In the county manager’s proposed 2021-2022 fiscal year budget, the county showed its hand as to how it plans to borrow $300 million for school system capital improvements that county voters approved in the November election last year.
The first haul of money – $120 million – will be borrowed in the fall of this year, while the date for the remainder of the funds will depend on circumstances.
The question of when voter-approved school bond funds are sold has, in the past, been a matter of lively (read: heated) debate between the Guilford County Board of Commissioners and the Guilford County Board of Education. As a rule, school officials want the county to borrow as much money as soon as humanly possible – however, the county like’s to borrow the money on an as-needed basis so the county doesn’t have to pay interest on the bonds until that money is ready to be put to use.
County Manager Mike Halford unveiled his proposed 2021-2022 budget this week and it included a timeline and other details regarding the coming school bond sales.
It’s important to note that the money the county spends paying off issued school bonds is in addition to the $216 million the county is proposed to give the schools in the coming budget to help pay for things like teacher pay increases, utility bills, hiring new teacher assistants and school building maintenance and supply. This year, as every year in recent history, the county will spend just under half of its budget on the schools.
Halford’s new budget states, “In November 2020, Guilford County voters approved $300 million in School Bonds to renovate existing and build new school facilities across the county. In April 2021, the Board of Commissioners approved $300 million in capital project ordinances for 11 school projects, which allows the Board of Education to proceed with the implementation of its building plan.”
The budget lays out a plan to sell $120 million of bonds in the fall of this year and sell the remaining $180 million either in late 2022 or early 2023.
Halford said the exact timing of that second round of bond sales will depend on school construction progress.
It’s interesting to note that, when county voters approved over $600 million in school bond money in May 2008, at that time school officials were demanding that the county borrow a great deal of the money immediately. School board members especially wanted to board to borrow money to replace Eastern Guilford High School – a school that had burned to the ground in November 2006. The school board even attempted to tell the commissioners which financial instruments to employ to borrow that money. One meeting in the Blue Room of the Old Guilford County Court House at that time got quite combative.
In the end, however, the commissioners borrowed the money at their own pace and it turned out that worked out well. Former Guilford County Commissioner Billy Yow commented afterward about, how, in hindsight, it was clear that the county did the right thing by borrowing the funds at the rate they were needed rather than all at once. He pointed out that the project got paid for, with no hold-ups, yet the county didn’t have to “warehouse money” for years.
It turned out that school officials couldn’t spend that construction money as fast as they thought they could, and, even ten years later, the county still had money on hand from the 2008 school bond referendum.
In the past, school officials have greatly overestimated the speed at which they can spend money on construction. In the post-pandemic world, where construction crews are in high demand, that could mean more delays than usual.
Paying off the school bond debt for the new school bonds will cost county taxpayers $1.7 million in fiscal year 2021-22.
