF through a levy on property taxes in the school district. Currently, the COF for the Huron School District generates approximately $4.5 million per year.

Issuing new COC doesn’t raise taxes, and COC are paid back over 20 years, unless they are refinanced for better rates and reduced payback time.

The COC approved Monday night will be used for a multitude of tasks – most notably, the $4.9 addition to Huron High School – which will house a new orchestra room, new Career and Technical Education (CTE) classrooms and renovation of several other classrooms. It will also be used to replace a portion of the roof at Huron High School, replace the entire roof of Huron Middle School, replace the boiler at HMS and cover renovations and equipment upgrades in the Huron High School kitchen, as well as new scoreboards at Huron Arena and Tiger Stadium.

The district’s COC are subject to the State Aid Pledge agreement, which allows the school district to use the state’s bond rating in securing the funding. The pledge acts as a guarantee as well, as if for whatever reason the school district would not make a payment, the state is able to hold back a portion of the district’s state aid funding to meet the obligation.

Christopherson reiterated that making the commitment will help maintain the school’s largest tangible assets, its buildings.

He also added that a portion of the COF has been transferred to the district’s General Fund, taking on the added payment will require the school district to “strictly adhere” to its budgets and time Capital Outlay purchases to the times of year that the district has cash on hand.

“For instance, with the new COC, we’ll have and interest payment due on that amount in February,” Christopherson noted. “Then in August of next year, we will have a principle and interest payment of $862,000 due on this new round of COC as well as the last payment, of $688,000 that is for the projects that added artificial turf to Tiger Stadium and gave us eight tennis courts across the street.”

Other COC payments for the HHS and HMS renovations ($465,000) and the addition to the CTE building, of $225,000, meaning that up to $1.8 million in Capital Outlay payments will be due on COC between July 1 and Nov. 1 of 2025.

Part of the reason to make the move now is that doing the projects together in one COC issuance saves the $55,000 flat fee that it costs for each issuance event. The addition to HHS has received two grants to be used and both have a timeline to use or lose, and with the turf/tennis courts coming off the books in 2025, addressing areas that were lacking in the district was on the table.

“We ended the last fiscal year with $2.9 million cash on hand in the COF,” Christopherson said. “Our cash on hand has increased over the past four years, due to using ESSER (Elementary and Secondary School Emergency Relief) funds for purchases like school buses and computers, instead of our Capital Outlay Fund.”

In addition to purchasing ‘things,’ state law allows a portion of a school districts COF to be transferred to the district’s General Fund, to help that fund as needed. Over the past few years, between $300,000 to $700,000 has been transferred to the General Fund to avoid shortfalls.

Christipherson said that the transfers will continue in budgets going forward as well.

While most of the district’s projects are funded through COC, Christopherson noted that the biggest project to date, the additions to the district’s three elementary buildings, and their renovations was achieved by a special levy approved by voters in the 2012 election. Voters approved issuing $22 million in general obligation bonds at that time, which is paid for by a special levy. Through re-financing, the 30-year payment period for the general obligation bond has been cut to 26 years, saving significant interest savings.

“While the Capital Outlay Fund is part of our normal budgeting process, the general obligation bonds issued for the elementary school renovations in 2012 will go away in the future,” he said.

“When we did that bond election, we were using data compiled by Koch Hazard Architects that forecast we would need more space going forward,” Christopherson said. “Their guidance was prophetic as we are continuing to grow our student population and having the larger buildings in place save us a lot of headaches and money.”