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Posted: March 12, 2013 9:36 p.m.

Looking at the math of E-SPLOST

Time is dwindling for Newton County residents to decide whether to approve the continuation of the education SPLOST, which is a special one percent sales tax used annually to help boost the Newton County School System’s budget to pay for special projects. A vote on the sales tax is set for Tuesday March 19 with early voting set to end on Friday.

However, as of this week, residents still expressed confusion as to why the $75 million in proposed SPLOST projects are listed when only $55 million – $57 million is projected to be raised during the five-year SPLOST period.

The News reached out to Peggy Bullard, business manager for the school system, for an explanation as to why the numbers don’t add up and why they’re not supposed to and the Georgia Department of Education to see what guidelines school systems were required to follow when requesting SPLOST funding for projects and debt.

SPLOST IV projects add up to $75 million
To recap, according to the information released from the school system, education SPLOST IV funding is expected to go to the following between Jan. 1, 2015 and Dec. 31, 2019:
• Debt service tax relief, in the amount of $30 million
• New school security, which includes the purchase of a ViewPath and S.A.F.E. camera, audio and silent alarm system for every classroom in every school at a cost of $3.85 million
• New school technology, including computers and printers, infrastructure upgrades, interactive equipment and software for all schools at a cost of $17 million
• School maintenance, which would include system-wide roofing, paving, electrical upgrades and HVAC renovations at a cost of $11.3 million
• Additional student transportation, with approximately 75 school buses and other bus maintenance equipment at $9.6 million
• Construction of a replacement high school or making additions to current buildings dependent upon enrollment, growth and state funding at $3.25 million.

The projects and debt service add up to a total of $75 million, with an estimated $45 million set to go toward capital projects and $30 million to go to debt service relief.

Bullard explained the school system is required by state law to put a limit within its referendum of how much the education SPLOST would collect.

In the proposed education SPLOST IV, that limit is $75 million. Despite the list above, the actual education SPLOST IV referendum is more general, and reads as follows, stating the school system would collect a one percent sales tax for:
(a) acquiring, constructing and equipping one replacement high school; acquiring school buses and related transportation equipment; acquiring instructional and administrative technology improvements; adding to, renovating, replacing, repairing, improving and equipping existing school buildings and other buildings and facilities useful or desirable in connection therewith; and acquiring any necessary property therefor, both real and personal; all at a maximum cost of $45,000,000; and

(b) the cost of retiring a portion of the Newton District’s Taxable General Obligation Bonds, Series 2010B (Direct Pay Qualified School Construction Bonds); General Obligation Bonds, Series 2012A; and Taxable General Obligation Refunding Bonds, Series 2012B; or bonds issued by the Newton District to refund such bonds, by paying or making provision for the payment of the principal of and interest on such bonds coming due on Feb. 1, 2015, through Aug. 1, 2020, in the maximum amount of $30,000,000.

Bullard explained the school system cannot by law exceed the limit of $75 million because it has been set within the referendum.

“We have to put down a limit and that’s all that we can collect,” Bullard said. “If there was $78 million collected, it stops at our $75 million, which I don’t think it’s going to go above that. But, before the five years end, and $75 million was collected, it would stop. The tax would stop.”

Matt Cardoza, director of communications with the Georgia Department of Education, said the tax would stop being collected once that top-end limit was reached.

For example, if the $75 was reached in October 2019, then the tax would be collected until the end of the month and then stop.

It would not be collected during November or December of 2019.

If by the end of October, the school system had collected more than $75 million, any overage could only be used to pay down school system debt or it would have to go to the general fund of Newton County’s government, Cardoza said.

“So if they collected $80 million, the only thing that they could use that $5 million for would be debt. If they don’t have debt, then those proceeds would have to go into the fund of the county government,” Cardoza said.

SPLOST IV funding expectations
Bullard said the current education SPLOST, SPLOST III, is expected to raise around $55 million in revenue for the school system. SPLOST III does not expire until Dec. 31, 2014.

The proposed education SPLOST IV, which will be up for a vote on March 19, will be for the calendar years 2015 through 2019.

Bullard said the school system hopes to collect $75 million in SPLOST revenue in order to complete the projects on the priority list.

However, she explained it is an estimate and completing projects depends on a number of factors.

“This SPLOST won’t even start until two years from now and then it goes five years from there. So hopefully the economy is going to grow,” Bullard said. “We always estimate more especially when we are doing it this far ahead of time.

“We really were estimating those costs and with the SPLOST not starting for two years, it’s an estimated cost,” Bullard said. “We’ll have to prioritize our projects, but we certainly want to leave it open for if we do collect more we can use it. If we limited ourselves then the tax will stop and we can’t get all of our needs. We’re hoping we will get $75 million.

“We’re collecting more in SPLOST III than SPLOST I and SPLOST II in the economy,” Bullard said. “So hopefully with the Baxter coming and all those people coming to build that, we’ll be hopefully spending money here,” she said. “You don’t know what’s going to happen.”

Bullard said tax collections could also be affected by inflation.

SPLOST priority list
Bullard explained that departments in the school system submitted a list of what kind of projects they were going to need and an itemized list was created. She said when education SPLOSTs are approved, the lists have to be prioritized.
“Each year, we will have to prioritize the needs and budget the expenditures that we can make based on expected collections for the year,” Bullard said.

“If by the end of the SPLOST we have not collected $75 million, it may be that some of the projects do not get done.
“The SPLOST project priority list should be made every spring when we do our budget,” Bullard said. “The collections will be estimated and the debt service needs for the year should be set aside. The balance can then be used for projects for that year.”

Cardoza said school systems prioritize their list; however, not everything may get accomplished on the list due to education SPLOST funding.

“You don’t have to build everything that was voted on because if you don’t collect enough, then obliviously you can’t,” Cardoza said. “You rate those in importance.”

Bullard also explained that administration changes also impact what may become a top priority on the list in the future.
“We are going to change administrations by the time this goes into effect,” she said. “Each year the administration will have to sit down and decide what the priorities are for that year and what the estimated collections will be. First, of course, will be the debt service reduction.”

Bullard said being that the current SPLOST ends Dec. 31, 2014, the school system wants to get SPLOST IV approved before the current one ends.

If SPLOST IV fails, the school system would have to wait 18 months before it can ask for another SPLOST, which means the SPLOST could be put on the November 2014 ballot.

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