ARKANSAS PUBLIC SCHOOL DEBT

NEARLY TRIPLES SINCE 2000

“The following provision for Arkansas school districts is recommended: a prohibition on the use of all taxes collected and secured by the pledge of an ad valorem tax levy to debt service for other than reducing bond principal and interest.” Policy Foundation, 1998 report

(December 2011) Outstanding loans and bonded indebtedness of Arkansas K-12 public school districts and educational service cooperatives has nearly tripled since 2000, increasing from $1.2 billion to $3.5 billion since 2000, public records show.¹

Trend: More Districts with Higher Debt Ratios

One trend is more Arkansas districts with higher debt ratios. Districts with “no indebtedness” declined from five to one in the period, while the number of districts with a debt ratio greater than 20% was constant at 10.²

The number of districts with “total indebtedness ranging from .1% to 5% of total assessed valuation” declined from 135 (2000) to 57 (2011), and those in the 5.1-to-10% range fell from 112 to 86. But districts in the 10.1-to-15% range expanded from 41 to 61, and those in the 15.1-to-20% range increased from 7 to 24 in the period.

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¹ Arkansas Department of Education, “Outstanding Indebtedness for Arkansas Public Schools, June 30, 2011 and June 2000, http://arkansased.org/about/reports.html. Arkansas had 310 districts in 1999-2000 and 239 in 2010-11. Non-bonded debt with an energy savings contract is excluded from total indebtedness in calculating the debt ratio of school districts. Postdated warrants, lease purchase agreements and installment contracts must be registered with the Department of Education and “shall be a part of the total debt of the district. It is considered “non-bonded debt.” (pp. 1 and 7, 2011 report.

² The 10 districts and their counties (1999-2000) were Alma and Mountainburg (Crawford), Turrell (Crittenden), Greenbrier (Faulkner), Spring Hill (Hempstead), Cushman (Independence), Fouke (Miller), Mount Judea (Newton), Wickes (Polk), and Hector (Pope). The 10 districts (2010-11) were Valley View (Craighead), Alma (Crawford), Earle (Crittenden), Poyen (Grant), Spring Hill (Hempstead), Lonoke and Carlisle (Lonoke), Lavaca (Sebastian), Horatio (Sevier), and Lincoln Consolidated (Washington).