During the November meeting of the Unified School District 475 Board of Education, then-member Carolyn Gaston called into question whether or not the decision to house the district’s bond money at Sunflower Bank was the correct one.
She didn’t feel her fellow board members had taken enough other institutions into consideration. Though Gaston has departed from the board, the discussion continued at the January BOE meeting Monday.
Members talked about it options. According to Superintendent Corbin Witt, these included retaining its current services with Sunflower Bank and issuing a partial termination of the current agreement and recompeting the bond proceeds.
Part of the problem is that the RFQ dealt mostly with heavily-impacted military aid, though the vote, taken in March 2017, was for both bond money and impact aid.
New member Sarah Talley expressed concern about this. She believed opening up the request for quotation (RFQ) to bids on the bond money again would be “more true to the process.”
According to the district’s Chief Operating Officer David Wild, doing what Talley suggested would be time-consuming. It would require a 60-day notice before the RFQ could be reissued – resulting in another waiting period of about 30 to 45 days while waiting for bids to come in, he said.
“I would like to point out to the board that those funds are currently sitting idle because Sunflower Bank does not know what to do with them,” Wild said. “It cannot invest them … Those funds are not being maximized at this point.”
The funds were received Dec. 21, 2017.
According to Wild, the impact aid which is being invested with Sunflower Bank is also in a significant amount.
“You’re looking at $67 million in impact aid invested over 25 years,” he said. “The bond proceeds seem like a significant amount of dollars at $105 million but that, as you pointed out, is a construction loan. It’s transitory, it will be dispersed within 36 months.”
Wild said this was the reason so much stress was put on the heavy impact aid in the original RFQ.
Member Dr. Anwar Khoury said that even with the bond funds being invested over a shorter period of time, the amount was still significant.
He also said he didn’t believe the board had ever been told what would be done with the bond funds in terms of investments.
Market President of Sunflower Bank Rich Jankovich attended the USD 475 BOE meeting.
He said there were some limits on what Sunflower Bank could do in investing the money. The bond money is allowed to be invested in things such as treasuries and government securities.
Jankovich said the bank had a plan as to how to invest the $105 million, but can’t go forward with it until the BOE arrives at a decision.
“If we divide those funds between every institution in Junction City, then administration up here has to keep track of which pot, which investor are they’re going to pull the funds from,” board member LaDonna Junghans said.
She suggested the board proceed with caution. She said she feared the district would “be turning the wheel and coming right back to where we are now, but we’re going to be further down the road while that $105 million is sitting in the bank.”
Chief Financial Officer Marilee Fredricks was in favor of putting out an RFQ for the bond proceeds.
“I’m looking for the integrity of the process,” she said. “I have no vested interest in who we use.”
Talley was in agreement with this.
“If we choose not to, when can we pick and choose not to do the right process?” she asked.
According to Witt, the board wasn’t legally required to send out a separate RFQ for the bond proceeds.
Khoury suggested putting out an RFQ and requesting Sunflower Bank to invest the money in the meantime.
“We have $105 million that right now is going to sit probably in the bank for the next year until we start bidding,” he said. “That money is significant, sitting at even 2.25 in treasury bonds – you’re talking $2 million.”
Wild brought up the possibility that the district could end up paying some kind of penalty if terminated its agreement with Sunflower Bank, because it has likely incurred costs since Dec. 21, 2017. He said he wouldn’t know what the damages would be – or if – until he had issued the termination.
Khoury motioned in favor of a partial termination of the agreement with Sunflower Bank and for a separate RFQ be formed as soon as possible, while having Sunflower Bank make investments. Talley seconded the motion.
The motion passed, with members LaDonna Junghans and Tom Brungardt voting against it.
The district is currently in the process of purchasing land for the new school.
According to Witt, the district’s architecture firm has been holding meetings with JCHS’s faculty and staff to flesh out the details of the new school and how it might best serve the students’ needs.
The design phase will be a three-step process, Witt said. A more detailed design will be created for the new school, the review of those designs by the community, and a final design.