Struggling SC school districts seek help

A legislative showdown, pitting a handful of cash-strapped school districts against Gov. Nikki Haley, could lead to one S.C. school district closing its doors.

To date, bills have passed either the S.C. House or the state Senate to let three struggling school districts - Florence 4 and Charleston and Jasper counties - issue long-term bonds to pay their day-to-day expenses, including teacher salaries. Two other bills to do the same for Colleton County and Hampton 2 have passed both houses of the General Assembly.

Typically, school districts issue bonds - loans that have to be paid back by local taxpayers - only for big expenditures, such as the construction and renovation of schools.

But the districts, and some of the lawmakers who represent them, say the districts are grappling with state budget cuts and the loss of federal stimulus money, and need the money just to pay day-to-day expenses.

Perhaps the worst off is Florence 4, a small district with about 700 students, that is facing down about $800,000 in debt. Officials familiar with the district's finances say the district lost hundreds of students after enacting a policy that allowed students to transfer to nearby districts. The district did not anticipate a large loss of students and did not make enough administrative cutbacks to offset the loss. It also did not adequately plan for state budget cuts, they say.

The result? The district has debts on a wide range of items, including employees' health benefits, state withholding taxes, utility bills and more.

"If they (Florence 4) do not get this bond bill passed and get some cash, there's a good chance they're looking at closing the doors," said Debbie Elmore, spokeswoman for the S.C. School Boards Association, which helped the district find a school-finance expert to review its books and figure out a way to pay off the debt. "They won't have the money to pay anybody."

Haley already has issued a warning to lawmakers that she will not sign the school bond bills into law, saying they don't abide by the basic laws of finance. "We should not fund short-term operational costs with long-term debt backed by taxpayers," Haley wrote in a letter to lawmakers. "Such financing schemes have led to disastrous consequences in other states like California."

Republican Haley wrote that she sympathized with the school districts but could not support further burdening taxpayers. Her threatened vetoes of the school bailout bills could set up a battle in the General Assembly over whether to override the first-term governor.

State Sen. John Land, D-Clarendon, whose district includes Florence 4, said he knows issuing bonds is not the best solution. But there is no other viable one, he said.

"We know of no other way to get this school district out of the spot that they're in, other than to give this additional money to them and let them spread it out over the next several years," Land said. "They seem to have stopped the bleeding administratively, let go of 20 employees, made a lot of cuts. But we have to get them back on their feet."

Area state senators have approved a local bill, requiring the approval of only the affected legislators, to let Florence 4 issue up to $1 million in bonds without voter approval.

However, local House members, including state Rep. Phillip Lowe, R-Florence, amended the bill, requiring the district to work toward consolidating with its neighbor, Florence 1, and requiring voters to approve the borrowing.

But some senators balked at those requirements, leaving the issue back before the House without the consolidation and referendum requirements, and Florence 4 in limbo.

Land said consolidation is a good idea, but it is politically difficult. "It would be wonderful if they were consolidated with the school district next door," he said. "But it's kind of like a shotgun wedding. You have to have two willing partners. But, right now, Florence 1 isn't interested because of Florence 4's debt."

In Colleton County, it's a loss of federal stimulus money that has led to a financial crunch. A pending bill would let the district borrow up to $2.5 million.

"Even with that, we're going to have to cut in other areas," said Assistant Superintendent Bob Pence. "We're hoping it'll help us hang on until the economy improves and the state can fund us at a higher level."

A spokesman for new state Superintendent of Education Mick Zais offered little sympathy, saying school districts, including Colleton, should not have used federal stimulus money to cover their recurring costs. "That was always one-time money," said Jay Ragley, Zais' spokesman. "They (the districts) knew it. They should have planned better."

Just how to pay for struggling school districts in lean years remains up for debate in the General Assembly.

State Sen. Darrell Jackson, D-Richland, has said encouraging districts to merge would save money and increase effectiveness. He has a bill pending before the Senate to form a study committee to look into consolidation.

More immediate help will come July 1, when all of the state's school districts will see at least a 10 percent increase in their base-student cost, Ragley said. But school districts say even that larger amount is well short of the $2,720 per student that a state formula says is required.

This story was originally published May 30, 2011 at 12:00 AM with the headline "Struggling SC school districts seek help."