I have never voted against a school tax in my life, but I will be voting against the debt service millage extension for the Little Rock School District.
This is a financial matter, and it needs to be analyzed in financial terms. Thus far, there has been almost no financial analysis. Most of the proponents talk in general terms of providing new facilities for students, which is laudable and something we would all endorse. However, the matter needs to be assessed from a financial point of view. It would do no student any good if the bonds are issued and the school district is so strapped financially that it cannot provide the educational services necessary for its students.
A vote for the measure is a vote to borrow the principal sum of $160 million at a time when the district faces great uncertainty. The borrowing adds about $8 million per year to the district's debt service through 2033, and then adds about $22 million through 2041. Six more payments of $3.8 million are due, with the proposed bonds being fully retired in 2047. The total cost of this borrowing is roughly $560 million, or an increase of more than $257 million over the district's current debt service obligations.
After this borrowing, the district would owe about $346 million in bonded debt. The additional cost of this debt, by itself, is dangerous because the district has no operating cushion.
Equally problematic is the almost certain loss of revenue the district will experience due to declining enrollment. Pulaski County now has over 9,300 charter school seats. eSTEM and LISA [Academy] were expanded by the State Board of Education on March 31, 2016. The district will lose about 1,250 students to these schools alone. The revenue impact will be a loss of over $8 million. The increased costs of the borrowing, combined with the revenue losses due to declining enrollment, put the future of the district at great risk. Nothing I have seen with respect to this proposal has discussed these realities. The Little Rock School District needs to do some detailed projections that take the enrollment losses into account.
Rather than borrow now, the better approach would be to make a realistic assessment of the size and character of the district over the course of the same 30 years of the proposed bond repayment. The district can borrow, if necessary, after the budget is balanced and enrollment is stabilized. In the shorter term, the same revenues that would be spent on annual interest and fees could be spent on facilities on a pay-as-you-go basis. This amount, plus the capital money the district already has or will receive, should be enough to build the Southwest Little Rock high school. Any shortage could be covered with second lien bonds.
At the present time there is much uncertainty, and taking on a long-term obligation without a repayment plan would be imprudent. The district does have some serious facilities needs, but new school buildings have not, and will not, solve the district's problems. Before the district takes on an enormous financial obligation, the State Board of Education, the commissioner of Education and the stakeholders/taxpayers need to develop a comprehensive and detailed long-term plan for educating our children. The commissioner supported the preparation of such a plan in late March of 2016. He then appointed a committee to prepare the plan. The committee has been meeting, but its plan has not been published. Therefore it is impossible to know if this millage extension is in line with the committee's ideas.
The reality is that charter schools are expanding, with more applications to be filed. This reality has not been discussed. The bond payments will be a priority. Whatever is left will be used to run the district. The educational program and the employees of the district would bear all of the cuts necessary to allow for the higher bond payments. This is not a prudent plan, or actually a plan of any kind.
Without a realistic enrollment projection, a pro forma operating budget in the out years, and the comprehensive plan for educating all students that the commissioner said was necessary, there is no way to make a fully informed decision about this matter.
Baker Kurrus is the former superintendent of the Little Rock School District. He was appointed by State Education Commissioner Johnny Key, but his contract was terminated after he warned about the expansion of charter schools. You can read his full statement on the Arkansas Blog.