Leader Blues

Wednesday, May 13, 2009

TOP STORY >> PCSSD finally selling bonds

By JOHN HOFHEIMER
Leader senior staff writer

Stephens Inc. may have offered $81 million in second-lien bonds on behalf of Pulaski County Special School District as early as yesterday to pay for two new school buildings, following Monday’s bond-sale application approval by the state Board of Education, according to interim Superintendent Rob McGill.

After deliberating more than an hour, the board approved the application 7-2.

A month ago, the Board of Education turned thumbs down on the district’s application for the bond, saying its repayment plan depended on cuts to teacher and administrative salaries.

This time around, taking a page from Little Rock School District’s successful bond application, McGill showed that the $5.5 million a year debt service could be covered by the increase in appraisals and property tax revenues and use of existing bond-retirement excess funds.

Of the $81 million the bond will raise, $51.4 million is earmarked for construction of a new high school at Maumelle and $28.6 million for construction of the new Sylvan Hills middle school.

With sale of the bond, the district’s bonded indebtedness will more than double from $75.4 million to $156.8 million. Annual debt service will double to stand at $11 million.

The architects and construction manager say the construction bid packets could be ready by the end of this month for the high school at Maumelle.

New revenues from increased real estate appraisals will account for $3.5 million of the annual debt service on the second-lien bond, transference of $2.8 million from operations and maintenance to debt service will account for most of the rest, with another $190,000 a year available from cutting a public relations person and two other staff members.

McGill and Anita Farver, the district’s interim chief financial officer, defended PCSSD’s plan to repay the 27-year bond as state board members questioned changes that could affect the school district’s revenues and ability to pay.

Farver said even if increased real estate appraisals triggered an automatic millage rollback—Amendment 59—the district would still be able to make its payments.

She said neither the possible loss of desegregation funding from the state nor the loss of 6,000 Jacksonville-area students for a standalone district would hamper the district’s ability to make its payments, though she didn’t explain her conclusion.

Board member Sam Ledbetter wanted to know where the $2.8 million came from and Farver told him it was from the roughly $8 million a year routinely transferred from excess debt service to maintenance and operations.

Sherwood Mayor Virginia Hill-man came to support the bond application, but all the speakers were from the Maumelle area.

Proponents told the board that each school term in Maumelle there was a massive out-migration of parents taking their kids to private schools rather than to the decrepit Oak Grove High School. They said many of those parents will opt to keep students in a new high school at Maumelle.

Board member Bill Vasquez of Jacksonville said the board had ceded its oversight responsibility in the past to superintendents, and that he wanted to know why the schools at Maumelle and Sherwood couldn’t be built for $1.20 a square foot like those at Beebe and Cabot.

Construction managers Baldwin and Shell estimated the cost as high as $1.80 a square foot and Vasquez said the current proposal would allow $1.55 a square foot.