District plans for facilities funding
By Phyllis Moore
Published in News on May 23, 2013 1:46 PM
The Board of Education says it's time to move forward on construction and facilities projects -- whether or not the county commission approves additional funding requests.
At a two-hour work session Wednesday afternoon, the board played out several scenarios should the commission not vote to support several small projects, including security and technology programs, as well as a list of "critical needs" to be addressed in the district. Options bandied about included borrowing money and drawing down its fund balance and money generated from the county's half-cent sales tax and lottery sources.
The commission is expected to respond by June 30 to the district's request earlier this month -- which included a $3.4 million "special county appropriation" for some of the most pressing needs in the district and a $3 million drawdown from the half-cent sales tax, for a total of $6.4 million.
Nan Barwick, assistant superintendent for fiscal services, presented figures should the school board opt to borrow money on a 30-year or 20-year payback plan, considering two options -- $48 million to cover projects in the central attendance schools, Spring Creek Elementary and Charles B. Aycock High and building new schools in Grantham and Spring Creek, or $30 million, which would cover central attendance, SCE and CBA and one new middle school.
She said she was "extremely nervous" about the $48 million option, pending interest rates and any changes to the lottery funding source, and suggested the $30 million plan would be more within reach.
"I feel comfortable with doing one school and the other three projects, if the county is willing to borrow money on our behalf," she said.
Board members also said they had more confidence moving forward with the half-cent sales tax money rather than relying heavily on lottery funds.
"Should the commissioners not be able to move forward (with funding), I feel good about the half-cent sales tax," said Dr. Steven Taylor, schools superintendent. "The lottery would be more of a concern to me. (The state) could take one vote and that could go away."
In the meantime, the school board is weighing whether to access an option that has long eluded them -- additional money in the fund balance.
Board member Chris West said he is being mindful of how the commission may respond to the estimated $11 million in sales tax money and almost $7.5 million in lottery funds.
"They may look at $18 million in our fund balance and say they're not going to fund anything," he said. "Based on the $18 million we're projected to have on June 30, they could decide not to take care of any of those."
"If the commissioners find out we have got a dollar, that's too much for them," board member Thelma Smith said.
There was once a time when the district actually operated with a $6 million fund balance, Taylor said, but that was before the district was asked to spend it down and maintain a lower reserve. The fund balance of $2 million was established based on the district's monthly expenses.
The subject has long been debated, especially when paired with issues like covering payroll and potential disasters such as the one experienced this week in Oklahoma, where tornadoes wiped out two elementary schools.
So when the discussion veered toward setting a threshold for funding sources, the contention was that there always needs to be something kept in reserve.
"No amount what we leave in there, if we had a major disaster, $18 million is not going to rebuild three schools," said West. "No matter how much we leave in there, given a disaster like we see on TV, we're going to have to depend on other resources."
He suggested making the threshold somewhere around $7 million or $8 million. Board member Rick Pridgen suggested the amount should be closer to $4-5 million, ensuring payroll and necessities be covered.
"It seems silly to keep a lot of money in the bank when we have got a lot of needs," said John Grantham, chairman.
West said he didn't consider it silly, especially should a disaster strike.
Board member Arnold Flowers tossed out another suggestion for the threshold -- $4 million for the sales tax and $2 million for the lottery funds.
Board member Eddie Radford said he would support that, saying he prefers to have a cushion and Flowers' suggestion would allow them to have savings in reserve for emergencies.
West said the recommendation would still give them $12 million to use for remaining projects.