When the County Commission approved the $32 million bond in October, our community knew that $17.6 million of it was for the new Blanche elementary school with an additional $5.7 million for a new STEM (science, technology, engineering, and math) wing at the county high school. The Commission sent the remaining $8.6 million to the city school system, which was earmarked by state law for for a few specific uses.
The question facing the city school board and really, the entire community, is deceivingly simple – where is that money best put to use?
To make the best decision, let’s take a look at where things stand currently and how we got here.
Where It Started
The best way to see the current lay of the land is to follow the money. To do that, we’ll head back to October 2011.
The City of Fayetteville issued $6 million in General Obligation Capital Outlay Notes, which was used to fund capital improvements to the elementary and middle school facilities. To back up those Notes, the City pledged its “ad valorem taxing power”, essentially its ability to increase taxes if needed, to pay.
Fast forward 16 months to February 2013, the city government and city school board signed what’s called an “Interlocal Agreement”. The two boards decided to refinance those Notes by converting them to bonds. Bonds and notes have a lot in common with the difference mostly being in the maturity length, which is the length of time the debt is repaid. Notes usually have shorter terms than bonds. When the Notes were converted, the city issued $6.125 million in bonds. If for whatever reason you find yourself looking at a schedule of debts held by the city, these bonds are called the “General Obligation Bonds, Series 2013”.
As of the last fiscal year, that bond sits at $5.09 million with payments each year totaling around $350,000. That number fluctuates a bit each year as the principal payment increases and the interest payment decreases. For the next few years, that debt payment schedule looks like this:
- 2018 – $215,000 principal payment with $142,100 interest payment
- 2019 – $220,000 principal payment with $137,800 interest payment
- 2020 – $225,000 principal payment with $133,400 interest payment
If that schedule is kept, the debt is repaid fully in 2037.
Where We Are Now
As of the last public audit, the city school system ended fiscal year 2018 with $3.785 million in its General Fund, which is money that can be used for any expenses that schools need. That General Fund expenses cover everything from school instructional programs to salaries to building maintenance and debt service.
With the city’s portion of the county’s October 2018 bond, the school system received $8.6 million. But with that money came a few restrictions. Most importantly, this money can only be used for two types of expenditures – capital projects or debt retirement.
Here’s Tennessee Code § 49-3-1004 (2017) for that restriction:
“(a) The proceeds from the sale of school bonds issued under § 49-3-1002 constitute a special fund to be known as the special school fund, except funds for aiding this state in the construction of state education facilities or institutions as provided for in subsection (b), which shall be kept by the trustees of such county and the treasurer of the city schools separate and apart from all other funds and shall be applied exclusively to purchase property for school purposes, to purchase sites for school buildings, to erect or repair school buildings, to furnish and equip school buildings and to refund, call or make principal and interest payments on bonds or other obligations previously issued for the same purposes, and to be used for no other purposes by the county board of education of the county, the city board of education or the governing board of the city. The city board shall have a right to draw warrants on the funds only for the purposes mentioned in this subsection (a).” [Emphasize mine]
To put that into easier language – building construction or repairs would fit under this. Replacing or purchasing school equipment qualifies. Paying off the outstanding $5.09 million would as well. Using this money for anything outside of that isn’t allowed by state law.
The Early Possibilities
As with many decisions our community faces, there’s a few different routes for using the $8.6 million. The options below were compiled through interviews with school employees as well as public officials from both the city and county government. School officials are still in the early parts of the decision-making process so keep in mind that these are just early options.
Cosmetic and Safety Upgrades
This area includes repainting classrooms, removing carpet in favor of tile floor replacements, and replacing water fountains and gym showers. Entrances at the schools could also be upgraded to be more secure. We’ve seen the county school system take similar steps in entrance upgrades after the Parkland school shooting.
Research shows that 1:1 laptop programs can lead to higher test scores and promote 21st-century learning skills. City schools currently use Chromebook carts to boost educational curriculum but those are shared between classrooms. They would need an additional 571 Chromebooks to bring their total count up high enough where each 3rd to 12th grade student could have a dedicated laptop.
Ralph Askins Traffic
In August 2018, the Board of Mayor and Aldermen asked the city schools leadership to look at options for improving safety along the streets by Ralph Askins Elementary. Options in this area range from street changes to a new parking lot.
High School Addition
There’s several portable classrooms in use at the moment, mostly used for Career/Technical Education (CTE) classes. A new addition, possibly coupled with a new gym, could provide space for those classes, along with Comprehensive Development Class (CDC) classes, while eliminating the need for the portable classrooms.
As we’ve talked about before, CTE training is vital for our community. When we have successful training programs, it’s easier for our residents to find jobs and for outside businesses to set up shop in our community.
Debt Reduction or Elimination
The $8.6 million would completely pay off that outstanding $5 million debt and leave $3.6 million for other options. If paid off in full, this frees up the roughly $350,000/year currently going towards the debt service, which is money that can be used for anything the school system needs rather than restricted to capital projects. Partial amounts of that debt could also be paid to free up some of that money currently going to bond payments.
This option carries through to city government choices as well. Remember, the City of Fayetteville is on the 2013 bond series. If the $5 million debt was retired, the city government itself would have even more freedom to explore new capital projects that might require issuing bonds.
Here’s where the community comes in. It’s easy to get lost in all of these big million dollar numbers. But these are our tax dollars being spent. A dollar (or a few million) spent in one place ripples throughout other decisions to be made. It’s critical to look at the overall picture when making decisions of this magnitude.
For now, $5 million of the total $8.6 million was invested into a CD earning 2.25% interest – that’s $112,500/year. The city school leadership along with the school board have asked an architect to start drawing up plans for the bigger projects. That’ll bring actual numbers for those discussions around traffic improvements and CTE addition. And remember – these options are all preliminary so they’ll change as the decision-making process goes forward.
The city school board and the aldermen were elected to make those decisions on our behalf. To do that, they’ll look at all the facts you just read. They’ll consider their own expertise and experience. And they’ll listen to what the community has to say.
The best way to share your thoughts and ideas is to contact our elected officials that will vote on the variety of choices. You can find the city school board officials here.