02/04/08 — District officials say $23 million is step forward

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District officials say $23 million is step forward

By Matthew Whittle
Published in News on February 4, 2008 1:51 PM

Like the members of the Wayne County Board of Education, school officials are approaching the recently adopted $23 million school facility funding plan with caution. But they also believe that it can work.

The plan, which is relying heavily on sales tax and lottery funds, was put forward in December by County Manager Lee Smith.

In it, funding for the work is broken down into several sources -- $1.2 million from money saved on utility costs through performance contracting, $4.5 million from school and county cash reserves, and $16.4 million through financing methods such as certificates of participation, with the estimated $1.6 million annual debt service (20 years) to be paid through those lottery and sales tax revenues.

The school district's concern, explained school finance officer Nan Barwick and assistant superintendent of auxiliary services Sprunt Hill, is two-fold -- the strength of those funds and their ability to find money in the future for annual and emergency capital needs.

The money in those two funds is restricted to school capital, debt payment and routine maintenance (sales tax only) and can only be accessed with the approval and cooperation of the county commissioners, though the school board decides how it is spent.

Currently in the county's lottery fund, there is $2.4 million -- $1.1 million of which has been collected this fiscal year, with another $1.2 million expected to come in by June 30.

So far, the school board has only drawn down $370,000, which it put toward property acquisition for a future Grantham Middle School.

On the sales tax side, there was $2.8 million in the county's account as of June 30, 2007.

Revenues for the current fiscal year are projected to total about $4.4 million -- $1.3 million budgeted for debt service, $1.8 million for the school system's annual capital needs and a projected balance of $1.4 million.

"We've been spending only $1.8 million (annually), but that was intentional," Hill said. "We were trying to be prudent with our finances."

What will make him and Mrs. Barwick more comfortable in the future, though, is if they have at least $2.5 million available for those annual and emergency needs.

"You can't forget the upkeep and maintenance of your existing schools. We're still going to have buildings that need roofs and we're still going to need new buses," Hill said. "All of that takes money, and (with rising costs) it might take more than $2.5 million.

"It's important we have this in the future."

Adding to their discomfort is a hesitancy to rely on lottery revenues, which have only been collected since the 2006-07 fiscal year, to help fund the $1.6 million debt payoff and the $2.5 million in annual needs.

"We've only received it for a year, so naturally I have a concern," Mrs. Barwick said. "Everything today looks really good, and if we continue to receive that kind of money, we won't have an issue, but there is discussion of the lottery changing again.

"To me it hasn't become steady income yet and 20 years is a long time."

Adding to her concern, she continued, is the fact that the school system's share of the $4.5 million in cash -- $2.25 million -- also is likely to come out of its sales tax funds.

Unlike the county, she said, the school system only has a "couple hundred thousand" dollars available in its fund balance for capital needs.

But, she and Hill acknowledged, this $23 million plan is at least a start.

"Our belts will be tighter than what they've been," Mrs. Barwick said. "We won't have the luxury of knowing there are extra dollars over there. Would we have liked for more money to be contributed on the county's side? Naturally, yes.

"But I'm glad to see us moving in a direction; I just don't think we were quite prepared it would be this direction."

Still, she does think that overall, the plan is a good use of the sales tax and lottery funds.

"We can get a bigger bang for our buck if we do it this way," she said. "It's a doable game."

Now, Hill added, it's just a matter of getting started.

"We'd love to have more," he said. "We've got more needs out there, but we're glad that we're moving. The schools need it. The kids need it. On my side, I'm excited."

Already, he is laying the groundwork in order to begin putting items out for bid as soon as possible. He also has begun investigating the potential lease or purchase of more than 60 mobile classrooms for use at Eastern Wayne and Norwayne middle schools once those classroom demolition and construction projects begin.

Additionally, he said the performance contracting discussed in the plan has already begun.

Any further move toward construction, though, will have to wait until the school district is able to sit down with their county counterparts and work out a financing and construction timeline -- likely one beginning about six months from now.

Currently, the school board's facilities committee is looking for an architect to help oversee the renovations and develop such a plan. Also being considered is the combination of several projects under one bid.

"I'd really love to have this under one project," Hill said. "But we're waiting on (the county's) timeline. That's what we don't know yet. We want to look at their timeline with the dollars and that will tell us what we can do first.

"Then once we do these things, new ones (from the rest of the $105.1 million plan) can be added on."