2001-11-16 Taxpayer Alliance: Vote no on bonds - excessive use of bonds erodes leverage
FOR IMMEDIATE RELEASE: 10/11/2001
CONTACT: ARTHUR PURVES e-mail: firstname.lastname@example.org phone: 703 281-0176
TAXPAYER ALLIANCE: VOTE NO ON BONDS - EXCESSIVE USE OF BONDS ERODES LEVERAGE
Arthur G. Purves, president of the Fairfax County Taxpayers Alliance, today warned voters that approval of the $378M school bond referendum will perpetuate school overcrowding by rewarding the school board's fiscal irresponsibility.Ý "Every bond referendum is approved and yet the number of school trailers increases.Ý Obviously bonds are not the proper funding source," Mr. Purves stated.
Bonds are used for leverage, i.e., to generate a cash source that is much larger than the annual debt service payments.Ý However, Fairfax County has sold so many bonds that its annual debt service actually exceeds the revenues from bond sales!Ý For example, last year the county sold $175M in bonds (of which $130M was for schools) but paid $185M in debt service. Since 1995, Fairfax County has spent $100M more on debt service than it has received from bond sales.ÝÝ That extra $100M could have built five new elementary schools. Bonds are appropriate for one-time capital costs.Ý However, with the steady growth of the school system, building construction and maintenance are annually recurring expenses.Ý "Use of bonds for recurring expenses inevitably results in debt service becoming larger than bond revenues, is fiscally irresponsible, and contributes to school overcrowding," Purves stated. Recurring construction expenses should be paid for from the schools' operating budget, which is $800 million more than is required to pay for enrollment growth and inflation over the last 25 years.Ý However, the school board has arbitrarily decreed that school construction must come from bonds and not the operating budget.Ý The result is that while buildings are neglected school staff has increased four times faster than enrollment, producing no significant increase in academic achievement. "Children would be much better off if voters rejected the bond referendum and forced the school board to pay for recurring construction costs from its lavish operating budget," Purves concluded.