The Bulloch County Board of Education voted earlier this month to issue $40 million worth of bonds to finance projects under the sales tax extension voters approved last November.
With the referendum extending the Education Special Purpose Local Option Sales Tax, or ESPLOST, for five years, voters also authorized up to $40 million of public debt to be repaid from the $51 million or more in expected revenue. Right now, the existing 1 percent tax is paying off projects authorized under the previous five-year referendum, which expires Dec. 31. Without further borrowing, projects in the newly authorized tax would have had to wait until after ESPLOST 4 collection begins Jan. 1 and revenue starts arriving in monthly installments.
“This way, by selling the bonds, will give us a large chunk of money in the next few months that we can then begin quickly moving on projects instead of having to wait for next February when we would receive approximately $850,000 each month,” said school system Chief Financial Officer Troy Brown.
If the school system had gone that route, the timing of projects would have been limited by the monthly cash flow, he said March 8 after the board’s decision.
“Now we will have a large amount of funds available that we’ll be able to start multiple projects simultaneously,” Brown said.
The bonds, to be repaid over five years, have not been issued yet. That could take three to four months but should happen before the summer, Brown said. The school system works with a special attorney and underwriter to issue the bonds.
In contrast to the Bulloch County’s three previous five-year ESPLOST authorizations, which funded school construction and major renovations, the fourth one dedicates the largest portion, a little over $30 million, of the money to countywide initiatives. These include $22 million for school safety and classroom technology, ranging from security cameras, radios and badge-entry systems to e-books and printed textbooks; $1.15 million for playground equipment and school furniture; and $7.5 million for relief of the general fund.
By shifting costs such as textbooks, computers and school buses to ESPLOST, school system officials hope to halt erosion of the general fund balance and stave off a property tax increase.
“The intent we tried to communicate with the public in the ESPLOST referendum was that $30 million of the $50 million, estimated, would be toward the district initiatives and the general fund relief, and the remaining $20 million-plus … would go toward facilities projects,” Superintendent Charles Wilson told the board.
For shares of that remaining $20 million-plus, schools’ requests were scored and prioritized by a countywide committee. Top scoring projects include resurfacing the Statesboro High School track, remodeling for security at Langston Chapel Middle School and adding a second gym at William James Middle School, but these are part of much a longer list.
One system-wide priority has already been funded by borrowing from the general fund, which will now be repaid from the bond proceeds and ultimately the ESPLOST. The playground equipment ordered in December for the Brooklet, Mill Creek, Nevils, Portal and Stilson elementary schools, about $85,000 worth for each school and totaling $409,235, has now been installed.
Wilson told board members they will not see every individual spending item funded from ESPLOST but will be presented the big-ticket items requiring board approval.
“We will follow the board purchasing policy on every item on our list,” he said.
Once money from the bond sale arrives, “these projects are going to start moving,” he said.
The bonds are expected to sell at a premium, above their par value, or face value, which has to be repaid. The premium will help offset the interest and issuance costs so that the net cost of borrowing is hoped to be about $2.2 million, Brown said in an interview.
“We are confident these bonds will sell at a premium, so we will actually receive more than $40 million,” Brown said. “The exact amount will be determined once we actually take those to the market.”
With principal and expected net borrowing costs totaling about $42 million, the school system should have enough ESPLOST revenue to repay the bonds and still have several million dollars more. The $51 million is a conservative projection of the five-year revenue, which was capped at $60 million by the wording of November’s ballot question.
The school board’s vote to move forward with the bond issuance was 8-0, on a motion from Glennera Martin seconded by Stuart Tedders.
Old ESPLOST final
The board also unanimously approved the final cost of the last project completed under the old ESPLOST, the athletic facility added to the back of Portal Middle High School.
In use since fall 2016, the facility includes a fieldhouse for use in multiple sports, concession stands and improved handicap accessibility for the football field. It was projected to cost $999,644 but ended up costing $1,161,614, an increase of $161,970. The architect only recently signed off on some punch list items, allowing the final payment to be made, Brown said.
Board member Steve Hein suggested that this illustrated one justification for the bond issuance, since construction costs tend to rise. But in this case, Wilson said, officials looking to minimize the cost left some things out of the project that were necessary, such as a retaining wall, landscaping, fencing and some earthwork.
“We’ve dealt with this before in projects, and we always need to be very honest with ourselves about what we want and understand the cost of the project that we want,” he said.
Herald reporter Al Hackle may be reached at (912) 489-9458.