NCS will generate between $150 and $250 million for facility improvements over next 20 years
Funding Capacity Result of Previous Boards' Foresight, County's Recent Growth
Last evening, the Nelson County Board of Education did not approve issuing nickel tax revenue bonds to fund the construction of the Thomas Nelson middle school addition. The bonds are necessary to finance the $24.7 million in construction bids that will unite high school and middle schools on the current Thomas Nelson campus.
The board voted to accept the construction bids on Jan. 17. Thursday’s 3-2 “no” vote to authorize bonds to pay for those bids means a delay to potential construction on the middle school wing. In the coming months, the NCS board may choose to revisit the bond sale issue or consider other facility planning options.
Thirty Year History of Facility Revenue
The bonds at issue are the mechanism public agencies use to finance capital projects, and those bonds are paid through funds set aside by law to only be used for specific purposes.
Superintendent Wes Bradley shared a little about the 30-year history of school funding.
“There is a lot of confusion about how school boards finance construction projects in Kentucky. Put simply, state law in 1991 required schools across the state to begin a 5-cent local ‘nickel tax’ contribution to fund school buildings. Facility funding is intended to increase learning opportunities while also enhancing operational efficiency. That means doing more for students and saving taxpayer dollars long-term.”
In 1994 and again in 2003, state legislation further allowed for “growth nickels” in communities like Nelson County that experienced significant property and population growth. Those nickels were intended to ensure long-term investments in facilities and student opportunities. Unlike in surrounding communities that did not experience similar growth, the Nelson County nickel tax levies are not subject to recall.
Learn more about facility financing and Nelson County Schools, projected revenues and current debt obligations
Facility Revenue is Not a Board Tax Rate Decision - Makes Up 24% of Total Funding
In Nelson County three “nickel taxes” add up to 17.1 cents of the local school tax rate, and generate nearly $6.7 million annually to fund past and future school facilities. This money will continue to be generated regardless of any board decisions. This number makes up about 24% of the total tax revenue and can only be spent on facilities.
“Facility funding is out of our NCS board members’ hands,” Bradley added.
“When the board votes on tax rates, it does not impact the facility fund, it only impacts the annual general fund revenues that support salaries and operations.”
While Nelson County is fortunate to have a strong property value base to support schools, it’s healthy to also to see our current facility revenue in light of comparison to surrounding communities.
Currently, Nelson County has the lowest debt to revenue ratio in the region.
Growth in Nelson County Allows for Long-term Investment in Students
As Nelson County property values increase by 5%, the facility fund increases with it. One nickel in 2010 was generating around $1 million dollars. The same nickel today is generating nearly $2 million dollars. This continued property growth, coupled with trends over the last 20 years, is projected to generate between $150 and $250 million over the next two decades. Nelson County, along with school districts across Kentucky, have continued to invest in the future of students and community through facility funding mechanisms.
Learn more about the facility planning process and designs at nccommunitycampus.com.
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