You might remember in October, Concerned Citizens of Pickens County (spokesman Robin Nelson Miller) stated the school district was in economic crisis and taxes needed to be raised for capital needs and day to day operations. If that didn’t occur, teachers wouldn’t be given raises, capital needs wouldn’t be addressed and schools might have to be closed. That statement proved to be untrue, and I’m not surprised.
When CCPC makes statements that are out-there, mis-leading or untrue, I respond to them. It does the public no good to be mis-informed like that. I’ve challenged them to debates numerous times, hoping it would help get the right information out to the public on each of the issues, but they have refused. Hence there is this dynamic. They make a mis-leading or untrue statement, and I respond with the rest of the story or the actual figures and the public is left to figure it out.
Now, in the month of June, it is clear the school district was not, and is not in a financial crisis. Again, this shows their lack of understanding of how economics works and the financing of the school district.
Let’s recount my response as written in the Pickens County Courier in the fall of last year:
"I've studied finance my entire adult life and I ask what crisis? A financial crisis occurs when your revenue is here and your expenses are here and then sudddenly your revenue falls to here. All of a sudden you have all these expenditures, and you no longer have the revenue to pay for them.
That is not occurring with the school district. In fact, the school budget is in $500,000 surplus. Gasoline prices are falling, employment is rising and both are stimulating the economy so state and local revenue is growing. Plus we’ll receive an extra $500,000 in TIF money, so I’m optimistic about next year too."
See the video when I said this in November 2014.
Concerning the capital needs plan covering roof and HVAC replacements, computer refreshes and painting schedules, bonds were refinanced providing an extra $3.25 million a year for each of the next 20 years. This was no secret to a bond analyst like myself; this savings was out there. The bonds were issued in 2006 at 4.85%. Interest rates had fallen significantly with all the Federal Reserve QE’s, and the annual savings was going to be in the millions. That savings could and utimately were applied to capital needs.
Unbeknownst to CCPC we had sold the old band field on Pendleton Street in Easley for $325,000 and that could be and was applied to capital needs. CCPC countered, well you have no more property to sell. No. We have a $300,000 contract on the Highway 8 property in Pickens. By the way, it is my understanding someone has also bought the lot next door at the corner of LEC road and will be putting up apartments, so it will also bring in tax revenue for our schools for years to come. When I was chairman in 2011, the board decided to sell that property too. It pays to think like a business once in a while.
Additionally, the building program was winding up and there was $1.1 million in savings. You put all that together and nearly $5 million was added to capital needs projects pushing the district through the 2015-16 year.
In November the district put forward a set of priorities of building capital needs (HVAC, roofs, computer refreshes, repainting and repaving schedules), boosting classroom supplies and narrowing the teacher pay gap. The general fund budget is where we’d address classroom supplies and teacher pay.
I was wrong about how much TIF revenue would be added to the district annually. It wasn’t $500,000, but it turned out to be $660,000 annually. Why did I know this money was coming and CCPC didn’t? I was the chairman of the board when the TIF investigation started and had a good sense where it was going to end up and how much extra money it would bring in. (Click here). $450,000 of that new revenue was put toward classroom supplies.
Concerning the final priority, narrowing teacher pay, I was optimistic. You can read that in the letter I wrote: “… the school budget is in $500,000 surplus. Gasoline prices are falling, employment is rising and both are stimulating the economy so state and local revenue is growing. Plus we’ll receive an extra $500,000 in TIF money, so I’m optimistic about next year too.”
It was Economics 101. Lower gasoline prices stimulate economic growth and we were are already in an economic expansion, so the economy was going to get a good boost. Naturally state revenue is strong. Since first reading of the budget an additional $360,000 has come into the district and I believe another dose of extra revenue will come in to school districts around the state before the end of June. Local revenue is likely to surprise on the upside as well the next year.
As a result teachers will receive a step increase for 2015-16 and another one on top of that. The aim was to fund both of those extra pay raises over five years. Half of that problem will be solved in the first year.
Priorities set and lots of progress made on all of them without tax increases. This is never going to be enough for groups like the CCPC because no matter how much money comes in, there can always be more by raising tax rates. And if tax rates aren't raised, you just don't support education. You see, they measure how much you care about children or support education by how much you are willing to raise tax rates, not by how much is accomplished academically. Like I've said, years ago the administration/ board took steps to raise the graduation rate, and now the rate is 7 points higher, but yet that is not caring enough.
When you add together overzealousness and a lack of understanding, the result is often mis-information and a public that is led off course. There was no economic crisis. In fact, the economy and financial condition of the school district was improving. It is just that some didn’t see that was occurring.
Like every other district, we face financial challenges. And the economy could go into a recession in a year or two. Then we’ll have to tighten our belt like everyone else. However, in the here and now we are better off then most districts and addressing priorities at a healthy clip. Why? We made some permanent spending reductions (especially in non-classroom areas) in the 2010 to 2012 period to balance our budget. As a result, our budgets have been balanced or in surplus every year since then. A balanced budget is a great starting point because when new revenue comes it, it can be allocated to new priorities. That is not the case every where. Like I’ve said, Oconee is working on cutting $3 million from its budget. Greenville has raised taxes 7 of the last 8 years -- that is nothing to be proud of because it stifles business growth, hence investment and job creation in the long run. And in the end, one of the ultimate goals is to have jobs waiting for students who are graduating.