Shelton goes in-depth with SDPC bond issue

Editor’s Note: This is the first installment of a new multi-part series of interviews conducted between Courier staff reporter Nicole Daughhetee and SDPC board trustee Jim Shelton, a former board chair.

For those readers who followed the Greenville Plan series, and for those readers who are just joining in, I recently conducted a series of interviews with School District of Pickens County board trustee and former chair Jim Shelton in the hopes of illuminating for the public some of the more “behind-the-scenes” thoughts and discussions that are part of any governing board.
The information and opinions expressed in the following interview come from Shelton’s perspective of events as they occurred.
During what I have coined “The Shelton Interviews,” Shelton has been candid about The Greenville Plan, the Building Plan and, of course, the $9.15 million bond issue. So, without further adieu…
Following the Greenville Plan, it seemed natural to delve into the October 2010 $9.15 million bond issue. As with any other event, there is a history in which the bond issue was rooted back in time. Because I was not covering the SDPC prior to 2010, Shelton offered me a history lesson so I could better understand the context surrounding the $9.15 million bond issue.
“The bond issue came about from several different sources,” explained Shelton. “Earlier in 2009, the board was advised by then interim Superintendent Mendel Stewart of the possibility of going with what is called millage stabilization. What millage stabilization means is quite simple: regardless of where the debt service is, and our debt service had a tolerance of 58 mills (because of the Greenville Plan), but the idea was that with 58 mills we would more than satisfy our obligations for current debt load.”
At that time, in 2009, there was a gap of about five or six mills that could have been collected, Shelton told me.
In other words, said Shelton, the board would keep people’s taxes at the same level all the way out, and that additional money would go back into capital improvements. Some of the money could go to satisfying debt that already exists. This is a onetime tax collection every year.
“I was reluctant to do that,” explained Shelton. “At the time, as we talked about with the Greenville Plan, we had no control whatsoever, in my opinion, on where those finances were going. We had the big gap with the Greenville Plan that we had to solve. We still saw free-fall from where the state paid us for operations revenue. So, I was reluctant to go back and agree with a recommendation from the school district that said let’s just stabilize the mill and we’ll collect all that money and use it for what was still a question mark at the time.”
Because there lacked a dedicated reason or project or expense for those dollars, Shelton says he was reluctant, in 2009, to agree to it.
Fast forward.
Between 2009 and the summer of 2010, Ross, Sinclair and Associates — the firm who handles the bonding issues with the board — approached the trustees with a proposal: if the board converted their bonds from a tax to a tax exempt status that it would, in essence, be a refinancing of the debt. To do so would give the district a six-month gap in debt payments.
What this boils down to is that the district would only pay half of the bond encumbrance for that particular year, and that would be picked up at the end of the debt.
“In other words, we’d push that debt out. We’d take that six-month payment, and instead of making that payment in 2010, we’d actually make it 20 years later,” said Shelton. “So we don’t add to the debt burden; we simply shift it out. By doing the tax-exempt conversion, over time the cost of the bond indebtedness drops by $1.5 million, and that’s prorated over 20 years.”
This was an option that was hanging out there, however it was not an open-ended option. The SDPC board could not leave the option “out there” and decide to convert it at some point in the future, he said.
“We had about a two- or three-year window in which to exercise the option,” said Shelton.
During this time, the SDPC was entering into phase three of the building program.Construction had started on six of the seven new high schools. Daniel still wasn’t started, but everywhere else slabs were poured, bricks were going up — construction was happening.
Despite the progress, there were still unresolved issues in Easley. There were three facilities in Easley for which there was not an agreeable solution in Shelton’s opinion. Those facilities were the Adult Learning Center in the North Side Center. No money in the building plan went toward this. The second was Simpson Academy (the old Clearview High School) and no money went toward this. The third facility of concern was Gettys Middle.
“Gettys became a special case because, compared with the other middle schools in the county, its size made it unmanageable,” said Shelton. “The other middle schools were undergoing expansions, renovations or movements, but they always had a manageable population, unlike at Gettys, which — at the time — had roughly 1,350 students.”
The projection, Shelton said, was that Gettys’ population would expand to more than 1,500 in the very near future. In terms of student population, Gettys was expected, by sometime in 2013, to be larger than three of the area high schools.
This is an issue Shelton felt needed to be addressed in order to meet some critical needs, both socially and academically, of the students in Pickens County. With a school the size of Gettys, which was only projected to grow larger, addressing such critical needs became incredibly difficult.