“Our county commissioners not only recognized (the need), they were willing to borrow the money and get it in our hands as quickly as possible so we could start on that,” said Superintendent Mike Murray. “I feel very encouraged.”
Leaks and system failures have been regular features of the school system’s budget discussions with the county for the last couple years — a broken water main under Smoky Mountain High School was leaking $5,000 of water per month as Murray spoke.
Coming to a head
Things have come to a head this year, with Murray telling commissioners he couldn’t afford to wait for the money to come gradually available. Things needed to be fixed now, he said, in January presenting a list of more than $12 million dollars’ worth of roof replacements, HVAC system renovations, water projects and athletic facilities.
“We have to keep roofs over our heads,” Murray said. “We can’t market the school system if things are falling down around us.”
Commissioners agreed with the need’s acuteness but asked Murray to back out the cost of new athletic facilities. Though the school system is in the midst of attempting to fund a $900,000 artificial turf football field with aid from a $200,000 NFL grant, commissioners decided to put a hold on funding for other items on the athletic facilities wish list, such as tennis courts, a baseball field and a new track at Smoky Mountain High School.
However, they have agreed to take out a loan for as much as $10 million to get the school system started on addressing the other needs as soon as possible.
“This money is to keep roofs from leaking on kids’ heads,” Commissioner Boyce Dietz said.
The list of critical needs will cost an estimated $8.6 million to address, which is under the $10 million per year borrowing limit the state imposes on counties for this type of contract. It’s hard to say exactly how much the project will end up costing, however.
“Who knows whether the estimates they’ve put together are high or low at this point in time, but we believe they’re reasonable estimates,” said County Manager Chuck Wooten.
All commissioners have done so far is pass a resolution stating that they intend to reimburse themselves, through a loan, for money they will begin spending immediately to address the school system’s capital needs. There’s no sense, Wooten said, in paying 3 percent interest on a loan when the bulk of the funds needed are sitting in the county’s fund balance. By passing the resolution, the county gave the school board permission to go ahead and start planning to address these needs with the understanding that the county will appropriate the money to do so when the funds are needed.
The work will likely be done in two phases, said Commission Chairman Brian McMahan, with the county borrowing whatever amount it needs to reimburse itself for funds expended by the end of the calendar year. At some point next year, the county would borrow a second time to pay itself back for the second batch of expenditures.
Questions about quickness
The decision to endorse the resolution was unanimous, but support among audience members was not.
“Incredible,” said Ron Mau, a councilmember for the Village of Forest Hills who will be running against Commissioner Vicki Greene in November. “How can the commissioners walk into the meeting, add an issue that potentially adds $10 million in debt to the county and add it to their agenda so there is no public notice and therefore no public comment?”
Commissioner meeting agendas and links to documents related to each item are typically posted online in the days leading up to each meeting, giving people a chance to see which issues will be discussed and review the materials beforehand. Sometimes, however, items are added last-minute at the beginning of the commissioner meeting. The debt issue was one of those items.
Commissioners did have a scheduled meeting with school system administrators two days before the meeting — after the initial agenda had been posted — when they learned what their list of critical needs looked like and of the broken water main under the high school.
“We got a very big water leak that just occurred,” McMahan said. “That’s $5,000 a month. That’s $60,000 of money in a year. Why wait? All we did was just approve a resolution that says that we intend to pay ourselves back when we borrow money.”
More votes will occur before any money is transferred or debt issued. Commissioners will have to approve a transfer from the county fund balance to the school system, a decision that will be published in advance and give people an opportunity to comment, McMahan said. That will likely happen at either the April 7 or April 21 meeting.
Opportunity for public comment will arise once more before commissioners actually take out any debt. Taking on debt requires a public hearing.
One project of many
But Mau also questions the need to pay for all the repairs by issuing debt. The county has a fund balance of more than $8 million above the minimum level the state requires counties keep for emergencies — why not draw from that to pay for the costs that sales tax revenue can’t cover, Mau asked.
“It does not appear there would be a need to borrow the entire $9 million,” Mau said.
That might well be the case, Wooten said, if school repairs were the only capital need on the county’s plate. But it’s not. Commissioners are working toward building a new animal shelter and a new or renovated health department. An expansion of the justice center is on tap and commissioners are hoping to further improve and expand community parks.
“It kind of comes down to a point where we have a lot more projects than we have available funds,” Wooten said. “If we’re only looking at schools, I agree we could pay for that on a pay-as-you-go basis.”
Commissioners plan to pay the debt off using sales tax revenue already earmarked for school spending. Of the $9.27 million the county receives annually from sales tax revenues, $2.65 million is earmarked for education spending. Of the $2.65 million, $799,000 is not already committed to another project. Borrowing the projected $8.6 million in renovations would mean paying $720,000 on the loan each year. If the county borrowed the $10 million maximum, it would pay $833,000 a year.
The board is hoping to ramp up education spending overall with a countywide sales tax increase. The quarter-cent hike would bring Jackson’s sales tax to 7 percent, with the estimated $1.1 million in additional annual revenue to go to K-12 and community college capital projects. The issue will be on the June 7 ballot as a referendum question.