JACKSON — Legislative action could set off a small building boom for Mississippi’s public schools.
A measure passed by the House on a unanimous vote last week — and now awaiting action in the Senate — would renew schools’ power to borrow against state aid checks.
After the 1997 passage of the state funding formula, known as the Mississippi Adequate Education Program, a nine-month window opened for districts to pledge up to $160 a year per student to repay bonds.
Districts borrowed $767 million using that provision, said Todd Ivey, financial chief for the Mississippi Department of Education. But only about $40 million is outstanding, and those bonds will be paid off by 2018.
House Education Committee Chairman John Moore, R-Brandon, who’s sponsoring the bill, says districts would like a chance to borrow again.
“In the areas where there’s need for more school buildings, more classroom space, it probably would be an advantage,” Moore said.
His bill would increase the amount of money a district could pledge to $195 per student per year. That may not sound like much. But in a 2,300-student district — the typical size in Mississippi — it would generate nearly $450,000 a year. That would be enough to borrow more than $6 million at 4 percent interest over 20 years.
That much money is probably not enough to build a new elementary school or a high school. But it’s enough for a new classroom wing or to renovate a school, said Michael Waldrop, executive director of the Mississippi School Boards Association.
Larger districts would get much more money. The 32,000-student DeSoto County district, Mississippi’s largest, could divert $6.3 million a year for capital needs. Statewide, if every district diverted the maximum amount, it would yield nearly $96 million a year.
Allowing schools to borrow against state aid sparked opposition the first time. Not requiring voter approval and the implicit state guarantee of the debt were cited by then-Gov. Kirk Fordice for his veto of the Mississippi Adequate Education Program in 1997. Lawmakers overrode the veto.
Not having to win a 60 percent majority in a bond referendum, as state law requires, is also one of the prime attractions.
“It’s very, very difficult to pass a bond issue,” Waldrop said.
The money could be spent on buildings, land, technology, heating and air conditioning work or refinancing old debt. The longest a district could borrow for is 20 years. The state Board of Education would have to approve borrowing and spending plans, as well as declare that diversion of the money wouldn’t hurt the quality of education in a district. Any district rated below “successful’ would not be allowed to borrow.
In return, the state guarantees that districts will keep getting the money for the duration of the debt, which helps borrowers pay a lower interest rate.
The new window for borrowing would open Oct. 1 and end in 2018.
Rep. Tom Weathersby, R-Florence, has supported the bill. But he says he worries some districts might get into financial straits by cutting into their state aid. Lawmakers have not fully funded the formula in recent years, and Gov. Phil Bryant has proposed a 2013 budget that funds MAEP at a level $330 million below what the formula specifies.
Weathersby, whose brother is Rankin County Superintendent Lynn Weathersby, said he’s also worried charter schools could drain enrollment and money in some districts that borrow.
“How does that district cope with losing those students?” he asked.
Weathersby said he doesn’t believe the bill is related to the failure of a $170 million bond issue last fall in Rankin County. Fewer than 40 percent of voters supported the proposal.
Moore, though, said that for growing districts, the provision would be a way to accommodate more students without having to pass a bond issue.
“This might keep some classrooms from being grossly overcrowded,” he said.
The bill is House Bill 776.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info