Wake County school leaders identified more than $2 billion needed for in school construction over the next seven years on Wednesday, but some school board members are concerned about getting enough money to meet the system’s immediate needs.
The Wake County Board of Commissioners is looking at borrowing money without voter approval to pay for new school projects over the next two years rather than placing a school construction bond referendum on the November ballot.
Commissioners and county staff said Wednesday they want to switch to a new long-term funding model for capital projects that will provide more predictability and stability. School board members like the concept but want more details, particularly on whether they’ll get enough money for the next two years.
“I understand why we may not be able to have a referendum for schools this year until 2018,” said school board member Susan Evans. “I’m just nervous whether that excess debt capacity is enough to carry us to that point.”
On Wednesday, commissioners and school board members held the first of a series of joint meetings to determine the size of the next school building program and how it will be funded. The county commissioners are responsible for providing funding for school construction projects.
Historically, school building programs have been funded by seeking voter approval to issue general-obligation bonds that are backed by the county’s taxing authority.
Instead, county staff are assuming there won’t be a school bond referendum this year. Instead, they want commissioners to issue limited-obligation bonds, which are backed by the assets for which the money is being borrowed and don’t require voter approval. Interest rates tend to be higher for limited-obligation bonds.
Commissioners denied, however, that the move away from a school bond referendum is meant to protect the $2.3 billion Wake Transit Plan, which would add trains and buses in a way that could quadruple transit ridership in Wake County by 2027.
“It’s not either transit or schools,” said Commissioner Jessica Holmes.
If commissioners skip a school bond referendum this year, state law would prevent them from putting it on the ballot until 2018.
Under the new proposed model, the county would use a mixture of limited-obligation bonds and general obligation bonds to pay for all the county’s capital needs. Commissioner Caroline Sullivan said it would let voters know that there is a long-term plan for financing projects and reduce cases where people might not support a bond referendum unless their school is included.
“This is all being driven by an effort to plan ahead and part of responsible government,” Commissioner John Burns said.
If the county doesn’t raise taxes, it would be able to borrow $440 million for county projects in the next two years. This comes as school staff estimate they’ll need an average of $358.9 million a year for construction projects.
“It’s moving in the right direction, but I’m not sure it’s enough to meet that,” school board member Keith Sutton said of the new funding model.
School officials said they need a new round of money because the district is projected to have 20,904 additional students by 2022. Wake already has 157,180 students, making it the largest school system in North Carolina and the 16th largest in the nation.
School board Chairman Tom Benton said the district needs more money to keep up with growth, to deal with the backlog of major renovation projects and to reduce how many students are in temporary classrooms.
“We’re going to ask you for a large number,” Benton said.
The current $994 million building program – largely funded from a $810 million bond referendum approved by voters in 2013 – will be ending within the next two years. Unless more money is provided, no funds would be available to build new schools or do renovations past the 2018-19 school year.
The largest item the school system needs is $1.1 billion for new schools, or an average of $157 million a year for the next seven years. That amount covers the opening of 10 elementary schools, two middle schools and three high schools. Also on the bill are five elementary schools, a middle school and a high school that won’t be open at the end of the seven-year period but will need to be bid out.
The new schools come at a time when construction costs have risen. Wake is now projecting it will cost $100 million for a new high school, $63 million for a new middle school and $34 million for a new elementary school.
Another expensive item is an average of $83.5 million a year for 15 major school renovations, such as the reconstruction of Apex High School.
Other big-ticket items include:
▪ An average of $65.5 million a year for a variety of items such as technology, furniture and equipment, temporary classrooms and program contingencies;
▪ An average of $30 million a year for life-cycle replacements to change out individual systems at schools before they fail;
▪ An average of $12.9 million a year for projects identified by the district’s space needs analysis;
▪ An average of $10 million a year for land acquisition for school sites,
The school system will finalize by March the list of projects it wants in the next building program. The school board will then meet with commissioners to agree on a final plan.