Paying Down $13 Million In Debt — Part I
By Alex Saitta
October 24, 2012
At the July 25 meeting, the school board voted to set aside $13 million in surplus interest from the building program to pay down some of the building debt.
Some questioned the legality of the motion and its passage. It was questioned in all sorts of ways relating to Roberts Rules of Order; was the item given proper public notice; was it on the published agenda and they said the motion required 3 readings by law. I said at the time all those claims were untrue and those who made the accusation later realized that was the case.
Public Notice Given:
In April I examined the building plan’s financial statements, and it appeared to me the building program had some extra revenue. At the May board meeting, I asked the administration to report to the board in July if there was extra money and how much?
The item was placed on the agenda of the July meeting. This line is taken from the meeting agenda: “A. Building Program Investment Earnings Update- Mr. Clark Webb.”
The agenda was distributed to board members 6 days before the meeting, along with the entire board packet that contained a memo detailing all the figures requested and more. Both the agenda and board packet containing this memo was emailed to more than 20 media outlets in and outside of Pickens County, and this was all placed on the district website for the public to view before the meeting. The memo detailed the following:
Upon the issuance of the above Bonds, a deposit of $315,003,226.12 was placed into the project fund held by the Trustee, Wells Fargo Bank. The proceeds were invested in at an interest of 4.83%.
As of the April 30, 2012, interest earned is $55,779,186.37. Of this amount, $42,000,000.00 has already been allocated to projects, leaving an unused balance of $13,779,186.37.
Pursuant to the governing bond documents, any unused balances are eligible to be spent on additional authorized projects or the early retirement of principal.
Robert’s Rules Of Order:
That report with those options was not only given to the board in writing, but discussed verbally at the July meeting as well.
The claim this item was not on the agenda was untrue. When this item on the agenda was reached at the meeting, we read the information and it was discussed by the administration. I then made a motion to use the surplus funds for payment against the building loan. The issue was debated, voted on and passed. In sum, a report was given and a board action was taken. That is one of the ways Roberts Rules of Order functions.
Under Act 152, three readings are required when the district spends a significant amount of money from the general fund.
The $13 million is sitting in a school district’s building account. The people own the school district and hence own the $13 million. If that money is not spent on new building projects and the people keep it, that is not an expenditure. Three readings were not required.
In July if the board had decided to spend the $13 million on more buildings, that would have been an expenditure, true, but since the money is not coming out of the general fund, it would not have required 3 readings. Such building expenditures never require 3 readings.
For example, early in the year the board approved $13.55 million to renovate the old Easley High School. That only had one reading, as well as all spending on the building program. Again, that money is not being spent from the general fund so the 3 reading rule doesn’t apply.
Act 152 also states 3 readings are required when money is borrowed. In this case, money was not being borrowed. The opposite was occurring — money that is owed was being paid back. Three readings was not required.
Mr. Jim Shelton said in the Pickens County Courier there was no time to evaluate the building needs out there… This is no different than the Greenville Plan.”
His notion this was like the Greenville Plan is untrue. The Greenville Plan borrowed $336 million, and did an end run around the voters of this county who voted “No” to so much borrowing in a referendum the year before.
This vote didn’t borrow money, instead, it set aside $13 million to be returned to taxpayers by paying down debt. That’s opposite of the Greenville Plan.
Plus it was a simple act — a motion and a vote, not an elaborate scheme concocted by a misguided superintendent and slick lawyers. In 2005 a $197 bond million referendum was defeated nearly 2 to 1. The board then hired a slick attorney, created a dummy corporation, had it borrow $336 million and it circumvented the constitution and trampled on the voters of this county that said “No” to all that debt.
This vote set aside $13 million to be given back to taxpayers by paying down debt. Simple. Not an elaborate scheme.
I don’t see the similarity to the Greenville Plan.
Some are saying why return the money if the district still has building needs? Preceding the vote, taxpayers had already done more than their fair share concerning buildings in this county. $374 million had been spent on buildings. That is equivalent to building 37 new Easley libraries. I say, the district should have done a better job of managing the money they were given.
When I drive by a new school that spent $25,000 for an LED sign that flashes, “Have a great summer” or walk into a new high school and see six 50” TV’s in the lobby playing Fox News and the weather channel, I know the district was given more than enough money to meet its building needs.
When I see Greenville built 12 new high schools and not one is on more than 75 acres, and our district “needed” 150 acre tracks, I see the excess.
When I think back at how the district bought 20+ acres across from Daniel High for $1.4 million, and never thought to ask SCDOT if it would be able to use it, all the wasteful decisions come back to me.
Why I Made The Motion:
A few reasons.
Believe it or not the debt level of the school district is still growing. Looking at the latest financial audits, the debt level in 2010 it was $348.3 million. In 2011 it was $350.1 million. In 2012 it is $352.7 million. If the district has extra money, it should not be spent on expanding the building program, but instead, used to pay down some of this staggering debt.
When this extra $13 million was discovered, the NEXT meeting the administration came forward with a laundry list of more building "needs". I've been on this board long enough, since the beginning of this building program, to know where this was going. Soon trustees would be pushing to spend it on more projects, growing the building program again.
I made the motion to set aside the $13 million to later be used to pay down debt.
After Jim Shelton was questioning the legality of the vote, I went further warning the public in a letter to the editor on the issue: "This $13 million dangling out there is too appetizing to Mr. Shelton, who apparently wants to grow the building program for the eighth time, and spend your money the way he wants."
Less than 3 months later Mr. Shelton made a motion to allocate $3.6 million of the $13 million that was set aside for debt repayment, to instead be spent on more building items. It passed 3 to 2, with Shelton, Cooper and Edwards voting in favor. (I was not able to attend that meeting because I was in the emergency room that morning.) This is the 8th time the building program has been grown and its total cost is now $377.8 million.
When the government gets your money, it will not want to give it back to you. Politicians love to spend your money on things they want to buy or believe are needed. How much debt they put the public in is secondary to them. If you don’t put a limit on them, they’ll bankrupt the county, state or country. If someone comes along and wants to limit the amount they are spending or borrowing, curtail the public debt load, or give excess revenue back to the taxpayer, those on the left will oppose them any way they can — beit legally or through the political process.