Remarks To The Fairfax County School Board Regarding the

Remarks To The Fairfax County School Board Regarding

the FY2003 Capital Improvement Plan

January 7, 2002

By Arthur G. Purves

President, Fairfax County Taxpayers Alliance

Members of the Board and Dr. Domenech:

My name is Arthur Purves. I address you as president of the Fairfax County Taxpayers Alliance.

The school administration states that its eight-year Capital Improvement Program (CIP) is underfunded by $660 million

Are you aware that during the last eight years, the county has spent over $500 million on interest payments for bonds?

Interest is justified to obtain "leverage", which is what you get when bond sale revenues exceed the annual cost of the bonds, or "debt service." For example, if the county raised $1 billion in bond sales for an annual debt service payment of $100 million, the leverage would be 10.

However, due to an over-reliance on bond sales, the county's leverage from bonds has evaporated. Since 1978, the highest leverage the county has ever had was 2, in 1983 and 1989, and the average annual leverage since 1978 is 1.1.

Now, $500 million could build or renovate many schools. The county though has sacrificed these schools for the privilege of borrowing each year about enough money to pay the annual debt service.

In other words, if the county had funded construction on a pay-as-you go basis instead of selling bonds, there would have been $500 million extra dollars to spend, without raising the sales tax.

The CIP apparently requires about $200 million a year.

This year's school budget has $800 million more than is necessary to cover inflation and enrollment growth over the last 25 years. Next year, the superintendent is requesting a budget increase that is four times larger than the increase in enrollment. Much of past increases occurred in times of prosperity, the late 80s and late 90s. During prosperous times, why didn't the board spend $200 million of the $800 million on construction?

Answer: Because the board has a self-imposed policy of funding all construction from bond sales, which besides costing interest have never raised enough revenue. This policy is not state-mandated. The school construction crisis, which is at least a decade old, is the result of bad management, not lack of money. The board had the money, but chose to spend it on wasteful new programs.

To see the waste, look at the schools' FY03 Program budget. It lists dozens of programs, but has no information about program effectiveness. Some important programs are missing, including the seven-period day, which is not mandated. Expensive information technology programs, such as the student information system, are omitted. Rather than fund programs whose effectiveness is unknown or cannot be defended, the board should reallocate windfall revenues to school construction.

Thank you.