Albemarle elected officials continue conversation on how to pay for $318M school capital request
Last week, the Albemarle School Board met with the Board of Supervisors for a work session on financial planning that will be required to help cover the school system’s request for $318 million over five years to build two new schools, buy land for a third, and renovate existing ones. I wrote up the details of the request last week and this next piece captures the discussions of how to pay for it. (review the presentation)
That part of the conversation began with a note from Andy Bowman, the chief of the county’s Office of Management and Budget, about changing one policy. Currently Albemarle seeks to cap the percentage of debt service to revenues below a certain amount. Bowman said one scenario would be to expand that to eight percent.
“If we went to eight percent, there would be another $37 million under the county’s financial policies that could be borrowed that,” Bowman said. “That capacity is not planned for at this time because everyone at this table knows very well, that is not free money and we have to think about the other financial side. It’s just the borrowing but how it gets repaid.”
The county could go up to 10 percent, but that would take away funding that could otherwise go to other projects.
No decisions have to be made this early in the process, but the discussions were intended to inform staff on potential direction.
“This is not the end and the final decision for any of the schools or other needs that we have,” said Nelsie Birch, the county’s chief financial officer. “These discussions really are a way to inform [County Executive Jeffrey] Richardson who has to present a balanced budget to the Board of Supervisors in February.”
One option would be to raise the real property tax rate from the current 85.4 cents per $100 of assessed value. However, Birch said rising assessments have already brought in additional revenue.
“The Board always has the opportunity or the option to increase the tax rate,” Birch said. “For today, we have effectively increased taxes in 2023 to the equivalent of 9.9 cents. You just didn’t increase the tax rate.”
Another option would be a local sales tax increase dedicated to capital construction, but that avenue is likely closed as long as the Republican Party holds one of the two houses in General Assembly. Legislation to allow localities to hold referendums on an increase without state permission failed in a House of Delegates committee last February. (House subcommittee kills schools sales-tax bills, February 25, 2022)
In Virginia, School Boards have no power to raise taxes themselves. That’s entirely up to the Board of Supervisors or City Councils. But School Boards do prioritize what they want to have built.
Kate Acuff, School Board member for the Jack Jouett District, said her elected body has opted to proceed with creation of two High School Centers because that is a cheaper option than building a new school. The first Center is in operation at Seminole Place and a second will be built on county-owned land in Mill Creek.
“We have on our side made a huge effort to economic in terms of capital costs,” Acuff said.
Acuff also said the county has other initiatives it could appeal to in order to justify some expenses, such as installing more costly geothermal systems for heating rather than build cheaper boilers.
“How wedded to a Climate Action Plan is the county because it’s cheaper for us to build a school that’s not as efficient,” Acuff said.
Supervisor Diantha McKeel noted that there are $16.8 million in projects identified to help improve the Lambs Lane Campus where she said about a quarter of the student population attends. She noted that some of those improvements are road projects and Supervisors might seek funds that the School Board cannot apply for directly.
“To be a little innovative about this, let’s look at how we can work together perhaps using revenue-sharing money, Smart Scale funding, transportation funding for the Board of Supervisors to make perhaps that happen but the Board of Supervisors have to talk about that first,” McKeel said.
Both McKeel and Ned Gallaway were on the School Board before being elected as Supervisors. Gallaway had a series of questions. First, he wanted to know if the tax rate would need to be increased to achieve that $37 million in additional revenue that Bowman had mentioned.
“As it is today, we’d have to increase taxes by how much?” Gallaway asked.
Birch and Bowman said 1.5 cents dedicated to capital would cover the additional debt service but they would need to do further analysis. To fully fund the $318 million request would require a much higher rate increase but the finance staff did not have the exact numbers.
Gallaway also said the county and school board should consider working on some items together. For instance, there is a $1.7 million request from the School Board in FY24 for a data center. Gallaway suggested that could be reviewed as part of a larger county-wide study.
“The Supervisors will be getting a facilities study that’s going to be coming to us with next steps and recommendations about how we use our space,” Gallaway said.
That includes land on Berkmar Drive Extended given to the county as a proffer that has not yet been programmed.
Another item not yet known include the results of the 2023 reassessment.
At the end of the meeting, School Board Chair Graham Paige listed items he would like to have.
“I would like to have if possible have some pros and cons about a tax referendum, what would be some good points for having it, and then some cons, some bad points for having it if possible,” Paige said.
The Albemarle Board of Supervisors will further continue discussion of the five-year financial plan at their meeting on Wednesday.
Before you go: The time to write and research of this article is covered by paid subscribers to Charlottesville Community Engagement. In fact, this particular installment comes from the December 12, 2022 edition of the program. To ensure this research can be sustained, please consider becoming a paid subscriber or contributing monthly through Patreon.