Ga. Schools Tap New Source for Construction

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School officials in Georgia pay close attention to the weather forecasts these days.

"It's good to see sunshine. That means they can get some work done," muses Stanley J. Pritchett, an administrator for the DeKalb County schools, as he leaves his office for the short drive to one of several construction sites in this 90,000-student district near Atlanta. "If you can just get a roof on, you can do anything."

A former high school principal in DeKalb County, Mr. Pritchett is the district's executive director of business and plant services and the point person for the largest school construction initiative in his district's history. Over a five-year period ending in 2002, the district will spend nearly $400 million on 11 new schools and several additions and renovations at 120 existing schools.

And DeKalb is just one of several Georgia districts in the midst of construction madness. Across the state, roughly $4 billion is expected to be spent on school facilities by 2002--roughly 10 times more than was spent to build venues for the 1996 Summer Olympic games in Atlanta.

The building boom brings with it interesting dynamics and an atmosphere in which schools could easily find themselves competing for high-priced contractors. What's more, with some states assuming greater responsibility for upgrading and building schools--a burden that historically has been left in the hands of local school boards--Georgia has clearly taken a different route, and it's leading schools away from their traditional reliance on property taxes.

Sales-Tax Option

In 1996, Georgia voters approved a measure that gave local districts access to a 1-cent sales tax for school construction and renovation, to be charged in addition to an existing state sales tax of 4 cents and other local sales taxes. Concerns about new taxes have kept other states from taking a similar path, but in Georgia since 1996, 144 of the state's 180 school systems have asked their local voters to approve the five-year tax, and an overwhelming 129 of them have succeeded.

One of the benefits of the new source of funds--called the Educational Local Option Sales Tax, or ELOST--is that a pay-as-you-go system of building schools can save districts millions of dollars in interest charges. By comparison, because schools receive an annual lump sum from property taxes, they must borrow money by selling bonds until those revenues come in. Schools have more ready access to sales-tax revenues, which come in monthly.

"If you had enough money in your pocket to pay for your house, that's a lot smarter than paying interest for 30 years," argued Kelly McCutchen, the executive vice president of the Georgia Public Policy Foundation, a conservative think tank in Atlanta.

A sales tax also spreads the cost of construction across a larger segment of the population and provides much-wanted tax relief to property owners, supporters of the option say. It doesn't hurt that many districts are promising to roll back property-tax rates.

Districts can also use the sales-tax revenues to pay off their long-term debts on previous construction projects. About $1 billion is being spent statewide to pay off past debts.

Even so, most school leaders in this fast-growing state are learning to exercise caution when relying on the often-unpredictable tax.

"The difference with a sales tax is that you don't know exactly what you're going to collect," said David Crews, an associate superintendent of the 89,000-student Gwinnett County schools, another rapidly growing suburban Atlanta district.

In most counties, sales-tax revenues so far have come in under projections, and that makes school administrators nervous, said W. Jerry Rochelle, the director of facilities services for the Georgia Department of Education. "All they need to do is wait until Christmas," he added.

But a sales tax is not the solution for every district in the state.

"Some counties are just too poor," Mr. Rochelle said.

Others won't take in anywhere near as much money as the metro-Atlanta districts will collect.

'Mixed Blessing'

Take Paulding County, for example, where new single-family homes on large lots sell for $80,000, attracting families from outside the state, as well as from the close-in Atlanta suburbs.

Located west of Atlanta, it's the second-fastest-growing county east of the Rocky Mountains, according to the U.S. Bureau of the Census. Its population, now at 68,000, is projected to reach 200,000 by 2010.

But in five years, the sales tax is expected to bring in only about $25 million in Paulding County--enough to build only two of the five new schools needed.

"It's a mixed blessing for us," Ray Perren, the superintendent of the 14,000-student Paulding County schools, said of the sales-tax option. "We just don't have the economic base that we need for a [sales tax] to meet our needs."

Mr. Perren is already banking on dividends from the opening of a new Home Depot store in his county. When there's not much local retail business to speak of, an enterprise such as the giant seller of home-improvement products can make a noticeable difference.

As with any new tax, the sales-tax transition had some start-up problems. Merchants had new forms to file. Some didn't collect the extra penny at all. School officials accused the state department of revenue of sloppy bookkeeping. The state collects the tax and then disburses its proceeds.

But John Galbraith, an administrative specialist for the revenue department, said it routinely takes four to six months to work out the start-up problems.

Bad Timing

With a success rate of 90 percent in winning local voters' approval, opposition to the sales tax for school construction has been spotty. But don't tell that to school leaders in Cobb County, north of Atlanta, where a sales tax that would have raised more than $500 million over five years was defeated last June. The district had planned to use the money to build 10 new schools and pay for extensive renovations at 11 more.

The 89,000-student district, which has roughly 8,000 students in portable classrooms, now has plans for another tax vote in September. Officials there believe their timing was off the first time.

"June is a terrible time for a referendum because all the parents are at the beach," said Jay Dillon, the spokesman for the Cobb County schools.

The district, however, still faces opposition from Paul Ploener, the general manager of an Atlanta Christian radio station and the leader of an anti-tax group called Concerned Taxpayers in Cobb County. Mr. Ploener, who worked to defeat the first sales-tax vote in Cobb, contends that the district has spent construction money unwisely in the past.

"Before we throw more money down the bottomless pit, I want to see some changes," he said.

Meanwhile, with sales-tax dollars now available to school systems, some Georgia educators are concerned that the legislature will be less willing to spend state money on school construction. State funding for schools' capital needs had been shrinking in the 1990s even before the sales-tax option passed. And, with construction booming, the state is paying a lower percentage of local districts' building costs.

And, even as more districts than ever run building programs, the state education department has fewer experts available to review construction plans. Mr. Rochelle's department now has only "two and a half" employees signing off on local building plans, he said, compared with 10 in the early 1980s.

State officials are most concerned about those districts that don't have a lot of experience with building programs, or don't have anyone on staff who understands the school construction business.

To help, the education department produced a video this year called "Avoiding Pitfalls in School Construction," and brought school leaders together on the state's distance-learning network for a question-and-answer session.

Contractors and school officials are also keeping a close watch on costs. With so much demand, the chances increase that prices for services and materials will climb and that laborers will become scarce. For example, construction costs skyrocketed before the 1996 Olympics because there were so few contractors available.

Demand could play a particularly significant role as educators race to have new and renovated schools ready by the middle of August, about two weeks before students return to school.

While Mr. Rochelle has been trying to encourage districts to consider opening new school buildings throughout the year, including during spring break and winter break, that is not an option for most administrators.

"A lot of what we're doing is driven by parent expectations and tradition," he said.

Some school leaders, however, are discussing alternative time lines. Officials from several of the Atlanta-area districts also have talked about ways to avoid competing for contractors.

"Everyone is in the same shoes," said Brad Bryant, the chairman of the DeKalb school board.

Vol. 17, Issue 38, Page 13

Published in Print: June 3, 1998, as Ga. Schools Tap New Source for Construction
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