What's

the best way to fund new public school

construction in Fayette County? There's no

perfect solution or quick financial fix, given

the options offered by Jim Stephens, finance

director for the county school system, and Claude

Paquin, a Fayetteville tax attorney.

The

two men presented the details of various

financial plans Thursday evening during a meeting

of the Board of Education's Facilities Advisory

and Action Committees.

Stephens

outlined how school districts are funded under

the Quality Basic Education (QBE) Act in Georgia

and what impact House Bill 1187, the Governor's

Education Reform Act, will have on local

financing.

There

are three sources of funding for the school

district's maintenance and operation budget,

according to Stephens. Local sources make up

44.01 percent of the pie, coming from local ad

valorem taxes, other local taxes and fees such as

real estate transfer tax, railroad equipment tax,

tuition generated by summer school programs

evening school and the community school, interest

earnings and miscellaneous local receipts.

The

big slice, 54.17 percent, comes from the state in

the form of the QBE allotment, state grants to

include lottery grants for technology equipment

and state preschool and other state grants such

as those for outdoor classrooms and pay for

performance grants.

Federal

grants under various "title" programs,

primarily for disadvantaged students, fill out

the smallest portion of only 1.82 percent.

QBE

funding covers 16 direct instructional programs,

four separately identified programs such as staff

development programs, 10 categorical grants,

local fair share and the educational equalization

funding grant, Stephens said. Audit tests,

explained Stephens, specifies the percentage of

money that must be spent in any given area.

The

key items impacted by the education reform act

require that local five mills or the local fair

share remains the same. Increases every year must

be based upon tax digest growth. It also requires

that the Education Equalization Funding Grant be

reduced each year by 25 percent until it hits

zero. In fiscal year 2000, the amount is reduced

by $2,860,020 with the grant's demise coming in

2004.

Stephens

listed four different financing methods for new

construction which included state construction

grants, special local option sales taxes

(SPLOST), general obligation bond issues and

other options which included certificates of

participation (COPS) and the public facilities

authority (PFA) "Both must be paid from

operation and maintenance appropriations,"

Stephens emphasized. "The Fayette County

Board of Education uses 19.84 mills property tax

for operations and maintenance. There is no more

taxing authority available to support either of

these options." Both of the options also

require that the title be held by the lessor,

Stephens added.

The

most viable still appear to be the bond or SPLOST

route for new school construction. Stephens

refrained from taking a position on one method

over the other, simply citing the advantages and

disadvantages of each.

Points

cited for SPLOST are:

A very successful

financing option throughout Georgia.

Tax is limited to a

maximum of five years duration or until the total

amount in the referendum is collected.

Can be used as a

pay-as-you go by program or can be accelerated by

incorporating other financing methods.

Taxes all county

residents and others who may do business in

Fayette County.

Avoids long-term

debt and interest payments.

Can be continued

beyond the five-year life only if the voter's

recognize the need and approve another SPLOST

referendum.

Generates large sum

of money over a short span of time.

Sales taxes are no

deductible from income taxes.

Does not accrue

benefits of inflation that may be seen under a

bond issue if inflation occurs over the pay down

period.

Stephen's

take on a general obligation bond issue states:

It provides

immediately available funds for construction

projects.

May allow earning

of excess interest during construction period

within allowable ranges under arbitrage rules.

Requires imposition

of property taxes to meet debt service costs over

the life of the outstanding issue.

Matches cost with

the use of the facility.

Obtains best

interest rates available through issuance of tax

free bonds.

Obtains best

interest rates available through issuance of

tax-free bonds.

Obtains 22 percent

of proceeds from commercial and industrial

segment of the community.

Exempts elderly and

certain other property holders from bond taxes.

Existing homestead

exemption and governor's new property tax relief

exemption cannot be used to reduce the property

taxes of the typical homeowner.

Incurs long term

debt typically for 20 to 30 years.

Is paid solely by

county residents and other property owners.

Last

September, SPLOST referendum was turned down by

the county voters. The facilities and advisory

group is currently seeking the best option to

address growth in the schools and is expected to

come up with a recommendation in the weeks to

come.

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