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Economic Commentary

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With the end of the 2021-2022 school year, we hope you have time to reflect and evaluate before the heavy lifting of completing required forms, audits, reports and the like. And what a couple of years it has been.  First, dealing with COVID to end the 2019-2020 school year, all the delivery options of education in 2020-21, and then having to continue deal with COVID and the masking mandates, etc. throughout the year.  We were visiting with an administrator who said he had school patrons presenting differing sides of the masking issue, and both using science as there basis of their position. Unreal! Let’s hope the recent uptick in COVID cases in China as well as the U.S. doesn’t take off and run rampant through the country again.

As if COVID did not present enough challenges on its own, you also continue to deal with the ongoing challenges of running and educating the kids of your district.  And while the primary focus of your District remains the same, that of providing a quality education program, administrators are being challenged with a myriad of concerns that were not even thought of as little as ten years ago.

But one thing is certain, the public school system will not only persevere, but succeed with resounding success as it always has because of our administrators.  Your ability to plan and work together will ensure that the delivery of education in our public school system continues to be the overriding positive mechanism that grooms our future leaders.

From a school’s economic standpoint, the ramifications of the pandemic will continue to be a source of concern.   But rather than the driving force it once was, inflation has taken over as the “elephant in the room”.  Inflation will present its own set of challenges for the school administrator.

Higher interest rates present an opportunity to receive a higher rate of return on your investments, but unfortunately, those investment returns rarely outweigh the increased costs associated with the financing of a school district.  Undoubtedly, we will continue to see an increase in the costs of food, gasoline, salaries and construction, to name a few.

Setting the tax levy is always an interesting time, but this year may be significantly different and more important than it has been for a long time.  Past years have seen administrators hoping the Consumer Price Index (CPI) and the rate of growth closely match.  Real estate prices in some areas have increased dramatically and you may be looking at reducing your operating levy even though inflation is at a 40 year high.  We would encourage you to contact your local assessor soon (in the event you have not done so already) to begin to analyze the effect on your local operating levy.

Interest rates have risen dramatically (especially on the short end of the yield curve), but still remain low in relation to past history of rates. Longer term interest rates have not risen as dramatically, and therefore, borrowing still remains a viable option as you review your long term capital needs.

We at Raymond James stand ready, willing and able to assist you and your district in any way possible.  We have the expertise and manpower to assist in your planning and execution of your financial needs.  We can assist in the computation of operation and debt levy for the state auditor, as well as bonding capacity and refunding analysis.  If we can be of service, please let us know.

Dick Bartow, Managing Director for Raymond James
dick.bartow@raymondjames.com