Why should Guilford County Schools let everyone else have all the federal bond fun?

While county commissioners and the Greensboro City Council are still trying to hash out the confusion surrounding federal stimulus bonds for a proposed downtown luxury hotel, GCS is reviewing its list of projects that could be funded with federal bonds, entertaining the idea of using those bonds to pay for projects passed by voters in a 2008 local bond referendum.

GCS stands to gain $34 million in no-interest Qualified School Construction Bonds (QSCB), which were authorized by the federal government through the American Recovery and Reinvestment Act. Proceeds must be used for the construction, rehabilitation, or repair of public school facilities or the acquisition of land on which a school facility would be built.

But some school system officials want to divert those funds to cover existing bond obligations.

The North Carolina Department of Public Instruction reports that the state received a total QSCB allocation of $275 million. Of that, $261 million has been passed along to school systems, with $34 million in total bonds being issued. The state’s top five county school systems — Cumberland, Forsyth, Guilford, Mecklenburg, and Wake —were allocated a total of $88.4 million.

The stimulus act also more than tripled funding for another federal school bond program. The Qualified Zone Academy Bond (QZAB) allocation went from $400 million annually nationwide to $1.4 billion for 2009, with an equal allocation coming in 2010.

North Carolina in total received $44 million in QZAB. Of that total, $19 million has been allocated to 13 school systems.

GCS’ $34 million in qualified school construction bonds will come in two $17 million installements, one for 2009 and another that is expected for 2010. Facilities director Leo Bobadilla told the Board of Education at a recent meeting that while the federal government will allow systems to carry over 2009 allocations, they will not be allowed to carry over 2010 allocations, creating what he described as a “use it or lose it” situation.

Bobadilla and system chief financial officer Sharon Ozment presented the board with a list of projects that would qualify for QSCB funding, the majority of them heating and air conditioning improvements to several schools. Also included on the list were door, window, and roof replacements at several schools.

The most expensive renovations are HVAC upgrades at Ferndale Middle School, at a cost of $2.4 million, and at Northeast Middle School at a cost of $1.5 million.

Bobadilla also offered up another alternative, however — use some of the QSCB bonds to fund projects in a $457 million bond referendum approved by voters in 2008. Guilford County commissioners, who already have warned school officials to brace for another tight budget year, are pushing that alternative.

Bobadilla suggested the proposed Northern Greensboro Elementary School, at a cost of $25 million, for QSCB funding.

School board chairman Alan Duncan noted that switching new construction from the local bond to federal bonds would save taxpayers $6 million.

“It’s very important to preserve our assets, because they’re the taxpayers’ assets,” Duncan said.

But board member Nancy Routh questioned that notion, saying the money saved was only “imaginary money” because it was merely savings on debt service.

“Theoretically it’s there, but there’s not $6 million somewhere in existence that the county could allocate for another project,” Routh said.

In the end, the board voted 6-3 to approve the list of maintenance projects as presented by staff and present it to county commissioners, with Duncan and fellow board members Garth Hebert and Paul Daniels voting against. Board members Amos Quick and Deena Hayes were not present.

Still, as school systems across the state wait for their 2010 allocations, the big question is how quickly they will have access to funds. The economy is still slow, and the bond market remains down.

Sam A. Hieb is a contributor to Carolina Journal.