ATLANTA - After almost 50 years of letting school districts financially fend for themselves, South Carolina will sell the second tranche of a $1.1 billion school bond authorization tomorrow.
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The competitive sale totals $327 million and includes $200 million for schools, $75 million for capital improvement projects, and $2 million for state highway projects. The first portion of the school bond authorization, worth $250 million, was sold a year ago, said David Adams, a spokesman for the South Carolina Treasury Department.
Treasurer Grady Patterson said he expects the sale to go well considering the state is rated triple-A.
Pierre Kisteneff, the president of Columbia Capital Markets Inc., who is familiar with what the state is trying to do with this program, agreed.
"With interest rates dropping, the bonds will be well received," Kisteneff said. "In my opinion, there will be no problem in the market's ability to absorb these bonds."
Kisteneff said the tremendous growth the state has experienced over the last 20 years has brought more pressures on the educational system. He also said major industries with facilities in the state, such as Honda Corp. and Michelin Tires Corp., demand highly qualified and skilled workers.
"By the state committing to issue this much debt for schools, it shows the measure of commitment they have to this issue," Kisteneff said.
Patterson and Gov. Jim Hodges led the charge almost three years ago after a report concluded that the state needed at least $3 billion for school capital needs. Patterson said school districts have traditionally funded capital needs, which led to concerns about disparity.
"Richer districts had more money to fund their needs, whereas the poor districts suffered because they did not have as much money," Adams said.
Kisteneff said that in the poorer districts it is common to see old and dilapidated schools. Adams added that most of the schools in the state are more than 40 years old. However, the scene is changing as proceeds from the bonds are used to update classroom facilities, as well as to build new schools, Patterson said.
The 1999 legislation that authorizes the bond package calls for the state to issue $750 million of general obligation bonds by 2004. Proceeds will then be made available to local school districts based upon need. The state money can also be used to pay off existing debt if a district's classroom needs already have been met, which would be welcome news to districts after they get construction financing.
Haynsworth, Marion, McKay & Guerard is the bond counsel.
