Baldwin County’s innovative and award-winning funding plan developed by financial officer John Wilson allows the system to build new schools and have them paid for in four-year cycles.
“He is a rockstar,” State Sen. Chris Elliott said of Wilson. “There’s no other way to describe him. He has consistently looked at the problems that we face and come up with really innovative solutions to address them. Essentially it’s a big construction fund so there wasn’t any long-term debt.”
Superintendent Eddie Tyler said Baldwin schools’ pay-as-you-go program is the state’s largest.
“In fact,” Tyler said, “Ninety-five percent of all school construction in Alabama is funded utilizing the typical method of long-term bond debt.”
To protect the investment, the county is spending upfront. Tyler and other officials reached out to the local legislative delegation when a question from the split negotiations with Gulf Shores had no answer.
“We learned during the Gulf Shores separation that the law regarding school separation did not address how to resolve the transfer of assets acquired under debt-free construction as we are doing with our system,” Tyler said. “As a result, we asked Sen. Chris Elliott and our legislators to pass a law addressing the valuation of assets paid for with cash just as they do those paid for with long-term debt.”
In the local bill, any cities wishing to break away from Baldwin County would not only inherit any debt owed on any of the buildings, they would also have to pay for those buildings from the pay-as-you-go program.
“Essentially it deals with the depreciated value of the building and what the building’s worth is as opposed to what the debt on the building is,” Elliott said.
Tyler says it protects the investment made into the buildings from Baldwin County sales tax collections.
“Should a city choose to split away, we have an ethical obligation to ensure the taxpayers of Baldwin County are reimbursed for the cash they provided to the city for construction of any facilities,” Tyler said. “Replacement facilities can be provided at no additional cost to the remaining families.”
Under previous state law, breakaway systems would inherit any buildings the county owned free and clear, but also inherit any debt owed on the buildings in the breakaway district.
“Under the new law, that is still true for those paid with long-term debt, but also for those assets paid in cash,” Tyler said. “The city would pay the depreciated value of the assets as reported by the state Examiners of Public Accounts during our annual audit report. Now we have a law which addresses debt and cash-funded construction with valuations calculated in the same manner.”
The pay-as-you-go program is fueled by a 1-cent sales tax the county and schools share that was “stabilized” when the commission voted to make the tax permanent. The school’s portion gives the county $60 million a year and Wilson formulated the pay-as-you-go plan based on that revenue.
Tyler said the system saved about $75 million in interest during the past five years, mostly from using the pay-as-you-go method.
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