Lottery Funds To Go For School Construction
From The Associated Press: NASHVILLE — Gov. Phil Bredesen’s State of the State address Monday will include a proposal to use state lottery money to spur school construction projects around the state. The governor wants the state to take $100 million from lottery reserves and use the money as a collateral for counties and cities that have poor or no credit ratings, administration officials told The Associated Press. The goal is to use the state’s financial clout to get the best-possible credit terms for local school districts.
“We in essence are establishing a guarantee fund for local construction that will help subsidize between $1 billion and $1.5 billion of new schools,” Finance Commissioner Dave Goetz said.
The governor’s speech is also expected to include calls for a cigarette tax hike to pay for other education initiatives, an expansion of the state’s pre-kindergarten program, lottery scholarships for community college and a more rigorous curriculum for public schools.
Goetz called the governor’s plan a “credit enhancement program” for any of the state’s 136 school systems that want to participate.
“We would pledge to the bond rating agency that if a local school district or county were to default on its bonds, we would pay one year of interest and principal,” he said.
Even the richest counties and cities don’t have the best bond rating, and the smaller school systems are often unable to even qualify for a rating.
A second prong of Bredesen’s school building proposal would be the creation of a state-run pool for local governments to access that would cut down on administrative costs.
Creating that sort of pool would put the state in competition with those already offered by the Tennessee Municipal League and underwriter Morgan Keegan & Co.
Both aspects of Bredesen’s proposal would require approval from the Legislature.
Tennessee school districts spent a total of $1.44 billion in the four budget years between 2001 and 2005, according to the state Department of Education.
Goetz emphasized that the program is not a giveaway to the school districts.
“Those people who are willing to step up, this gives them an enhanced credit rating to go do that,” he said. “Those people who don’t, they won’t take advantage with it.”
Bredesen’s plan contrasts with some legislative proposals to distribute excess lottery money to all school districts on a per-student basis, Goetz said. That sort of measure would deplete the reserves without guaranteeing any long-term school construction plans, he said.
“It’s kind of like the grasshopper and the ant,” Goetz said. “We want to build up something that will last over time.”
Bredesen, a Democrat who was re-elected in November, has said improving education would be the focus of his second term in office. But he faces a different political landscape after the state Senate elected a Republican speaker for the first time since Reconstruction.
By Erik Schelzig
02/05/2007
