Yesterday the Fayetteville School District announced on their blog that they could be in line to receive $54 million in stimulus credits (read Qualified School Construction Bonds) to help finance the building of a new high school.  Is this program to issue federally subsidized bonds new?  No, the district has known about the program since at least June.  In fact, they have publicly listed the program as a reason to vote for the millage for quite some time.  So what is so breaking about this news?  It must be that the district got some sort of insider information from the state regarding the proportion ($54 of $113 million or 47%) of these bonds they would receive this year.  It is unclear from the District’s post how certain the allocation is or if it is even certain we will receive anything at all.  I hope the district provides the voters with a little more info before Tuesday’s election.

Here is my understanding of how the bonds work. The state would issue the bonds.  The bond holder would receive a federal income tax credit.  The interest rate the taxpayers would be need to pay to attract investors would be partially offset by the federal tax credit.  The U.S. Treasury Department establishes state allocation limits, maximum maturity, and sets a tax-credit rate for the bond program that, on average, equals the amount of interest taxpayers would ordinarily pay on debt.  In summary, issuing this type of bond would reduce the interest rate on our debt.  A reduced interest rate results in a quicker payback period. Which, in turn, means the millage could be rolled back a few years earlier.  The citizens of Fayetteville would still need to pass the 4.9 mill increase, providing the district with $115.825 million to construct a new high school.  The amount of the debt principal would remain unchanged.

Here at Mid-Riffs we have not taken a firm “yes” or “no” position on the millage as of yet.  We recognize that the current facility has some very real deficiencies that need to addressed.  We are just uncomfortable with the enormous size and scope of the proposal that is currently on the table and the resulting tax implications.  The case for the millage has been filled with inaccuracy, competing claims, and borderline dishonesty (admittedly this has been a problem on both sides).  In my Castles Made of Sand post I pointed out how flimsy most of the arguments for the millage really are.  I do believe there are perfectly valid reason to vote for the millage (I plan to post about this later). I also believe there are people who have decided to vote “yes”, who have been thoughtful and honest in their reasoning.  I am just not there.  I worry about passing  a significant tax increase in the midst of a historic economic downturn, and what that could mean for residents and businesses alike.  In a few years my daughter will be attending class in what is, by all accounts, a good school district, and I would like for her to have the best learning environment possible.  However, I think it may be brash to put undue financial pressure on those who live and work in Fayetteville when we could easily break this project (or one that is more modest) into pieces to be completed in phases.  A phased approach would also provide the added benefit of increased accountability as we move through the project.  A friend of mine posted a message as his facebook status that captures my feelings on the millage pretty well:

“A good scenario for all would be for the millage to be voted down, forcing the decision makers into a more realistic, analytical approach to financing and building a new high school. The millage is really the result of trying to satisfy everyone in a community committee of about 200 people. Not the best approach for good decision making.” — A Wise Friend

The Fayetteville School District announced today that..well, it’s not exactly clear. A cryptic post on the District’s blog says the following:

The Fayetteville School District learned today that the Arkansas Department of Education plans to release $113,443,000 in stimulus credits on September 21. Applying the rules of the program and understanding that a limited number of school districts applied for credits by the 2009 deadline, the new Fayetteville High School project could receive approximately $54 million of these credits for use in financing the project.

This will significantly lower the district’s interest rate on the bonds and reduce the date the bonds will be paid off by perhaps as much as six years.

The Stimulus credits could equal an interest savings of approximately $63,000,000, depending upon market conditions at the time the bonds are being offered. According to Dr. Lisa Morstad, chief financial officer of the district, “Due to the Stimulus Act, this is a very unique opportunity in which the district will be able to finance the new high school under extremely favorable terms. We are uniquely positioned in 2009 to take advantage of these credits, since the 2010 credits cycle will likely have many more participants, making the allocations much smaller. We’re grateful to Dennis Hunt and the staff at Stephens, Inc., for informing us of this opportunity and helping us through the process.”

Use of the credits for the new high school is contingent on the passage of the proposed millage increase on September 15.

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It’s not exactly clear what this means for the district, and they should work to clarify the meaning of the announcement as soon as possible.

1) First of all, uhh, what does it mean to receive a “stimulus credit”? In layman’s terms, how does the credit work? Does the state subsidize the interest on the bond?

2) What do they mean by “could”? Do they mean the district could be awarded the stimulus credit? Or do they mean the district will receive the credit and it could total $54 million?

3) How is it that the credits are contingent on the passage of the millage?

4) How do the credits translate into savings for the community? Will the credit simply increase the total amount the district has to spend,  or will the effect be a net reduction in the amount citizens are being asked to fork over on Tuesday?

Hopefully the district will soon be offering a clearer explanation.

I heard the roof was caving in at Fayetteville High.  I can’t believe we allow our children to attend class in such a dangerous building.

The myth that the Fayetteville High School campus is “unsafe” or  “falling apart” seems to have a life of its own.  I attempted to debunk this claim in my Castles Made of Sand post, but it would seem I was unsuccessful. Over the past couple of days, I’ve encountered some version of this myth as a facebook comment, in actual conversation, and in anecdotes from others.  I reassert that the building, while it does need some repairs, is structurally sound. Take a look at this report from the Arkansas Department of Education (ADE) – click here to view report.  The state estimates the facility condition cost (money the district would need to spend to maintain a safe learning environment) for Fayetteville High School (the entire campus) to be $2.9 million (2006 cost) and the 3 year cost from 2009-2011 to be $5.9 million – hardly full replacement cost. The state also ranks schools based on their facility needs.  A ranking of 1 represents the most facility needs and 1129 represents the least facility needs.  Fayetteville High School ranks 988.  I didn’t get to blow anything up, but consider this myth BUSTED.

For more info check out the Arkansas Division of Public School Academic Facilities and Transportation web site.  They have a handy tool that allows users to look at facility reports for all of the districts in Arkansas.

Update: Facility Condition Cost clarification made

Administrators decide the new high school will be constructed from sand. One school board member is quoted as saying, “Sand provides maximum flexibility. The students can create a new learning environment each day. And it’s green!”

The date of the much ballyhooed millage election is swiftly approaching. Next Tuesday, Sep. 15th, the citizens of Fayetteville will decide whether or not to provide the school district with a $115.825 million line of credit. The district plans to use this tidy sum to replace the current high school with a brand new “21st Century” campus. And why, one might ask, is it necessary to replace the current facilities?  I can think of four reasons new construction might be necessary:

1. The buildings are falling apart
2. New facilities will improve student outcomes (i.e. the current facility is inadequate for 21st century learning)
3. The current facility is too small
4. New facilities will expand the tax base and enrich our community

First, I would like to dispense with the notion that the current facilities are dilapidated and deteriorating to the point that learning is inhibited.  Back around the time when the district was looking to sell the high school campus to the U of A, an assessment of the current structures was conducted.  The resulting report stated plainly that the buildings were in excellent condition.  In fact, the U of A facilities department estimated they would only need to spend $11 million to make the campus usable at the university level.  The propaganda supporting the millage often highlights the age of the main building. Take this quote from the A Stronger Fayetteville website, “The current Fayetteville High School was built during the Korean War…”  Let’s be clear, while the high school is half a century old, the current facilities have gone through several renovations in those years (the latest was finished in 1993), and they are in good shape.  There is a big difference between adequacy and wanting all the bells and whistles.  If the voters decide that they would like to pay for all the bells and whistles, that’s fine; but it is dishonest to insinuate that the building is falling apart to get what you want.

Second, is it true that new buildings facilitate better teaching, collaboration, and general 21st century-ness such that student outcomes improve? It could be the case that rearranging the learning space really will pay dividends, but we do not have to blindly trust that it will.  We can look at evidence from around the United States on the link between facilities and student achievement.  In the Handbook of the Economics of Education, Eric Hanushek provides a review of the research on school resources.  Professor Hanusheck identifies 91 studies which look specifically at the link between facilities and student achievement in the U.S. (see table on pg. 889).  He reports that 86 of them find no statistically significant relationship.  And in the remaining 14% of analyses, there was hardly a consensus: 9% were positive and 5% were negative.  The punchline is that most of the high quality research studies which have explored this issue have found no relationship between school facilities and student performance.  This is in no way a surprising result.  Buildings don’t teach kids, people do.

A third reason a district may need to construct new buildings is if the current facilities are simply too small.   The district brought this issue to a head by successfully lobbying the school board to add the 9th grade to the high school campus. This will increase the student population from about 1,800 to somewhere between 2,400-2,500 students.  The high school’s student common areas and entertainment/extra curricular facilities have been undersized for some time, and it is time we did something about it.  But building a top-notch performing arts center and student common areas does not necessitate demolishing all of the current structures and starting anew.  Space concerns could be alleviated through a more modest construction plan which makes use of the investments the citizens of Fayetteville have made over the past 50 years.  As a side note, it seems to me that trashing perfectly good buildings is about the least green thing we could do as a city.

The last argument that can be made in favor building new high school facilities is one based in economics.  The argument goes something like this – If we build a new high school with all of the newest amenities, more people of means and businesses will be attracted to settle in our fair city.  The resulting influx of businesses and people will expand the tax base and act as an economic engine for the city.  This was the case that was made last week at the economic impact panel discussion. The only problem with this argument is that it leaves out one crucial detail: Tax rates will have to increase to pay for the new high school. And an increase in the tax rate will discourage both people and businesses from locating in Fayetteville.  For the economic engine argument to hold true the positive effect of the new high school would have to outweigh the negative effect of the increase in the tax rate. A look at the whole picture reveals that Fayetteville already has relatively high tax rates when compared to other cities in the area (take a look at millage rates, assessed real estate values, and estimated tax to confirm this for yourself) and the high school is consistently ranked as one of the best in the nation.  These two facts lead me to believe that any gains made by improving an already very good school will be severely diminished by an increase in the tax rate.

I am by no means against spending money on facilities.  I just want us to be thoughtful and honest about our reasons for investing in brick and mortar when it is clearly secondary to what goes on in the classroom.

Update:  Also check out our interesting followups – Oh my…the sky is falling! and Why vote “yes”?…Because we want to have the best!