Iredell in Transition :: Powered by statesville.com and mooresvilletribune.com

County takes on massive debt for school construction; Schools want more

Bethany Fuller | .(JavaScript must be enabled to view this email address) | June 3, 2007

Each year, hundreds of new students enter the Iredell-Statesville and Mooresville Graded School Systems with bookbags filled with new notebooks and No. 2 pencils.

Each year, the hallways and classrooms get just a little more crowded and, each year, school administrators try to find a new way to deal with the overwhelming growth.

The school districts have partnered with the county government to solve the problem, but reaching a resolution is complicated by the county’s already existing debt and the districts’ pressing need for new facilities.

During Tuesday night’s budget workshop meeting, commissioners didn’t focus on the upcoming budget year.

They were more concerned about the capital projects the schools have planned.

The county commission has already approved millions of dollars in certificates of participation (COPS) and held bond referendums in order to raise money to renovate and build school facilities.

Out of the $174.4 million the county currently owes, more than $163 million of the long-term debt was created for schools.
School officials now say they need new facilities - at least one school a year.

The big question county commissioners face is do they ask taxpayers for more money to educate the new arrivals? Or do they increase the long-term debt?

“We came up with a three-phase plan in order to study the school issues,” said County Commissioner Ken Robertson.

“That was about when we could go back and do some bond package. That was a way to realistically get the funding.”

Each phase of the commission’s facilities task force plan is a series of upgrades for I-SS and MGSD to control the growth, he said.

County Finance Director Susan Blumenstein said it’s been easier for the county to obtain funding for school capital projects through COPS than general obligation bonds.

In the past 60 years, only two proposed general obligation bonds have passed.

In 2006, voters approved a general obligation bond worth $50.6 million for I-SS, MGSD and Mitchell Community College.
But that hasn’t been enough.

COPS, unlike bonds, allow the county to borrow money without asking for a referendum or raising the tax rate.

The county’s first COPS was passed in 1992 when Iredell County and Statesville schools merged.

“Well, we’ve been doing (COPS) pretty regular lately,” said Commissioner Steve Johnson. “Generally speaking, the schools have asked for a COPS every two to three years. Primarily, that’s the bulk of the capital money the school’s been spending.”

According to the 2006 financial report, the county had about $35 million in COPS at the end of the 2005 fiscal year. The next year, it more than doubled that figure to $78 million.

And that is just the beginning.

Brady Johnson, chief operations officer for I-SS, said the county has the power to grant the districts money.

“We see the county government as holding the purse strings,” he said. “This is what we need. This is what we need for the children and they control the purse strings.”

Robertson agrees. He said the county recruited big businesses such as Lowe’s Companies Inc., so the county should be the one to solve the growth problem.

“We are absolutely required to give children schoolrooms with teachers,” he said. “We don’t have a choice. We have to provide schoolhouses and schoolteachers for children. I’ve said all along that we can either tap the brakes on residential growth, or we can let growth run basically unabated.”

Steve Johnson said county commissioners should think long and hard before creating more long-term debt.

“That budget is going to be administered in my term of office,” he said. “We are obligating children who aren’t born yet. Debt always limits your options in the future.”

David Dutton, executive director of business services for MGSD, said the schools cannot meet the needs of a growing student population without the money the county is providing.

“These are very vital to our continued construction and programs,” he said. “We’ve either been building or adding to schools for the past 10 years. We’ve been trying to keep pace the best we can with growth for a long time.”

The school districts and the county are preparing to embark on the second phase of the project, which means the county needs to find the money, Robertson said.

At a recent county commission meeting, Blumenstein said the county would be asking for another COPS sometime in 2008 - this time for $100 million.

Steve Johnson said he disagrees with giving the schools that kind of money right now, especially without the voters’ approval.

“I don’t know if they trust us with $100 million,” he said. “I don’t think (the schools) need it all right away. They certainly don’t need it in the spring of next year.”

Brady Johnson said the schools are only asking for what is needed.

“Our request for funding increases as the need increases,” he said.

Brady Johnson said renting more mobile units is not a good way for the schools to spend money. Currently, I-SS has 190 mobile units, 55 of which are construction-related.

“I just don’t think that is a wise use of money,” he said. “Renting is not a good way to spend money when you can be laying brick and mortar.”

Dutton said MGSD is planning on taking the money from the upcoming COPS offering to renovate the middle school and build another one.

“We are using all the capability that we can to build schools,” he said.

As part of the 2007-08 fiscal year budget, the county is taking a portion of MGSD’s and I-SS regular funding to help pay off its debt, Dutton said.

“It’s a division of the revenue that we have in a year that applies to debt service,” he said. “It’s a larger funding package and that gives us a better rate on the funding. The county gives us a great deal because the county has a great credit rating.”

Steve Johnson said the county needs to effectively manage its budget, then the free market will take care of the rest.

He said the county shouldn’t get in over its head in debt to solve this problem.

“We won’t get there as fast as those who panic say” we need to, “but we will get there,” he said.

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