Independent Assessment of the Five-Year Facility Improvement Plan February 11, 2014

Committee Community Members Phyliss Boyd David Broaden Geof Fountain Kevin Lancaster Will Williams

Condition of District Facilities Three-fourths of schools > 40 years old Half > 50 years old Three schools > 65 years old One school Byrd Elementary was replaced in last five years Aiken County’s last significant capital building effort by referendum was in 1980 - SAHS, MVHS, and SBHS

AGE/CONDITION OF AIKEN COUNTY SCHOOLS

District’s Identified Facility Needs $37M - Available in Five Year Plan for cyclic maintenance HVAC, roofing, carpeting, painting, paving, security and technology upgrades $275M - Total cost to replace/modernize all aging schools The facility needs lists has a total estimated cost of $37M to replace aging systems (HVAC, roofing, carpet, painting, security and technology upgrades) in the old schools Total cost to replace/modernize all aging schools is estimated to be $275,000,000

Capital Funding Available State law - limits annual capital funds at 8 % of assessed property tax values $17.5M - annual capital funds available for FY13-14 $10.5M - Cyclic Maintenance $7M - partial facility replacement/renovations AHS and NHS this year (Phase 1 of multiple not-funded phases) LMMS next year The district is funded from two millage rates: one is for general operation and is expected to provide approximately $48,000,000 for 2013-2014 this amount varies from year to year based on changes in the tax base and the operating millage rate. As allowed by State law, the District issues bonds on an annual basis to provide capital funding to upgrade/replace school facilities. The second millage, referred to as “debt service millage” is used to repay those bonds, plus interest, over five years. State law limits bond issuances; school districts’ general obligation debt (i.e. bond issuance) cannot exceed 8% of the total assessed property tax values for the district. The district issued bonds of $17,500,00 in 2013-2014 within its 8% capacity. About 60% of this is going to aging system replacements. The other 40% is going to partial phased facility replacement/major modernizations (AHS and NAHS this year, Leavelle McCampbell Middle School next year, etc.) Where is Ridge Spring-Monetta’s funding in the plan ? Authorization for issuance of general obligation bond is covered in Title 59, Chapter 71 of SC Law under the "School Bond Act" (appears to date to the 1950s).  New Article X in SC Law (late 1970s) updated the requirements for school bond debt.  Not sure how the legislature arrived at "8%" but it appears to have been settle on in New Article X.  Sounds like prior to the establishment of 8%, there was no set amount.  Might've varied by District.  (Mr. Burkhalter thought that Aiken's limit might've been as much as 25% in the 1960s).      Not sure how much of the 8% was used early on.  We have bond documents dating to 1978 in our file room.  The 8% is based on all taxable property in the District (taxable values are provided to us by the County).  Property values are a moving target - new construction, destruction of buildings, depreciation, reassessment, etc.   To determine how much of the 8% was used, we would have to find taxable values each year and run numbers, which would be a lot of work (assuming the info could even be found).  The 8% would've provided significantly less in the 1970s and 1980s vs. today because tax values were much lower.    When the District sells bonds, the bond documents address which projects will be addressed.  We could not "bank" unused 8% monies for yet-to-be-determined projects years down the road.  Also, the 8% threshold is in aggregate and not a yearly amount.  It is not "use it or lose it."  For example: If the District had no bonds issued and outstanding as of today (no debt counting again the 8%) and if our tax values were $600 million, we could issue bonds equal to 8% or $48 million.  However, if the District had a balance of $30 million remaining on past years' bond issuances (2012, 2011, 2010, 2009), we could only issue $18 million in bonds (to get us to the $48 million threshold).    

Committee Assessment/Conclusions The Five Year Facility Improvement Plan is applying the funding available to sustain the aging facilities in safer operating condition while waiting on adequate funds The 8% capital funding mechanism inadequately supports the level of funding needed to replace/modernize the large numbers of older schools in a timely fashion without elevated funding levels Lack of needed capital funds is resulting in expenditure of limited funds to keep older “end of useful life” buildings going, rather than investing those funds in new buildings The funding shortage will continue to increase over the years with ever increasing costs to maintain the older buildings   *  The Five year facility improvement plan PROVIDES A WELL PLANNED STRATEGY TO apply the AVAILABLE/PROPOSED funding to THE SPECIFIC facilities IN ACCORDANCE WITH A TIMELINE THAT WILL ALLOW EACH FACILITY TO stay operationIONAL AND PROVIDE A SAFE AND MODERN LEARNING ENVIRONMENT.    *  The current milledge debt funding level does not ADEQUATELY support replacement/modernization of the large number of oldER schools IN A TIMELY FASHION AND WITHOUT AN ELEVATED LEVEL OF FUNDING.    *  BECAUSE THE MAJORITY OF DISTRICT BUILDINGS ARE SIMULTANEOUSLY REACHING THEIR "END OF USEFUL LIFE" MILESTONES, funding shortage WILL CONTINUE TO INCREASE over the years AS MORE SIGNIFICANT CAPITAL UPGRADES/NEW CONSTRUCTION WILL BE REQUIRED. Older school are being safely maintained and are clean. No significant issues regarding degrading infrastructure. Before and after maintenance costs in recent new building THIS CAPITAL EXPENDITURE HAS RESULTED IN LOWER MAINTENANCE COSTS, INSURANCE OF CODE COMPLIANCE, AND AN OVERALL BETTER LEARNING ENVIRONMENT FOR THE STUDENTS.

County Comparisons on Capital Funding School District Year of Referendum Amount Passed /Failed Construction $ Spent Enrollment Aiken 2010 $236,000,000 Failed $13,000,000 24,749 Beaufort 2006 $43,700,000 Passed $19,000,000 20,532   2008 $162,700,000 Berklely 2012 $198,000,000 $36,000,000 30,999 Charleston $450,000,000  Passed ( .01 cents sales tax) $61,000,000 44,755 Dorchester Two $179,900,000  Passed $6,100,000 23,759 $7,500,000 Horry 2004 $240,000,000 $33,000,000 40,072 $48,800,000 Lexington One $336,000,000 $91,000,000 23,890 $118,000,000 Lexington Five $224,000,000 $65,000,000 16,452 2007 $256,500,000 2005 $131,400,000 Richland One 2002 $381,000,000 $9,000,000 24,166 Richland Two $175,500,000 $38,000,000 26,582 $306,000,000 Edgefield 1991 $20,600,000 $90,739 $3,800,000 Op & Maint.

Capital Funding Comparisons Between Counties 9 districts of comparative student size have passed capital building fund referendums in the last ten years 4 of those districts also have a capital building fund 1% tax revenue for their schools Aiken District’s millage rates are in the bottom 14% of all South Carolina school districts Aiken County’s per capita income is 13th of all counties Put this first ? Data sources - Millage rate information was obtained from the SC Dept of Education. (SCDE) - Information on school districts that currently had a penny sales tax was obtained from the SC Dept of Revenue website.    - Unemployment data is per the SC Dept of Employment and Workforce (SCDEW). - Per capita income data was obtained from the US Bureau of Economic Analysis. 

Committee Assessment/Conclusions of Capital Funding School districts in South Carolina are actively investing in modern school facilities Capital buildings funds investment in Aiken County Schools pale in comparison to many of comparable sized school districts Aiken County ranks among the wealthiest counties while near the bottom in funding their schools Relative to other SC counties, Aiken County has the financial capacity to build modern schools but lacks the funding mechanism.

Impacts of Modern School Facilities Surveys show replacing old schools with new, modernized ones have a positive impact on student and teacher attitudes Curb appeal – Families recently employed in this area are choosing other school districts with modern schools over Aiken County Modern schools attract young families that contributes to a diverse, vibrant community Cost effective – funds are better utilized when invested in new buildings rather than used to extend the life of older buildings David’s survey report. Exec director of realtor board – “I hear stories daily from realtors of young families deciding to move to Columbia County and commute to their jobs in Aiken, due to the quality of the schools, based on them just driving by and seeing how modern they are.” Impact on teacher recruiting. If Aiken County becomes primarily a retirement county, rather than a diverse one, will the value of homes will go down or flatten over time due to negative or no growth?

What do the citizens of Aiken County want ?