Bond referendums were once the lone financing tool for school systems to build schools or improve existing ones, and if passed by voters, typically meant higher tax bills for homeowners.
The funding landscape changed for systems statewide with the advent of the education special purpose local option sales tax in the late 1990s.
But with more ambitious construction programs than in the past, the financing future for Gainesville and Hall County is something of a mixture as the districts approach school-related referendums on the March 24 ballot.
Basically, bond referendums pay upfront for projects — much like a home improvement loan for improvements — and are largely paid back with E-SPLOST revenues.
Estimates vary slightly between the school systems, but in $180 million of total collections in E-SPLOST VI over five years, Hall County would receive between $133 million and $136 million, Gainesville would get between $41 million and $43 million, and Buford, between $3.6 million and $4 million. Buford doesn’t have a bond referendum.
But funding scenarios are different between the Gainesville and Hall school districts.
Hall County Schools
Hall County is hoping to pass a $258 million bond referendum, with an estimated total repayment of $320 million over 20 years. The interest rate could be about 1.75% percent, “which is historically, incredibly low,” Superintendent Will Schofield said.
That’s about $16 million per year over 20 years.
Revenues from E-SPLOST, which, if approved by voters, would continue an additional penny per dollar on the sales tax, would cover about $10 million of bond repayments annually — assuming voters continue to pass E-SPLOST through the life on the bonds.
The remaining $6 million would come from a tax rate specifically for paying off the bonds — or a bond-reduction millage — that would be added to property tax bills.
Officials estimate that’s about an additional $100 per year on a $250,000 home, based on an initial 1 mill.
Schofield said, however, he’s hopeful the tax rate could be lessened by increases over the years in the property tax digest, rising E-SPLOST revenues and savings in closing three elementary schools as seven elementary school buildings are replaced with four.
The initial 1 mill could be reduced to 0.4 mills just through savings in closing the schools, Schofield estimates.
“We believe and have good reason to believe (the bond-reduction millage) would … get less and less as we go on,” he said. “It could very well be (there would be) years we need no debt-reduction millage.”
If E-SPLOST VI passes and the bond referendum fails, the system would have only collections from E-SPLOST to budget for improvements.
Schofield said in that case, he would “get up March 25 and come back at it until our fingers bleed doing everything we can to use duct tape and continue to make the facilities we have work.”
“I don’t make any bones about it,” he added. “Either me or someone else will be coming back again asking for … bonds again. With the need that we have and the age of the facilities, it’s like the old Fram oil filter commercial — ‘You can pay me now or pay me later.’”
If the bond referendum passes and E-SPLOST fails, “we would thoughtfully consider whether to sell a portion of the bonds or none at all,” Schofield said.
“The bond referendum does not require us to sell any bonds, and it does not require us to sell the entire $258 million of bonds.”
According to state law, if voters reject E-SPLOST, school systems would have to wait one year before asking voters to pass another one. The bond referendum doesn’t have a waiting period.
Gainesville City Schools
Gainesville is projecting E-SPLOST revenues to cover the 20-year life of $83 million in bonds to pay for school improvements, including a new middle school.
The total repayment is estimated at $108 million.
With the proposed E-SPLOST expected to bring in between $41 million and $43 million, passage of additional E-SPLOSTs would be needed to fully pay off the bonds.
“We do know other needs will arise (in ensuing years),” Superintendent Jeremy Williams said.
But several city elementary schools are new, and “we still have room for growth in all of those schools,” he said. “Conservatively, we’re looking at 10 to 15 years to see if we’ve outpaced our projected growth.”
Like Hall, Gainesville has to consider failure options.
If E-SPLOST passes and the bonds fail, “projects will be completed as funds become available, or pay as you go,” Williams said.
If the bond referendum passes and E-SPLOST fails, projects would be funded through bond-reduction tax rate, he added.
And like Schofield, “we would likely ask the community at a future date (for voter approval) … if either one fails or if they both fail,” Williams said.