Fulton schools set to become debt-free in 2012

The Fulton County school system is doing something most businesses and homeowners would love to claim. It’s on the path to shedding its long-term debt.

The system, which currently owes $178.8 million in principal and interest, has a goal of being debt-free by 2012.

If it meets its objective, Fulton could be in an elite class of school systems.

According to the state Department of Education, only a few school districts can boast that they’re not carrying any long-term debt.

They include Cobb and Rockdale counties in metro Atlanta.

In fiscal 2008, the last year for which the state has data, the collective long-term debt of Georgia’s school systems exceeded $4 billion, with more than $500 million of that in Gwinnett County.

The Fulton County school system is working to pay off its long-term debt with money from property taxes dedicated to debt retirement and with proceeds from its special purpose local option sales tax, or SPLOST, said Chief Financial Officer Theresa McDugald.

Every year until 2012, the school system will take about $32 million raised by the special property tax and apply it to the debt, McDugald said. In addition, $18 million in SPLOST proceeds will go toward the debt in 2009, 2010 and 2011, she said.

A final SPLOST payment of $36 million in 2012 will leave the system debt-free, McDugald said.

Success will spell a tax break for property taxpayers.

Wiping out the school system’s annual debt payment of $23.5 million will, after 2012, save about $118 on a $250,000 house and about $237 on a $500,000 house, McDugald said.

Being debt-free also means that when the next SPLOST vote rolls around in 2012, the school system will be able to dedicate all the proceeds to construction and technology, McDugald said.

“I think [debt-free school systems] are becoming more common because school systems have had the availability of SPLOSTs,” she said.

Cobb County’s school system has been debt-free since 2007, said schools spokesman Doug Goodwin. “We carried bond debt for 57 years prior to that,” he said.

Like Fulton, Cobb capitalized on the advantages of having SPLOST to erase its long-term debt, Goodwin said.

“It’s been a really big way to say ‘SPLOST works,’ ” he said.

Rockdale County’s schools have been debt-free since January 2006, said Cindy Ball, director of community relations.

By using money from two separate SPLOSTs, Rockdale was able to eliminate $44.8 million in long-term debt and save $4.9 million in actual interest payments, Ball said.

Property taxpayers will save a collective $2.4 million a year through 2010, she said.