Kyrene Board continues review of budget strategies


A careful consumer weighs the options for the family’s food budget– will it be hamburger or steak this week?
In similar fashion, the Kyrene Governing Board continues to consider a list of budget balancing strategies to shore up a lean fiscal year and correct an expected shortfall of $8.9 million.
Three of the strategies under consideration have been removed from the list, said Jeremy Calles, the district’s Chief Financial Officer, including a teachers’ salary freeze, increased class size and a reduction of students’ programs.
Two more strategies received close scrutiny at the study session on April 23– the sale of an unused parcel of land and the use of a lease purchase agreement.
The parcel, known as Club West, is located near the Ahwatukee Foothills neighborhood, across the street from a golf course, on Chandler Boulevard and 11th Avenue. The property was purchased with the intent of building a new school on the 11-acre site, when population growth looked like it would continue to grow in the Kyrene District. Now faced with fiscal challenges, the board may dispose of the land, since a new school is not needed.
It was hoped that a home or apartment complex builder would be interested in the site, but the zoning is not approved for a building project with high population density.
Unsolicited bids, previously received by builders, led school administrators to believe the worth of the land might be between $1.5 to $2.5 million at the market high; but, without a current professional appraisal, it’s actual worth is unknown.
The board agreed that it would be worthwhile to obtain a bid on the asset, even though board member, Ross Robb who is a real estate developer, doesn’t believe that the present commercial market is strong enough for the estimate to exceed the previous offers.
Staff will obtain quotes from at least three qualified appraisers, according to Calles and present the results to the board at a future meeting.
The board also heard a presentation from Stifel, an underwriter, on lease-backed financing options. If pursued, an asset of the district, such as the administration building, would be used as collateral to obtain a lease from a third party. At the end of the lease, the title of the asset would transfer back to the district.
If the Club West property is not sold and the board decides against the lease purchase agreement, Calles says that the budget strategy list can withstand crossing off one more significant item, but it is getting tougher to find items to cut.
“Over the last few years we have trimmed more than the fat, we are trimming meat and bone, so every
cut is painful,” said Calles.
“We are obviously uncomfortable with losing an asset, such as the Club West property, or providing a one-year fix while incurring a ten-year debt, in the case of the lease-back option. However, our budget strategy decisions are always made based on the Kyrene Blueprint, which can be viewed on our website
under ‘About Kyrene.’”


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