School superintendent: Funding not available to proceed with new building projects

Nearly an hour into Monday’s Rockingham County Board of Education meeting, Superintendent Rodney Shotwell finally spoke the words everyone dreaded hearing: “We can’t build anything,” Shotwell said.

“Not four schools?” board member Tim Scales asked.

“We can’t even build one right now,” Shotwell answered.

Shotwell’s dire prediction came at the close of his remarks concerning losses of state revenues intended for school systems. He explained that two of the county’s three funding sources for school construction were recently tapped by Gov. Beverly Perdue to help cover state budget shortfalls.“The governor has taken second-quarter lottery proceeds and ADM funds (money allocated to school districts from corporate taxes according to Average Daily Membership), to fill the budget deficit for this year,” Shotwell told board members. “The decision was made in lieu of asking districts to send reversions to cover the deficit.”

School districts were asked to return ADM funds in December 2008. This time, the second-quarter portion of those funds would not come at all.

Shotwell said the decreased funding stream meant the school system would not have enough left after paying previous construction debt to incur new debt.

Looking at the year ahead, Shotwell figured only $600,000 from ADM funds, $3,040,000 from Capital Reserve Funds (revenues from the two half-cent sales taxes collected for the district), and $1,125,000 from lottery proceeds.

The ADM funds reflected the missing second-quarter proceeds; Capital Reserve Funds were down by about 20 percent from previous figures; and the lottery proceeds were missing the funds kept by Perdue.

The total $4.7 million would first be used to pay off existing debt from Phase I and Phase II construction projects. Those payments, plus an annual percentage taken to cover capital maintenance needs, would require $4.6 million.

“That leaves about $131,000 available to acquire any new debt,” Shotwell said.

Comparing the construction of new schools to buying a house, Shotwell said that meant the county could afford a $131,000 mortgage payment after other debts were paid.

“That means you could only afford your new house if you could get lending terms of about 60 years — for one school,” he said.

Shotwell also told board members about two pieces of legislation currently before the N.C. Senate that could affect the school system’s future revenue stream.

Senate Bill 2 would change the current allocation formula for the lottery funds to provide distribution based totally on average daily membership figures. With the current formula, 65 percent of the distribution is based on ADM and 35 percent on based on the county’s effective tax rate compared to the state average.

The current method of figuring allocation favors counties such as Rockingham, according to Shotwell.

“So the poorer the county, the higher the tax rate, the more that counties like Rockingham and other Tier I counties will get,” he said.

Senate Bill 386 would allow the state to temporarily retain all corporate income tax revenues to support the general fund. Those funds are normally allocated to school systems through the ADM Fund.

Shotwell feared continued deterioration of the state’s funding stream could create even more problems for the school system.

“It could get to the point where we would have to worry about funding to pay for existing debt,” he said.

Upset about Perdue keeping lottery funds, board member Reida Drum said she could not believe the governor actually ran on the platform of supporting education.

“If I saw her surrounded by teachers one time in her campaign ads, I saw it 600 times,” Drum said. “I think we should send word to her that we thought she was supposed to be an education governor.”

Board member Steve Smith agreed.

“If we don’t do something, we’re just saying it’s OK,” Smith said.

The board voted 7-4 to send a letter to Perdue, state legislators and the North Carolina School Board Association expressing their disagreement with the decision to keep funds intended for the benefit of the state’s school systems.