Education bond referendum could meet with voter resistance
In light of the US House of Representatives’ approval of the $700 billion financial rescue package last Friday and the news of Wells Fargo’s proposed purchase of Wachovia, the $62.1 million education bond referendum on the Forsyth County ballot could meet with significant opposition from worried voters on Nov. 4.
Supporters of the measure point out that investment in community colleges is the best possible move for Forsyth County taxpayers in the current economic climate. Opponents of the referendum argue that the measure would simply result in higher taxes on citizens who are already financially strapped.
The purpose of the $62 million bond issue is to provide funds for Forsyth Tech to acquire facilities from the Winston-Salem/Forsyth County Schools and to improve and renovate facilities for use by the community college. The bond issue would also allow the school system to acquire and construct new facilities while expanding its current facilities for educational and administrative purposes. Tax revenues would allow the county to pay back the principal and maintain the debt service on the $62.1 million.
Gary Green, president of Forsyth Tech, said despite the current national crisis, the county’s financial position is strong, and voters should view this initiative as an investment in their future.
“Voters understand that when economic conditions are tough, it’s time to turn to their community colleges,” Green said. “I believe people will see this as a more long-term investment in their future. I’m optimistic about the bond referendum and our ability to pass it.”
John Davis of Deutsche Bank Alex Brown in Winston-Salem acknowledged the national crisis has had an adverse impact on the bond market, but investing in municipal bonds is seen as a smart move in turbulent economic times.
“Municipal bonds are the bargain of the decade,” Davis said. “I would not have said that two weeks ago. What voters have to decide, is it worth it for our community from an educational standpoint?”
In light of recent events, municipal bond yields are now seen as attractive relative to other investments due to their low risk, said Forsyth County Chief Financial Officer Paul Fulton. Municipal bonds offer investors security and peace of mind due to the fact they are backed by municipalities with the ability to tax.
“They are full faith and credit bonds — we hold out to investors that we will raise taxes to pay funds back. There is no risk practically speaking for someone to invest in these bonds,” Fulton said.
If the education bond referendum passes, the county would then produce an offering statement in conjunction with the Womble Carlyle Sandridge & Rice law firm of Raleigh, which should receive upwards of 10 bids from banks and brokerage firms, Fulton said. Those revenues will then come to county finance office and Forsyth County Commissioners will create a fund for Forsyth Tech and Winston-Salem/Forsyth County Schools. Forsyth Tech and the school systems will each put out contracts for bid. Once the county commissioners approve the bids, Forsyth Tech and the school system will come to the county when they need to pay a bill for their respective construction projects.
Fulton emphasized that Forsyth County has a triple-A bond rating, the highest rating possible.
Proponents of the bond referendum say that a proactive approach to the current financial crunch is investment in education. If Forsyth County hopes to compete in a global economy, it must train its workers for the high-tech jobs of the future.
“As a citizen who’s been involved with education, it’s a good thing,” Davis said. “I absolutely agree with Gary Green — the community college system is terribly important to this area’s economy.”
However, the bond referendum has its share of detractors, and NC Rep. Dale Folwell is among them. Folwell refers to the bond initiative as “the Forsyth Tech tax” and says he opposes the measure because it would place an unfair burden on the area’s taxpayers.
“To go in at this economic time and increase taxes on homeowners and use that money to destroy educational value is incredible,” Folwell said. “Voters should run from this.”
Folwell said Forsyth Tech’s plans to expand its facilities would disrupt its vocational education and career center and tear down 60,000 square feet of campus buildings. Folwell said he believes Forsyth Tech encourages students in the county schools to drop out by offering a high school equivalency degree that requires fewer credit hours to graduate, and therefore “destroys educational value.”
Terry Stoops, education policy analyst for the John Locke Foundation said it is incumbent upon public school systems and community colleges to not only maximize their resources but to constantly look for ways to accommodate student growth by creative use of current facilities.
Green said passage of the bond referendum would allow Forsyth Tech to expand its enrollment 50 –percent, from 8,000 students currently to 12,000 students by 2016.
Stoops said the county and proponents of the bond referendum should take into account citizens’ fears regarding the stability of the area’s economy, and the ripple effect on whether or not the bond succeeds.
“Residents have every reason to be fearful of economic conditions, especially on the ability of the county to get a decent interest rate on their bonds and the ability of taxpayers to pay the higher taxes to pay for such bonds — that’s a legitimate concern,” Stoops said.
However, Stoops acknowledged that the school system has an excellent track record of transparency with respect to school construction projects, and voters should take that into account as well.
“I have praised Forsyth County’s school construction program and that they have spent their money very wisely, so I don’t have concerns about the school administering the money. My concern is affordability,” he said.
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