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Greenville County Schools

Greenville County Schools. An Alternative Approach to Financing and Delivery of a Capital Program October 7, 2007. Greenville County School District, SC. 2006-2007 membership- 66,682 District covers 800 square miles 54 th largest school district in the US and growing 94 Schools

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Greenville County Schools

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  1. Greenville County Schools An Alternative Approach to Financing and Delivery of a Capital Program October 7, 2007

  2. Greenville County School District, SC • 2006-2007 membership- 66,682 • District covers 800 square miles • 54th largest school district in the US and growing • 94 Schools • Elementary – 47 • Middle – 17 • High – 14 • Career / Technology – 4 • Child Development – 5 • Special Centers - 7

  3. This is Greenville…

  4. But this is ALSO Greenville….

  5. The Growing Facilities Problem • In November of 1998, almost 10,000 of the 61,000 students in Greenville County were in “temporary” classrooms • Growing by around 1000 students per year • Lunch began at 10:30 with 3 shifts, only ½ students had seats in each shift • Most of the 83 schools were old and in desperate need of repair or replacement • Inflation was growing faster than their ability to pay • 2 failed referenda

  6. SDGC LRFP…What happened? • The Baby Boom Schools got old • Tax Cut Fever • Parents became focused on Education • Mold • Asbestos • Lead Paint • Plaintiffs’ Lawyers • Baby Boom Echo • Tax Cut Fever #2 • In-Migration

  7. Impact of Inflation The same 1,000 student school: 1995 Cost = $6,000,000 2001 Cost = $11,500,000 (a real cost increase of 14% per year)

  8. SDGC Long Range Building Plan • 1993 cost to cure = $336,000,000 • annual expenditure $30,000,000 • 1997 cost to cure = $554,000,000 • annual expenditure $40,000,000 • 1999 cost to cure = $712,000,000 • annual expenditure $65,000,000 • 2002 cost to cure = $783,000,000 • Debt Situation • Constitutional Debt Limit = $100,000,000 • Existing Debt = $100,000,000 • Projected to take 28+ years to complete LRFP

  9. Property Tax Increases (1990-2000) -----------------------Reassessment------------------------

  10. The Bottom Line “An analysis of the district's long-range facilities plan last year showed that the district might never have been able to complete the remaining schools with conventional financing, and construction costs would have topped $1.4 billion instead of the $800 million projected by Institutional Resources.” Greenville News, May 21, 2002

  11. The Perfect Storm • Confluence of factors made a solution possible • A champion on the board of trustees • An administration willing to take the chance • A motivated group of minds from the private sector • A community fed up with the decaying schools AND rising taxes

  12. The Plan • “Equal” school facilities across the district • Fund all construction now through innovative use of installment purchase bonds • Maintain millage at or below 42.5 mills by using conservative growth assumptions in tax revenue • Complete the program in 5 years • Leverage economies of scale in design, procurement and construction to achieve cost savings • Allow the District to use a 5 year planning horizon

  13. Installment Purchase Revenue Bond Structure

  14. Labor Forecast- LRFP Construction Personnel Forecast – Direct Labor – Current LRFP CHART IIIb.1(E)1A

  15. Labor Forecast- Recommended Construction Personnel Forecast – Direct Labor – Recommended InRe Plan CHART IIIb.1(E)1B

  16. The Reality • Implementation was delayed by lawsuit • First school groundbreaking in March 2002 • Construction cost escalation impacted budgets • Program converted from 2/3 renovate and 1/3 new to 2/3 new and 1/3 renovate • Assessed value of property and tax revenues grew faster than expected • Funds from additional growth were used to pay for “growth” schools • Expected completion of program mid-2008 (7 years versus projected 5)

  17. Construction Cost Escalation Impacts Total Budget

  18. Total Costs* $4.982 Billion $3.21 Billion 2052 Completion $1.88 Billion 2041 Completion 2007 Completion BEST Program “Pay As You Go” “Pay As You Go” Installment Purchase 5% Inflation 6% Inflation *Source- Greenville County School District

  19. Other Highlights • Community brainstorming sessions yielded 528 documented suggestions of which 418 were implemented • Minority participation increased 9 times over previous construction programs • “Mass customization” through development of automated, district-wide ed specs customized for each school’s curriculum and programmatic needs

  20. Other Highlights (cont.) • Development of comprehensive, district-wide design guide • Innovative techniques and technologies to reduce future maintenance, operations or capital renewal expenditures • “Green Schools” implemented • Long-term maintenance plan and forecasting system developed • All school design, warranty and maintenance documentation electronically captured and stored in an online retrieval system

  21. Simpsonville ES Monaview ES Blythe ES Robert E. Cashion ES Thomas E. Kerns ES Paris ES Cherrydale ES Sue Cleveland ES Southeast Area ES Prototype Design Mountain View ES

  22. 80 70 60 50 40 30 20 10 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Tax Millage Used for Greenville PlanWhere it Will Go if 5 Yr. Reassessments & Growth Match the Last 10 Years 14

  23. Tax Revenue Impact

  24. Wall Street Reaction “The associated Standard & Poor’s underlying rating upgrade on Greenville County School District, SC’s GO bonds to ‘AA’ from ‘AA-’ reflects the district’s addressing of its unmet and significant capital needs by the issuance of the $800 million installment purchase revenue bonds, issued through BEST Corp. Prior to this issuance, the district was hampered by a restrictive, unvoted GO bond debt limit that seriously hindered its ability to effectively address, on a timely basis, its capital requirements.” Standard & Poor’s – March 11, 2002 “Moody’s Investors Service has upgraded the Greenville County School District general obligation underlying rating to Aa3 from A1. The rating upgrade affects $95 million of debt and is based on Moody’s belief that the district’s plan for funding its sizable capital program will result in a manageable debt burden while addressing pressing long term capital needs.” MANAGEABLE DEBT POSITION EVEN WITH SIZABLE BORROWING PLAN “Moody’s believes that the district’s plan to issue $760 million of Installment Purchase Revenue bonds through a non-profit entity will enable the school district to address pressing capital needs without placing significant fiscal constraint on the district” Moody’s Investors Service – August 22, 2001

  25. The Domino Effect

  26. Can This Be Accomplished Elsewhere?

  27. This May Never be Done Again, but if you want to try: • Have political courage • Assemble a great team • Clearly demonstrate and quantify needs • Identify revenue source to pay for those needs with reasonable assumptions (including savings to be realized from program) • Develop a financing alternative that is cost effective Time = Money • Persevere, persevere, persevere

  28. Questions/ Comments

  29. Contact Information Didi Abi-Arrage President, In Re Financial, LLC Tel. 864-918-3816 30 Patewood Drive, Suite 200 Greenville, SC 29615 dabiarrage@inrefin.com

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