DALLAS — The Pulaski County Special School District will resubmit to the Arkansas Board of Education a request to issue $81 million in secondary-lien general obligation bonds that the board rejected earlier this month for the lack of a detailed financial plan.
District trustees voted Tuesday to again ask the state board to approve the bonds based on its amended financial plan prepared by interim superintendent Rob McGill and interim chief financial officer Anita Farver.
A letter detailing the changes adopted by the district’s board was hand-delivered to the state board to meet the Tuesday noon deadline for a place on the Board of Education’s May 11 meeting.
The two officials were appointed to their positions in March after the school board bought out the contract of superintendent James Sharpe and CFO Larry O’Briant retired. Both men had advised trustees that the district’s long-term finances could not support the proposal for $81 million of 27-year secondary-lien bonds.
The Pulaski County district currently has some $67 million in outstanding bond debt. The proposed issue would boost debt service from the current $5.5 million per year to approximately $11 million.
The district’s debt, which is covered by the state’s school bond enhancement program, is rated A by Standard & Poor’s and A1 by Moody’s Investors Service.
Carey Smith, a senior vice president at Stephens Inc., the district’s financial adviser, said the revised financial plan calls for most of the increase in debt service to be supported by additional revenue generated through annual increases in assessed valuation. No increase in the district’s 14.8 mill property tax for debt service will be required, he said.
“The Board of Education told the district to come back with a solid financial game plan,” Smith said. “We think this is a solid plan that the board will endorse.”
Property assessments within the district have grown from $1.9 billion in 2006 to $2.3 billion in 2008. District officials expect to generate $3.5 million in new revenue this year due to higher assessments.
The plan also calls for transferring $2.8 million from the operating fund to debt service, and reducing administrative costs by $190,000 a year. The earlier proposal called for cutting costs by shortening teachers’ contract year to 190 days from 192, but the current plan does not.
If the state board approves the bond request in May, Smith said the debt could be issued as early as June.
Proceeds from the issue would finance construction of a high school and a middle school. The current facilities are obsolete and outdated, according to Smith.
“The district wants to get this project up and running,” he said.
The district will receive $7 million from the state for construction of the two new schools, and will draw on up to $12 million from its building fund.
The total cost for the new high school is approximately $55 million, with the middle school expected to cost $28 million. The project will include $12 million for equipment and $5 million for a new stadium.
McGill told trustees on Tuesday that he would present a plan next month to seek $12 million in federal stimulus funds over the next two years to finance repairs and renovations at other district facilities.
The district has some 18,000 students. It serves all of Pulaski County, except for Little Rock and North Little Rock, and portions of Lonoke, Saline, and Faulkner counties.