State Education Commissioner Johnny Key
JOHNNY KEY: Approves $90 million in Little Rock School District borrowing.
told me this evening that, acting as the Little Rock School District school board, he'd approved a request by Superintendent Michael Poore
to move forward to raise $90 million through second-lien bonds to build the proposed new high school in Southwest Little Rock. and pay for other facility improvements including roof and heat/air repairs.
Second-lien bonds are a type of financing to which tax revenues are not pledged by voters.
May 9, Little Rock School District voters
overwhelmingly defeated a proposal to extend 12.4 mills
in debt for 14 years to allow a $200 million bond sale to pay for various district improvements and build the high school.
Key said he'd consulted with state Board of Education member Jay Barth
and "he agreed that we should move forward." He notified other state Board members this afternoon. Barth has been one of the few voices on the board seeking to encourage the board to find a way to end state control of the district and return it to local control with an elected school board. Since it was taken over two years ago by the state for low test scores at a handful of its 48 schools, Key has served as school
Key said he'd talked with Poore several times about the second lien bond option, both before and after the election. Indeed, Baker Kurrus
, fired by Key as superintendent for his opposition to charter school growth in Little Rock, had said second-lien bonds and budget reductions were a means short of authorizing a new bond issue and tax extension to build the high school. It was Kurrus' position that not enough was known about the district's future size and condition to add millions more in debt when enrollment has been dropping from charter school erosion.
I learned of the action from Dr. Anika Whitfield,
an outspoken advocate of a return to local control. She sees the decision to issue new debt as a repudiation of the vote by voters May 9. It is true, however, that officials said they were committed to building the Southwest high school (land has already been purchased) regardless of the election outcome.
Through Key, I learned of the meeting of the "Little Rock School Board" at 5:30 p.m. yesterday at which the action was approved by the "board
" (Key). I'm not aware that a press notice was issued of the meeting. The state Board of Education also must approve the borrowing .
It would not be able to do so until August.
A legal notice of the bonds will be issued this weekend in the newspaper and if no objections are filed with the county clerk within 14 days, the clerk will issue a certificate to that effect.
The bonds would be repaid with surplus debt millage. That's currently some $27 million in excess of the amount necessary for current bond payments, but it would come at the expense of operational funds, which likely means some budget cuts somewhere. I've been unable to reach Poore to discuss these details. I also want to ask him about why this option wasn't pursued originally, rather than a bond extension by which voters would have been approving in advance hundreds of millions in taxes that otherwise would expire.
Stephens Inc. would be the financial adviser in return for a percentage of the bond issue and the Friday law firm would be legal counsel. The bond issue would also cost $2 million as a fee for the underwriter.
The resolution adopted Thursday anticipates a 16-year payout of the bonds at an anticipated interest of 2.89 percent. The bonds could be called — or bondholders repaid in full — after five years. The district carries $178 million in debt currently with revenue of about $378 million.
Here's the complete bond proposal.