FOR YOUR INFORMATION: 2006 School Bond Referendum

On Nov. 7, 2006, Wake County voters will be asked to approve the sale of $970 million in General Obligation Bonds to support capital improvements for the Wake County Public School System.

The full Capital Improvement Plan (CIP), approved in May by the Wake County Board of Education, totals $1.056 billion. Of that amount, $675 million goes to build new schools, purchase land for future schools, and provide immediate student space through the use of mobile units and the conversion of schools to a multi-track year-round calendars. The remaining $380 million pays for renovations at existing schools, technology, and bringing schools up to compliance with environmental and Americans with Disabilities Act requirements.

There have been a number of controversies surrounding the CIP and the accompanying bond package, ranging from the concern over school conversions to year-round calendars to why a bond is needed to pay for these capital costs.

With such an important vote facing our community it is critical that Wake County citizens become informed about the issues. In this edition of Wake FYI, we take a closer look at the 2006 school bond referendum.

The Need for New Schools

• In the two decades between 1980 and 2000, the population of Wake County more than doubled, from 301,327 to 627,846.

• During the past 20 years, student enrollment in the Wake County Public School System (WCPSS) has grown at a similarly high rate, from 57,268 students in 1985 to 120,504 in 2005. The student population is expected to double again before 2025.

• The ten-day student enrollment count for WCPSS for the current school year was 127,767, meaning more than 7,000 new students came to WCPSS since last year.

• For more information on growth in Wake County and in WCPSS, please see the April 20, 2006, edition of Wake FYI.

• WCPSS’ capital budget, which pays for school construction and renovation projects, is funded primarily through the sale of bonds approved by Wake County voters. Since 1985, the school system’s proposed building plans have not been fully funded. A combination of reduced bond amounts and lack of voter support has led to more than a billion dollar difference between the amount requested and the amount provided for capital improvements.

• The Blue Ribbon Committee on the Future of Wake County issued its final report to the Wake County Commissioners in July 2006. The committee studied the future capital needs of the school system and made recommendations on both how to pay for those needs and how to reduce costs to make the most efficient use of taxpayer funds.

What Does the Bond Package Pay For?

• The bond package will provide funding for the 2007-09 Capital Improvement Plan (CIP) adopted this year by the Wake County Board of Education. A synopsis of the plan is shown below:

• You can review the entire 2007-09 Capital Improvement Plan online.

• What are Wake County voters being asked to approve in November?

  On Nov. 7, 2006, Wake County voters will be asked to approve the sale of $970 million in bonds. Combined with existing county funds, these bonds will pay for the $1.056 Capital Improvement Plan.

• Will Wake County property taxes increase as a result of the bond?

  Yes. Property taxes will increase by a total of 4.7 cents. This equals an additional $70.50 in property tax per year on a $150,000 home.

• Aren’t there other revenue sources than the property tax to pay for schools?

At this time there are no revenue sources other than the property tax available to Wake County Government to generate the level of funding needed. Many citizens believe the education lottery will pay for these expenses, but based on the formula used by the state, Wake County’s estimated annual revenue from the lottery is $9 million.

The suggestion of using impact fees or transfer taxes comes up frequently. The Wake County Government would need legislative approval to implement such a fee. Since 1985 the General Assembly has provided this authority only to around two dozen counties or cities in North Carolina.

Citizens who have lived in other parts of the country may be used to local boards of education having taxing authority. The Wake County Board of Education does not have any taxing authority and receives its funding (both operating and capital) from other governmental agencies, including the Wake County Board of Commissioners and the State of North Carolina.

A recently enacted state law opens the opportunity for school systems to create public-private partnerships to build schools. SB 2009 allows capital lease financing for public schools in North Carolina.

• Why can’t more charter schools be built to help with the large numbers of students?

  In North Carolina, charter schools must be authorized by the State Board of Education. State law currently limits the number of charter schools to 100. Wake County has 14 charter schools, the most of any county in the state. In the 2005-06 school year approximately 3,800 Wake County students attended charter schools (some of them outside of Wake County). A change in state law through the North Carolina General Assembly would be necessary to increase the cap beyond 100.

• What happens if the bond referendum fails?

  There is no way to know exactly what the result will be if the bond fails in November.
  The Wake County Board of Commissioners is required by law to provide adequate school facilities, so a new plan would need to be crafted should the bond fail. The plan could include other ways to pay for the Board of Education’s current CIP, or the two boards could work together to make modifications to components of the CIP. Possible options include:

  The use of Certificates of Participation (COPs): COPs are the same funding mechanism as a bond with two differences. First, they do not require voter approval. Second, the interest rate is typically one-half to one percent higher than General Obligation Bonds. For comparison, to issue $970 million in COPs as opposed to General Obligation Bonds would cost Wake County approximately $56 million more in interest.

  Increasing the number of multi-track year-round schools: For the 2007-08 school year, WCPSS will be converting 19 elementary schools and three middle schools to a multi-track year-round calendar to create additional space for students. Opponents of the conversion have stated that if the conversions proceed they will not support the bond. Should the bond referendum not pass, however, it is likely that additional schools will need to be converted to a year-round calendar to accommodate the influx of students to our system.

  Deferring renovations at existing schools: The decision could be made to fund only the building of new schools and delay the major renovations at the 13 WCPSS campuses included in the capital plan. (An additional 100 schools will receive smaller renovations in the form of new heating and air systems, roofs, or carpets.) Critics argue that deferring these renovations could result in great inequities in the quality of educational environments across the county and possibly shorten the life cycle of the buildings needing work, resulting in greater long-term costs.

• How do taxpayers know the money will be well spent?

  The Wake County Board of Commissioners and Board of Education created a Citizens' Facilities Advisory Committee to evaluate issues such as school capital program plans and construction management. The committee is made up of citizens with expertise in construction and finance.

• Can the bond money be spent on any other school expenses?

  No. The proceeds from the bond sales are earmarked for items in the capital plan and are kept in a restricted fund. In addition, the full $970 million in bonds will not be sold all at once. Bonds are sold periodically in amounts that coincide with phases of the building program.

• How long will this bond referendum cover the capital needs of schools?

  This bond referendum is not the final solution for Wake County. This package will fund the 2007-09 Capital Improvement Plan. Given the continued high growth the district is facing, Wake County citizens should be prepared for additional bond packages in the near future.

For More Information on the 2006 School Bond Referendum

• Wake County Board of Elections:
  Wake County citizens can learn more about registering to vote, polling locations, and see a sample ballot with the text of the bond referendum.

• WCPSS Blueprint for Excellence:
  This is an excellent resource for information on school growth, the Capital Improvement Plan, year-round schools and other topics important to the understanding of the bond referendum.

• Friends of Wake County:
  A coalition of individual citizens, community leaders and Wake County businesses who support the passage of the bond referendum.