Paying Down $13 Million In Debt ó Part II 
By Alex Saitta 
December 9, 2012 
 
 
 
Introduction: 
The school district raised $354 million when it issued the building program bonds in 2006. That money was put in the bank. It was anticipated $42 million would be earned in interest over the life of the program, and that $42 million was budgeted to be spent on buildings, furniture and equipment. Because the building program fell behind schedule by 2 years, expenditures from the bank account were slow, so more interest was earned, $55 million in total.  
 
In May I had noticed this, and asked the administration to report to the board in July the amount of extra interest. When the district presented there was $13 million in more interest, unrequested, the district also presented a new list of building needs, totaling $10 million.  
 
I have sat on the school board since the idea of a county wide building program was conceived.  I could tell where this was heading (see the money, spend the money, grow the building program yet again), so I made a motion to set aside the $13 million to later be used to retire some of the bond debt. 
 
Click here for Part I which explains all of that and more.  
 
What Happened on October 15th: 
As I mentioned, at the July meeting the administration said there was $13 million in extra building interest money, and it also presented a list of additional building needs. The board voted to not spend that money, but set it aside for payment of debt.  
 
To address the districtís list of new needs, we scheduled a meeting on Monday, October 15th
 
The 2012-13 operating budget generated a $1.3 million surplus. The hope was to use that money to get started on some of those new building needs.  
 
The morning of October 15, I was in the emergency room with a pinched nerve/ bad back, and given medication later in the day, so I couldnít drive. I was out of it. The administration presented their long-term needs, and Shelton, Edwards and Cooper got together and voted to spend $3.6 million of that $13 million of money allocated to pay down debt. It passed 3 to 2, with Gillespie and Trotter opposed. The $3.6 million was spent on a replacement to Edwards Middle Schoolís roof (which should have been done in the renovation) and planned Poly-Board upgrades for the renovated/ new elementary schools.  
 
See the video above.  
 
No Surprise To Me: 
As I said in Part I of this write-up, I believe some of the members of the administration and some board members had their eyes on spending this extra $13 million once it was discovered. After Jim Shelton objected to the vote to use the $13 million to pay down debt on legal grounds, I warned about this in an August letter to the editor: "This $13 million dangling out there is too appetizing to Mr. Shelton, who apparently wants to grow the building program for the eighth timeÖ" 
 
Less than 3 months later this occurred and Shelton made the motion to do it. I donít believe Shelton, Edwards nor Cooper support the blight of taxpayers in terms of all the debt this building program has buried them under. Before the Greenville Plan, the debt obligation (principal and interest) of the district was $38 million. After the Greenville Plan was passed, the debt obligation was pushed up to more than $600 million.   
 
An Unaffordable Expenditure: 
About four years ago the district bought Pro-Boards for all classrooms at a cost of $7 million. Those Pro-Boards needed to be refreshed.  
 
In 2010, the board voted to borrow more money, and spent $4.9 million for Poly-Boards for the secondary schools. As I mentioned above, $3.6 million was spent on Oct 15th -- $3.1 million of that was spent for new Poly Boards in the elementary schools. Adding the $4.9 and the $3.1 million, means $8 million was spent on the Poly-Board upgrades at all schools.  
 
My question is what will the district do in four years when the Poly Boards need replacement?  
 
Public Stewardship Of Trustees: 
The building program at this point is $377.8 million. It is equivalent to building 37 Easley libraries. It has been grown 8 times since it was first put on the drawing board.   
 
If any of the board members who had a hand in passing and growing this building program, were building a home and the cost was turning out to be twice of what they first talked about, none of them would be throwing more money at the builder. Thatís the flaw in government. Too many elected officials spend your money like it is your money, and not theirs.  
 
Where is the public stewardship of our school board trustees? If you are not resisting even more building, furniture or equipment spending at this point, I wonder, are you doing your job as a public official, charged with watching over the public till? Anyone can open the drawer and hand out other peopleís money. There is no talent in that.   
 
Looking ahead the district will not have the extra revenue to cover the four year/ $8 million refresh of the Poly-Boards, so the board will either have to borrow more money or choose a less costly alternative. Simply put, the four year refresh cycle is too costly and that should have been dealt with now.  
 
There must be a lot of technology choices between $8 million worth of Poly-Boards and 59 cent slide rulers. I would have asked the district to sell the extra Daniel High land it bought for $1.4 million, but never used. Maybe less boards is an alternative. Frankly some of the teachers donít use them, and many underutilize them.   
 
Such public stewardship was not exercised in the decision to upgrade the Pro-Boards. In 2010 the school board  just borrowed $4.9 million and handed it over. On October 15th when I was out, the board took $3.1 million of the money allocated to pay down debt and handed it over and it was spent.  
 
Running Out Of Money: 
The building program didnít have enough money for the planned Poly-Board upgrades or the roof, because the program is running out of money. Even hundreds of millions of dollars runs out sooner or later, especially when tens of millions was wasted.  
 
The district borrows each bond payment. That will cost $4 million in bond issuance feeds over the 25 years financing plan and $5 million in extra interest charges.  The district spent $1.4 million on land across from Daniel High, on the other side of Highway 133, that wasnít used. The district spent who knows what on statewide tours of high schools and flew board members and administra tors to nine states to look at state of the art high school designs. Why does Pickens High or any high school need six 50 inch TV monitors in its lobby, showing the weather channel and Fox News? Plans were drawn, redrawn and drawn again, puffing up the $25 million of architectural fees. The district probably bought half a million worth of LED signs for schools, which flash the date and time or announcements that could have been placed on the schools website at no additional cost.  
 
Two Different Approaches To The Money Shortage: 
At the October 15th school board meeting, the administration gave the board a list of needs over the next few years. While I questioned the administration timing of the presentation of this new list of building needs, I credit it for identifying long-term needs and associated costs. That is a necessary first step. However, the thinking needs to go beyond that. Next revenue should be forecasted or potential revenue uncovered. Likely the revenue would be short of those costs. This should trigger a process of thinking of innovative ways or alternatives to bring down the cost of things like the Pro-Board refreshes.  
 
It appears this was not the administrationís chain of thought. Why? Having observed scores of decisions like this one, it is my feeling most district administrators do not think that way. Their first thought is we have this need, give us the money. And frankly, this is how it has worked. The past three decades the economy was strong and the board had the money and just handed it over to the administration. And if the board didnít have the money, it would just borrow the money or raise taxes to get it. As a result, the administration didnít grow a strong set of financial management skills. It never needed to.     
 
After five years of tough economic times, and the public kicking off most of the board members with a proclivity to just spend more, borrow more and tax more, this school board often responds with, we donít have the money for all of that and we arenít going to borrow more or raise taxes again to get it. As a result, the administration is learning how to better manage their budgets ó get more out of every dollar. Administrators are starting to think of better and less costly alternatives even before it comes to the point of coming to the board and asking for more money.  
 
The board is split on which approach is best. Some board members subscribe to this conservative approach ó there are a vast amount of needs, there isnít enough money for all of them, so challenge the administration to set priorities, come up with more efficient solutions or less expensive alternatives, along the way strengthening the administrationís money management skills.  
 
Others on the board are still clinging on to the old liberal approach ó there is a want or need, get the money by running down savings, borrowing even more or raising taxes again, and then spending the money.   
 
It is two vastly different approaches to dealing with a shortage of money, that you see clashing from time to time on the school board. In the end, I believe the conservative approach will win out because there isnít enough revenue growth to fund over-spending, over-taxing and over-borrowing. As a result, a higher percentage of money will make it to the classroom, there will be less waste and excessive spending.  
 
Grows The Building Program: 
Iím sure some are going to say this $3.6 million of additional expenditures voted on October 15th did not grow the building program. I disagree. 
 
One, the source of the funds is from the bonds issued from the building program. Those bond proceeds were put in the bank and they earned more interest than expected. This money did not come from the general fund or special revenue account, but the building fund.  
 
Two, the building program planned to build new buildings, renovate buildings, take care of pressing furniture needs and upgrade computers in those buildings. Replacing the Pro-Boards with Poly-Boards at the elementary schools was part of the technology leg of the building program. I was told the Edwards Middle roof was 15 years old. When the engineers surveyed the school before the renovation, they said it was fine, but as the renovation finished up, that assessment changed and the roof was slated for replacement.  Iím not exactly sure what happened there.  
 
For these reasons, I believe this $3.6 million in expenditures will be accounted for under the building program.  
 
 
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