The Joint Capital / Facilities Committee – a body consisting of members of the Guilford County Board of Commissioners and the Guilford County Board of Education – has called a special meeting for Wednesday, July 30 at 4 p.m. in the Guilford County Schools Administrative Offices’ Board Room at 712 N. Eugene St. in Greensboro.
The county and the schools have a real challenge on their hands because, despite voters approving a whopping $2 billion in school bond debt in recent years, even that massive funding effort is leaving a lot of planned school capital projects unfunded due to inflation and cost overruns.
It’s very similar to what happened after 2008, the year county voters approved over $600 million in school bonds, and then, in the following years, became angry when many of the projects promised by school officials never got done.
The most recent $1.7 billion (billion with a “b”) bond referendum was gigantic and was supposed to cover most of the school system’s capital needs. The NC Local Government Commission – a State of North Carolina finance oversight commission meant to help keep counties credit worthy – almost never even bats an eye at bond referendums by large counties in the state; however, the commission felt a need to hold a special meeting in Raleigh on the county’s $1.7 billion school bond referendum.
Its passage by voters three years ago meant Guilford County would be taking on $2 billion in school bond referendums within a matter of four years, and the price tag on that amount with interest is estimated to come in well north of $3 billion.
Despite that massive infusion of funding for school construction, the money is, as happened just over a decade and a half ago, predicted to fall well short of the planned purposes.
Chairman of the Board of Commissioners Skip Alston is already talking openly about the need for another giant school bond referendum in the not too distant future. He has suggested that the referendum needs to be $1 billion or more.
The purpose of the July 30 meeting is for the joint committee to receive updates on the school bond program and capital funding plan and see where to go from here.
The payments on that $3 billion plus just started and already it is proving to be a major strain on the county’s budgets, which is why county officials are looking for some school money from other sources.
Chairman of the Guilford County Board of Commissioners Skip Alston was last year at this time pushing to have the cities and towns in Guilford County put up money for the public school system; however, that effort didn’t go very well and there are no new school revenue streams from those sources.
The board is also putting pressure on the NC General Assembly for the state need to pony up more.
County and school system leaders blame the shortfall largely on inflation that has shot up dramatically since the $2 billion was approved.
Higher interest rates than anticipated also means that the cost of paying off the debt has increased to higher than originally estimated.
Guilford County voters approved a $300 million bond referendum in 2020 and another $1.7 billion in 2022 that was meant to address the school system’s capital needs well into the future.
In the 2025-2026 fiscal budget, county budget officials laid out the current funding strategy to cover the $2 billion in debt payments in a way that doesn’t cause massive spikes in the property tax rate in coming years or create the need to cut into core county services. The plan, which was in large part created by the Joint School Capital Facilities Committee that’s meeting on Wednesday, uses a “pay-as-you-go” approach that combines annual savings and detailed debt structuring to help avoid overwhelming repayment peaks in the years in the decade of the 2030s.
The commissioners are also hoping voters will finally approve a new sales tax hike that will be on next year’s ballot in an attempt to raise more money to fund the schools.
Beginning in 2023, the Board of Commissioners started setting aside $50 million per year for future bond repayments. That amount is supposed to increase annually by 2 percent – reaching about $53 million in 2025 – with the goal of building a reserve ahead of the debt service spikes that are expected to peak between 2031 and 2038. The goal is to soften those peaks by using the saved funds to prepay or offset high-cost years.
Of course, in the new budget adopted in mid-June, the county commissioners already started raiding that $50 million they previously agreed to put in to fund payback contributions. They know that, in the new revaluation, property values which will go into effect in January, values are expected to be up an average of almost 50 percent over current assessed values – and that will lead to a tax revenue windfall just as happened with the 2022 revaluation of all property in the county.
A bar graph included in the county’s new budget shows how the mix of existing debt service and proposed debt service will shift over time: From 2023 to 2030, Guilford County leaders hope to build savings for future repayments while paying back the smaller payments that grow over time and that peak in the next decade.
From 2031 to 2038, Guilford County plans to tap those savings to help pay for the peak years. Then, from 2039 through 2050, the county will regain financial capacity to handle future needs.
The joint committee’s five guiding principles include: addressing current and future school needs in a timely way; protecting the county’s financial stability; designing a funding model that fits within existing revenue sources; reducing the overall cost of infrastructure through conservative planning; and limiting property tax volatility.
In other words, they’re trying to avoid a worst-case scenario where debt service crowds out everything else in the county’s budget. So far the only answer has been to put the burden on Guilford County property owners.
County officials say the long-range plan will help preserve flexibility for future school construction and renovations – without compromising other essential services like law enforcement, health, and human services.
Anyone interested in tracking how all that school bond money is being spent can visit the county’s School Bond Dashboard at: https://www.guilfordcountync.gov/government/countywide-programs-and-initiatives/school-bonds.
Ah, we have another “shortfall”. Demspeak for, “we have to have more revenue”!
Agreed! Most taxation is theft under the threat of taking our property or our freedom. Somewhere around 85% of government and its programs are a waste. Our ancestors should have been hanged for allowing it to get this bad.
What happened to the lottery money? Wasn’t that supposed to go toward education?
Everybody assume the position. Here it comes again
i had single serve packets of k-y jelly printed with my plumbing biz contact info – for hand-out advertising.
this is what happens when the school system doesn’t teach financial management in high school.
Financial management should start at home well before high school. I learned that by 8 years old taking back soda bottles for 2 cent refund.
This article should have noted that the Joint Building Committee was originally set up as a bipartisan committee because of concerns over the dollar amount of the bonds. The last Republican School Board member was Pat Tillman. Tillman was removed from the committee when he was elected county commissioner and gave up his school board seat. Appointments are done by the chair Skip Alston for the county commissioners and Deena Hayes for the school board positions. There are now 5 School board members and 4 County Commissioners. Each is a registered Democrat. THIS IS NOT BIPARTISAN.
The current financial situation began as a result of the leadership of Sharon Contreras, former School Superintendent. Mike Halford, former County Manager, was our one glimmer of hope for financial accountability for the bond monies. We should all have new concerns as we move forward with a new County Manager.
with ‘majority’ rule, the majority is ‘average’ ability @ top of the ‘bell curve’ not the ‘above average’ outliers. consider telling voters: i can’t ‘represent’ you because i am not stupid .
Your current financial situation didn’t begin with Contreras. As awful as she was, she only added to the problem with the latest round of bonds, bussing kids to the polls and coaching them to vote blue, and using county resources to support Jill & Joe Biden during a big event at the coliseum. It didn’t begin with Mo Green either. GCS finances have been forked for more than two full decades. NCDPI & the USDOE have both fueled this mess under Democrats and Republicans alike. They all need to go!
the challenge to fund edu began when tax dollars bought buses rather than infrastructure & competitive salaries. the bigger hidden damage was wasting students time for the ‘mandated’ travel to & from. parents with agency ($) put their kids in private schools with PROVEN quality.