STEM Bond Hits County Snag

WINNSBORO – Board members of the new Midland’s STEM Charter School came before County Council’s Presentation Committee last week asking the committee to recommend that Council include on its next agenda a request for approval of a $39,261,000 bond, $3,422,000 of which will go to help fund the school. The attorney for the school, Steve Cox, and Interim Fairfield County Administrator Milton Pope explained to the committee that the approval, in the form of a resolution, was little more than a technicality. Pope said the approval of the bond was merely a requirement by the Internal Revenue Service (IRS) for the school to receive tax exempt status. County attorney John James explained to the committee that there was no risk to the County to approve the bond, and that the County would not be liable should the school default for any reason.

“It would not be a debt or responsibility of the County,” James assured the committee.

Still, the three committee members, County Council Chairman David Ferguson (District 5) and Councilmen Mikel Trapp (District 3) and Dwayne Perry (District 1), quizzed the members of the STEM group and, in the end, delayed the approval, voting unanimously for a motion by Perry to defer the matter until March 10, saying they needed more time to study the issue.

“This is certainly something new to us,” Ferguson told the STEM group. Cox explained to Ferguson that Council had given such approvals for industrial projects and that this was the same thing.

Pope explained at the beginning of the meeting that under new guidelines for agenda items, Council now requires that agenda items first go before the Council’s Presentation Committee, which will then recommend to Council that the item be placed or not placed on the agenda. Or, as Pope pointed out, the committee does not have to even make a recommendation.

Ferguson asked Cox why the bond is for $39,261,000 when the school is only receiving $3,422,000. Cox explained, “The bond’s issuing authority is the Wisconsin Authority, which covers projects in a multitude of states. So you see several other projects listed in this bond besides STEM. Only $3.5 million of the bond goes to STEM. But the law requires the full amount of the bonds to be listed in the resolution.”

“Is this approval process customary (to ask for County Council approval)?” Perry asked.

Cox explained that not only is it customary, but that, “if our bonds are to be tax exempt, the governing body of the jurisdiction in which the project is located must have a public hearing and approve the bond issue. So these are held all the time. You probably do them for industrial projects.”

Perry asked if there was another way to have the bond approved. Cox said there are two candidates for approving this bond – the county or the state. But Cox said it is not customary to ask for the state’s approval.

“That would be very unusual. Neither the Governor nor the Attorney General have an established procedure to do this,” Cox said, adding that it had been done only once that he knew of, in Charleston, when a council member had a conflict of interest.

“The reason we came to this council is because you are customarily the body that approves bond issuances,” Cox said.

Still, Perry asked again, “Has anyone ever gone outside that (the local government of jurisdiction) process?”

Cox reiterated that it had been done in Charleston and re-explained the situation.

“Every charter school in South Carolina that I’m familiar with has come before the local government,” Cox said.

James told the committee, “We would be doing this as a resolution, so this does not bind the Council on its ability to borrow or its credit rating.”

Perry asked how many charter schools there are in the state. Cox explained that 30-40 have been authorized by local school districts, but that now most charter schools are authorized by the State Charter School District. He said there are about 20-30 authorized in this way.

Perry asked why the STEM school had not asked to be authorized by the local school district, and Cox explained that the Charter School District offers a uniform procedure throughout the state and that its procedures are more streamlined and easier to navigate. Kevin Thomas, Board Chairman, also explained that the drive to establish the school began in 2011, prior to the hiring of J. R. Green as Superintendent of the Fairfield County School District.

To make it easier for the committee members to understand, Pope explained that the approval they would be giving the school would not be an endorsement of the school, but approval of a process. Cox compared the approval the school seeks to a business license requirement.

“A business needs a license. The County may or may not like a certain business, but it issues a business license as a technical satisfaction for that business to operate,” Cox said.

Perry asked Pope if the resolution would require three readings, and Pope reminded him that it would be just like any other resolution.

“A resolution only has one reading,” Pope said. “And if you place the item on the agenda, it is just to fulfill the technical requirement of the IRS.”

“So if I want to deliberate longer and reconvene another committee meeting, I can do that?” Perry asked, to which Pope answered that he could. Perry said he needed two more weeks to study the issue.

The committee voted unanimously to defer a recommendation until they could meet again early on March 10 before the Council’s next regular meeting. Ferguson said the item would appear on Council’s agenda for a possible vote that night in case the committee recommends it to the agenda. If the Council votes to approve the item to be on the agenda, a public hearing would be held at a later date. Ferguson said he would poll the other Council members prior to the next meeting to see if the STEM members need to come back to answer questions at the next Council meeting.