Schools spending more, getting deeper in debt

Wednesday, March 12, 2003

School districts are awash in red ink, with debt rising 13 percent in the 2000-01 school year to almost $202 billion, the Census Bureau reported Tuesday.

The debt has resulted mostly from school construction projects, which have been plentiful in local school districts during the past five years.

Experts don't expect districts to earmark much additional money for debt repayment, however, because state and local governments face budget shortfalls of their own that could lead to their sending less money to schools.

In the Jackson School District, assistant superintendent of finance Jim Welker said there was a total outstanding indebtedness of $16,120,000 as of the end of the last fiscal year, which was July.

The majority of that was incurred through bonds issued for construction projects at R.O. Hawkins Junior High School, Jackson High School, middle and elementary schools, Welker said.

The district also has a $2,560,000 lease-purchase contract in place that was originally used for renovations at Orchard Elementary and the Jackson High School multipurpose gym. The contract, which was refinanced in August, costs the district around $400,000 annually from capital project funds transferred from the general funds.

Operating budget

According to Welker, debts from bonds do not impact the regular operating budget because the money to pay for them comes from a voter-approved debt service taken from local property tax revenues. Welker said the district's budget problems aren't a result of debt from bond issues, but come mainly from cuts in state funding.

Districts across the U.S. that are facing budget cuts are delaying renovations or waiting another year to buy new textbooks or computers. Other districts are turning to little things to save money, like rationing chalk or paper.

"Education is such a sacred cow, usually in an economic downturn, it doesn't get hit as hard," said Steve Smith, education policy analyst at the National Council of State Legislatures. "But given the magnitude of the budget crisis today, it's on the table."

The latest Census Bureau report covers the 2000-01 school year, a period during which the economy slipped into recession. Data came from an annual survey of state and local governments and school districts.

School spending rose 7 percent to about $7,284 per pupil, but wide variations exist among states and communities. Among states, New York and New Jersey topped the list, each spending nearly $11,000 per pupil. Connecticut spent $9,200.

Arizona and Mississippi were among the lowest, each spending less than $5,200 per student, while Tennessee spent over $5,600 per pupil.

Missouri's average per-pupil expenditure in 2002 was $6,991. The averages in the Jackson, Scott City and Cape Girardeau school districts all fell below the state average last year.

According to business manager Roger Tatum, the outstanding debt in the Scott City School District comes from a $3.5 million bond issue passed in 2001 for a 55,000-square-foot construction project now nearing completion, and a $780,000 lease-purchase contract signed in 1996.

As in Jackson, Tatum said his district's budget woes are a result of state funding cuts, not from district debts incurred from bonds.

At the end of the last fiscal year -- July 2002 -- the Cape Girardeau School District's debt consisted of $29,400,000 in general bonds, $207,000 in energy loans from the Department of Natural Resources and $4,050,000 from a lease-purchase contract used to install a new heating and air conditioning system in Central Junior High in 2002.

"Anytime you spend money, there is opportunity cost," Huff said. "If you spend a dollar in one place, that's a dollar you don't have to spend somewhere else."

About 93 percent of school district revenue come from state and local governments, the latter relying largely on property taxes.

Staff writer Callie Clark contributed to this report.

Michael Pons, a policy analyst with the National Education Association, said with many states facing huge budget shortfalls, spending on schools could take its biggest hit in 20 years when the new budget year starts in the coming months.

When the economy was booming in the late 1990s, states and communities poured money into building new schools and renovating old ones. Most projects were funded by voter-approved bond issues that brought with them many years of debt payments.

"The fact that schools are in debt because of school construction doesn't have much to do with the recession," Pons said. "The fact is, these were unmet needs that had to be addressed."

Besides construction needs, school districts face other expensive requirements, from technology to teachers. Districts in growing areas, particularly the South and West, have seen an influx of Hispanic immigrants, many of whom need special attention because of language.

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