ATLANTA -- An ambitious t2-year capital improvements program for Orange County, Fla.'s public schools will probably require about $500 million of general obligation debt, a key school system official said yesterday.
Carey E. Ferrell, associate superintendent for business services, said that bond funding sought to help pay for the capital program could conceivably total nearly $1 billion. The amount, he said, is the gap between the full cost of the school system's expected capital needs for its 1994 through 2006 school years -- estimated now at more than $2.6 billion -- and the projected $1.7 billion in state and local revenue available to the system during that period.
Ferrell said, however, that by the time the system's school board gets a more detailed capital needs assessment than the one currently available, the funding gap will probably be pared to no more than $800 million. To help cover that, he said, voter approval is likely to be sought for about $500 million of GOs.
"We'd like to finance our needs some other way," he said. "But when it comes right down to it, we'll probably look to general obligation bonds to carry a lot of the load."
The system's financial adviser agreed. "I think we will have to make Our case to the voters because I don't think the state will be a likely source of new revenues," said Thomas Holley, president of Government Financial Advisors Inc. of Winter Park, Fla.
The school system's large capital program is necessary because of swelling student enrollment in the Orlando-area county, which will require 34 new public schools by 2006, Ferrell said.
The system, with 140 schools and a current enrollment of about 118,000, is expected to face a 50% increase in students by 2003, Ferrell said. He noted that about 35,000 public school students are currently taught in portable classrooms.
Because the school board has stipulated that a private firm must first complete a detailed analysis of the system's capital needs, Ferrell said, the earliest date for a GO bond referendum would be November 1995.
If voters then sign off on the debt, bonds would probably be sold in approximately $100 million increments every two years.
The school official said that this Monday, the system's staff chose three firms as finalists for the needs survey. The finalists will be presented to the school board on Nov. 29, with an award expected as early as Dec. 13, Ferrell said.
He said the needs survey will probably require about six to nine months to complete. If the firm designated for this task does a good job, he said, it would probably be chosen to oversee the capital construction phase.
In the meantime, Ferrell said, the school system will also explore ways to avoid tapping the debt markets. One alternative, he said, would be to obtain legislative authority to levy an optional one-half cent in sales taxes, which could generate between $60 million and $70 million a year.
Ferrell said that the school system's current capital needs estimate for the 1994 through 2006 school years includes: $800 million for new schools, $630 million for renovations, $270 million for maintenance, $480 million for new technology, $70 million for buses, and $20 million for portable classrooms. In addition, the estimate must cover about $350 million for payments on outstanding lease financings.
Available revenues over the 12-year period come from both state and local sources, Ferrell said. The state is expected to provide about $290 million, local property taxes about $1.14 billion, local school impact fees, $170 million, and other local revenues, $90 million.
Ferrell said that debt service on $500 million in GOs could be covered with a property tax increase that would peak at one mill in seven years. The school system is currently at its two-mill limit for capital needs, and with 7.2 mills devoted to operating expenses, it is just under the overall 10-mill cap allowable without voter approval.
School system officials are mindful of the problems large bond authorizations have had in central Florida. In 1990, voters in Seminole County, which is just north of Orange County, squashed a proposed $520 million of GOs for school building and renovation.
In 1988, on the other hand, voters in Dade County narrowly approved a $980 million general obligation school bond referendum.
Orange County's school system has not sought a referendum on general obligation debt since the late 1960s, when about $25 million was authorized, Ferrell said. The school system currently has no GO debt outstanding.
"If we go to referendum, everybody realizes we have a big selling job to do," Ferrell said. "But we'll be ready."
Of the $204.7 million of lease revenue bonds the school system sold in 1990, $168 million are outstanding.
