School Bonds & The Pony Express Analogy

The Alpine School District personnel are campaigning for $250M more in new bond debt to be on the ballot in 2011.  Even though the ASD is one of the best-run districts in the nation, it is already $389M in debt and spends 67% of our local property taxes and the education system spends 100% of our State Income Tax.  In addition, the school district has the authority to levy a “capital tax” from which they collected an additional $70M in addition to the $230M bond that was floated in 2006.

Robert Smith, Assistant Superintendent, Business Administrator explained that the district uses fifteen-year contracts (many districts use 20 and 30 year loans) so they can get better rates of interest and that they only borrow against the authorized money as needed thus creating a stair step effect in the debt.  Mr. Smith reported that ASD pays about $30M a year against the principle plus interest payments.  If the interest rate is 4%, ASD must be paying $15M a year in interest. The interest alone is equivalent to one new elementary school a year.  At the $30M a year pay off rate, the district is 13 years in debt.

The question that must be asked is, “How much is too much debt?”

The auditor for the City of Highland observed recently that the city is over extended.  Its debt limit should be no more than 60% of its revenue.  If we use this same yardstick, ASD’s debt should be no more than 60% of $364M (it’s 2009 revenue) or about $220M.   In other words, ASD should not borrow another dime for nearly six years if its revenue stream remains at the 2009 level.

Utah schools are in a very difficult situation.  The average family size is the largest in the nation and at the same time the Federal Government is confiscating our land and thus reducing our ability to educate our children.  The Grand Staircase Monument alone cost Utah schools an estimated $2B.  President Obama directed the cancellation of 70 drilling permits this year thus further reducing our ability to fund education.  The Federal Government now controls 70% of the state.

State legislators are moving to exert our state rights but it may be years before we see much relief for our schools.  In the meantime we must find ways to educate our children.  It appears two things must happen.  Parents must take on a greater role and the school system must adapt.  We need public schools to be a resource center for parents and to provide basic instruction in reading, writing and arithmetic.  Gone are the days of “Enviro-Ed” and free lunches.

We have the technology and ingenuity in Utah Valley to construct a model educational system.  A Pony Express analogy illustrates the point.  We can hire better riders and buy faster horses or we can embrace technology.  No matter how heroic and courageous the efforts of the Pony Express riders and owners, they could not deliver the same service as a little old man sitting at a desk tapping on a telegraph key.  Education in America has been hijacked by “horse traders” intent on selling us mules for a Pony Express like educational system.  The equipment and the methodology both need an upgrade.

In lieu of bonds for buildings, maybe we need to look at a private funding model and use technology assisted teaching methods in this 21st Century.