Tuesday, August 14, 2007

Fayette County School board looks at nickle tax hike to address long-standing facilities issues

Last October, in a board of education debate, I was somewhat critical of the existing Fayette County Board for what I saw as a neglect of known facilities needs. At that time, the district said the need was $184 million for new construction, renovation and maintenance. This number was based on the 2004 district facilities plan. I argued that the board should not wait until the need grew to $200 million before doing something about it.

Many of the facilities projects had been "on the books" for years and kept getting pushed back due to insufficient bonding capacity. Just as with our homes, delayed repairs now can lead to greater costs later. School construction costs in Lexington have risen by about 8% a year, or 32% since 2004. Neglect the infrastructure at your peril. Leaky roofs, warped gym floors and air conditioning repairs all competed for the same dollars.

For example, Cassidy School was originally scheduled for renovation somewhere around 2000; now planned for 2008. Existing maintenance problems were handled with band aids while renovation was postponed in favor of more pressing needs, specifically new school construction. The situation has gotten worse.

When we planned for new elementary schools in the 1990s, the costs were typically in the neighborhood of $7 million. Bids for the new elementary schools presently underway in Fayette County came in at $14 million to $17 million.

It is important to note that Fayette County has not prospered under SEEK, the state's funding formula. For more than a decade Fayette County operated on the same funding as it did in 1991-92. During that time the district resisted the temptation to ask the local tax payers to better support Fayette County's schools. The last time the school district went to the public for a tax hike for facilities was in the 1960s. The Occupational License Tax began in the mid 80s and kept the schools from raising student fees for instructional materials for years. The general funding picture for Fayette County under SEEK hasn't gotten any better.

I have no doubt the district needs to raise the facilities tax, but I must confess I was surprised to hear that since last fall the stated need had grown to exceed $290 million, an increase of nearly 40%.

I looked into the question this morning and found that comparing to two numbers is like comparing oranges and...tangerines.

Administrators who work with state school facilities will understand that the Kentucky Department of Education does not allow school districts to list in their plans every item they need. That would lead to plans that were unrealistic and ultimately, never accomplished. District plans are limited to four years, further limited by the estimate of available funds, which in turn limits the number of projects that can be included.

The new $290 million figure Fayette County is using is based on current actual needs that exceed the 2004 plan including new projects and increased costs. For example, the district elementary school enrollment has increased by 500 students. "That's an elementary school..." district communication director Lisa Deffendall told me. As time goes by, smaller projects have turned into bigger projects. That is the case with Breckinridge and Yates elementaries for example. Both are in need of renovation. According to the 2004 plan, Breckinridge was only going to get some new lighting and Yates was scheduled to add some KERA mandated work spaces.

In fact, the actual figure is closer to $317.2 million when all projects are added, which takes the plan well beyond two biennia, to 2018. Without the nickel tax, today's kindergartners would graduate before many of the projects would be addressed. With the nickel, the full plan can be implemented by 2016, not counting emerging projects that occur. It might even be accomplished sooner, but there are practical limits to what can be done; like the number of construction firms capable of doing such work and some logistical problems. How many projects can a district the size of Fayette County realistically have going on at one time?

If the nickel is not approved, Fayette County is in for a rough time with its infrastructure. I'm not suggesting roofs will cave in (like the Minnesota bridge did), but I'm pretty sure rain will start hitting some student desks, sidewalks will crack, paint will be needed, repairs will be delayed and overall public confidence in the schools will be undermined.

The board is currently facing $21.9 million in projects that must be done, right now. If they can be done as part of a general building renovation, it will be much more cost effective. If the nickel fails, however, that work must still be done in a piecemeal fashion and the resulting impact on the rest of the facilities, in time, will become crippling as resources are siphoned away.

The circumstance the board finds itself in is troubling. It might also be argued that it is one of their own making. Many of the district's facilities needs have been around for a while. The best spin may call the board's previous inaction "commendable restraint" on behalf of the district's tax payers. The best thing that could have been said about the board - had they continued to get by on the cheap by slapping band aids on big problems - is "irresponsible."

Deffendall explained it this way, "In 2008, without the nickel, we can bond $27.6million. With the nickel, we can bond $195.2 million. And while that won't address the full $317 [million], we also know we couldn't do twenty-five projects, all in the same year, anyway...There's not enough contractors in Lexington. We'll hire them all, but that still won't [allow us] to juggle everything...What the bonding attorney has told us is that over a ten-year period, we would be able to bond the $317.2 [million]."

"We know there are going to be some projects that come online that we need to do. So that is why we see this as a long-term solution, because we're not going to need to come back and ask for more."


This from Raviya Ismail at the Herald-Leader.

Fayette County property owners' tax bills could rise more than 5 cents per $100 if school board members approve a plan to raise millions of dollars for new buildings and renovations.

School leaders said the increase -- from 54.1 cents to 59.5 cents per $100 of assessed valuation -- would allow the district to borrow the estimated $290 million it needs for immediate school construction and renovation projects, in addition to paying for regular operating expenses such as teacher salaries and textbooks.

The proposed tax rate has two parts. The bulk, 53.9 cents per $100 of assessed property, would cover regular operating costs. The other 5.6 cents would be used strictly for school buildings. If approved, the money could be used for renovations and construction at up to 25 schools.

Without a rate increase, the district would have the money to address the needs of only three schools.

"We wouldn't be asking if the need wasn't so great," Superintendent Stu Silberman said. "We're hoping that this community will support our kids and join in this investment into their future."

A public hearing on the issue will be held Aug. 27.

The board discussed the proposal for the first time at its planning meeting yesterday. Board members were supportive of the increase.

"In the long run it's going to save taxpayers, rather than postponing it to when (school construction projects) are going to cost more," said board member John Price.

School board Chairman Larry Conner said there has been talk for several years about increasing the school tax rate. He said board members have cut district personnel costs and appealed to legislators about their funding needs.

"None of that has been successful to bring the district to the level it needs to be," he said. "This does it and it does it in the least amount of impact to our citizens."

If the proposal is approved, the owner of a $100,000 home would pay $595 a year in property taxes. Of that amount, $56 would go strictly for building and facility improvement in the school district.

Without the 5-cent rate increase, the tax bill would be $539.

The median home value in Fayette County is $165,000. That tax bill would rise $92.40 to $981.75.

Fayette officials expect the new rate to generate an estimated $12.9 million next year, which would provide for a total bonding capacity of $290 million. Without the increased tax rate, the district would be able to borrow only $27.6 million toward projects.

The new rate would appear on the tax bill homeowners receive this fall.

A 5.6-cent rate boost would produce a 10 percent increase in property tax revenue.

For any increase above 4 percent, state law requires districts to hold a public hearing, and opponents could challenge the increase through a voter referendum.

Districts usually adjust the tax rate so the revenue increase doesn't exceed 4 percent.

The most recent school tax rate increase was in 2003, with the approval of a half-cent higher tax rate to cover regular operating expenses. In the past 10 years, the highest rate has been 54.7 cents per $100 of assessed property in the 1998-99 school year.

About half the 54 schools in the district need immediate construction or renovations. With existing funding, it could take well past 2025 before the list is completed.

District officials said the facilities' needs are acute because of growing enrollment, with the district adding more than 300 students a year for the past five years. School officials are aiming to build elementary schools in the Clays Mill and Hamburg areas.

During the last decade, 20 renovation projects and six new schools have been completed, costing the district more than $204 million. The district already has the money for three elementary schools under construction, which will cost more than $47 million total...

Current Bonding Capacity for Schools Only.

District Talking Points in support of a tax increase.

Ten Year Tax Rate History.

Yesterday's FCPS press release.

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