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Home > Blogs > Get on the Bus > Archives > 2007 > March > 15 > Entry
What does this mean for school construction?
(Bradford’s $14 million, K-12 school — 90 percent state funded using Tobacco money — was one of the first built under the state program when it opened in 2002.)
Did Gov. Ted Strickland Wednesday propose halting the state’s $12 billion construction program and instead earmarking dollars from Ohio’s share of the national tobacco settlement — which is funding the building program — for other purposes?
That’s what it sounded like to me. Here’s what he said in his state of the state address:
“And, finally, my budget will authorize securitizing Ohio’s tobacco settlement funds for approximately 5 billion dollars.
Armed with those resources, we will help firm the financial foundation of our school systems for at least a generation.
With 2.2 billion of that money, we will meet all current commitments of the school facilities commission. Within five years, every dollar will be in the hands of local school districts as they create facilities of the future.”
What exactly does it mean to “securitize” the tobacco money? I think what he is suggesting is we follow the example of other states that have mortgaged future income for the sake of quick cash today.
A good recent case is Illinois, which privatized its state lottery. What this means is investors paid a chunk of up front cash today ($10 billion) and in return get to keep all profits from the lottery for the next 75 years.
This is something you see TV ads for all the time: “Are you receiving payments under a structured settlement? Contact us and get your money now!”
Strickland didn’t go into detail, but I can’t see how Ohio could attract investors without crafting a deal that would be a loser for the state in the long term. Yes, we could get an infusion of cash now, but wouldn’t we have to give away more money in the long run to make the deal work?
And if we don this, will some school districts be left out of the construction program altogether? Strickland said “… we will meet all current commitments of the school facilities commission. Within five years, every dollar will be in the hands of local school districts as they create facilities of the future.”
While 190 districts have benefitted with new or rebuilt schools under the program so far, that means more than 400 districts have not gotten any state money for school construction. Some of those others may be in the pipeline for new buildings and therefore the state might be “committed” to them under Strickland’s language, but many, it seems to me, would be left out.
This was a long time worry of school districts during the Taft administration — that at some point the state would tap the school construction money and redirect it for other uses. If I’m reading Strickland’s comments wrong, someone please correct me.
(Image credit: Chris Stewart, DDN)
Permalink | Comments (2) | Categories: School Construction
Comments
By david
March 15, 2007 6:10 PM | Link to this
Construction money. The responsibility of the local district is to build their school buildings. The construction boom was a benefit to builders and gave “free” money to districts who had not directed enough funds to maintain their buildings through the decades or to build new ones as replacements became needed. Other districts who didn’t meet the “criteria” of having wasted enough of their own money on other than buildings, got lots of money: Bradford with most paid by others, Dayton, Trotwood (two swimming pools I heard), and others. While some districts were expected to pay most of the costs of new buildings. Something’s wrong there.By Mary
March 15, 2007 4:26 PM | Link to this
This reminds me of a quote I saw in March 3, 2007 Dayton Daily News -from a preacher. “I believe in minimizing brick and maximizing mission.” He is pastor of the Tipp City Ginghamsburg Church and picked by “The Church Report” as one of the 50 most influential Christians in the country. I am not one to normally tout preachers and religious institutions, but I really liked the quote and thought immediately of schools and education. Depending on how this construction money is used, I think the main benefactors will be the construction business, not necessarily education, students and taxpayers. The facilities will likely be costly to maintain and end up being an albatross when we cannot afford to pay more teachers, keep class sizes small, etc. In 2004, supposedly 10% or over $5 million of our district’s operating budget was used for operations and maintenance of school buildings and grounds. I’ll bet new football stadiums and basketball courts, rarely used and expensive to maintain, will be on every list while gifted intervention specialists, foreign language teachers, and small class sizes will slip as usual by the wayside.