Nearly three decades after the City of Scottsboro and Scottsboro City Board of Education entered into an agreement to finance construction of Scottsboro High School, the two entities are again facing decisions that could shape school finances and city obligations for decades.
During the Scottsboro City Council’s November 2 work session, Superintendent Jennifer Williams and financial representatives presented a proposed financing arrangement intended to provide approximately $70 million for school construction and improvements.
Under the proposal, the school board would refinance approximately $14 million in existing debt currently carried by the city, allowing the district to increase its borrowing capacity while reducing the city’s outstanding school-related liabilities.
However, questions surrounding the proposal extend beyond whether the school system needs new facilities.
City officials have raised concerns about how the district would afford increasing annual debt payments, whether additional borrowing could eventually affect classroom funding, why existing maintenance needs have not been addressed and whether restructuring debt originally financed at significantly lower interest rates represents the best financial decision for taxpayers.
The discussion has also brought renewed attention to a funding agreement dating back to 1996, annual city appropriations to the school system and the long-term implications of extending financial obligations into another generation.
Williams said the district’s proposed improvements are necessary, not only to address deteriorating buildings, but also to support the city’s continued growth and economic development.
In a statement addressing the proposed financing and construction plan, Williams said, “Scottsboro is growing, and we need to address school facility needs that have been discussed for many years.
Even if we move forward today, it will still be approximately two years before students walk through the doors of a new school.
That’s why we feel a sense of urgency.
We are asking for the opportunity to restructure some existing debt and renegotiate our current funding agreement in a way that benefits both the City and the Board of Education.
This would allow us to move forward with needed school improvements and construction.
These improvements also support our community’s economic future.
Families considering a move to our area often visit our schools, and the condition of our facilities helps shape their decision about where to call home.
Businesses and industries considering Scottsboro also look at our schools as they consider the needs of their employees and their future workforce.
We want our facilities to reflect the quality of education our students receive and give families and employers another reason to choose Scottsboro. Strong schools and a strong city go hand in hand.”
The superintendent’s statement emphasizes the school system’s position that improvements should not be delayed further, particularly given the estimated time required to construct new facilities.
The proposal, however, has prompted questions about how the district would finance those improvements while maintaining existing educational programs and services.
The city’s financial involvement in school construction began with a sales tax increase approved by the Scottsboro City Council on August 28, 1995.
The ordinance increased the city’s sales tax rate to 3%, with the additional tax scheduled to become effective August 1, 1996, or upon termination of Alabama Act No. 93-390, whichever occurred first.
That legislation involved a 1% Jackson County sales tax commonly referred to as the “Jail Tax.”
On July 30, 1996, the city and Scottsboro Board of Education executed a funding agreement to finance construction of a new high school.
The agreement authorized the city to issue approximately $15 million in general obligation warrants and pledge the additional one-cent city sales tax toward repayment.
The agreement also anticipated that Jackson County might subsequently levy a county-wide education sales tax.
If such a tax became available, the school board agreed to apply proceeds toward the city’s school-related debt obligations, subject to the agreement’s limitations.
On January 6, 1997, Jackson County levied an additional 1% county-wide sales tax designated for distribution between the Jackson County and Scottsboro school systems.
The county education tax subsequently became a major source of revenue supporting school-related debt payments.
Unlike the city sales tax, which is deposited into Scottsboro’s general fund, the county-wide education tax revenues are designated for school purposes.
The financial arrangement has been modified over the years as additional school construction projects were financed.
The current proposal would again change how debt and tax revenues are allocated between the city and the school board.
During the administration of former Superintendent Dr. Sandra Spivey, The Clarion examined the historical financial relationship between the city and school system.
Records reviewed at that time showed that the Scottsboro Board of Education received approximately $2.8 million in county sales tax revenue during fiscal year 2015.
Approximately half was transferred to the city under the existing school debt arrangement.
Then-City Finance Director Rick Wheeler reported that payments associated with the bond issue totaled $1,412,102.77 between May 1, 2015, and April 30, 2016.
The outstanding debt balance at that time was approximately $25.8 million.
Historical records showed that approximately $700,000 was used to reimburse the city for high school-related payments, while another approximately $700,000 was allocated toward obligations involving Collins Intermediate School renovations.
Of the latter amount, approximately $222,000 was applied to debt service, with the remaining approximately $478,000 retained until the end of the fiscal year.
The earlier review demonstrated how the funding agreements allowed tax revenue to pass through the city for debt payments before remaining funds were returned to the school system.
That process remains relevant to the current discussion because the school board is requesting changes that would free certain revenue sources for additional borrowing.
Williams told council members that aging school buildings have reached a point where major renovations or replacement must be considered.
Collins Intermediate School was constructed in 1966, while Nelson Primary School and Scottsboro Junior High School date to the 1970s.
Scottsboro High School, which opened in 1999, also faces significant infrastructure concerns.
According to Williams, the district has approximately $100 million in identified capital improvement needs.
School officials presented a facility assessment based on Alabama State Department of Education evaluations.
Under the assessment, scores of 60% or higher indicate severe or end-of-life concerns.
Collins Intermediate School had 11 building systems meeting that threshold, more than any other school included in the assessment.
Its roof and fascia and soffits each received ratings of 90%, while cabinetry and
shelving, exterior doors and frames, and exterior windows were rated at 80%.
Electrical and plumbing systems were rated at 70%.
Nelson Primary School had two areas rated at 90%: its roof and fascia and soffits.
Scottsboro Junior High School had three systems rated at 60%, including ceilings, exterior doors and frames, and exterior windows.
At Scottsboro High School, heating and air conditioning received a 70% rating, while the roof and floor finishes were each rated at 60%.
Caldwell Elementary School was the only facility included in the assessment without any systems reaching the severe threshold.
Williams emphasized that the district’s concerns involve essential infrastructure rather than cosmetic improvements.
The proposed capital improvement plan includes approximately $39 million for construction of a new junior high school.
Renovation and expansion of the existing junior high school into an intermediate school is estimated at approximately $22 million.
Additional projects include a new auditorium, improvements to the Scottsboro High School roof and heating and cooling systems, and a baseball and softball locker room facility.
The high school roof alone is estimated at approximately $4 million, while HVAC improvements could cost an additional $4 million or more.
The proposed locker room facility is estimated at approximately $1 million.
Williams said two architectural firms specializing in school construction produced similar preliminary estimates.
The superintendent also defended the need for an auditorium, explaining that the proposed school reconfiguration would eliminate the district’s current auditorium.
She said students involved in performing arts deserve appropriate facilities just as student-athletes need facilities to support their programs.
However, questions have been raised about using Bynum Auditorium, located inside the Board of Education building, which underwent a $780,000 renovation project last year.
The renovation has also become relevant to questions surrounding the district’s proposed construction priorities.
The capacity, intended uses and suitability of the renovated auditorium as an alternative to the proposed facility were not established in the work-session presentation.
Concerns have been raised about whether the proposed auditorium and other projects should take priority over immediate maintenance needs.
Financial representatives explained that the city currently carries approximately $26 million in outstanding school-related debt from four separate obligations issued in 2012, 2013, 2020 and 2022.
The school board proposes refinancing the 2012, 2013 and 2020 obligations, totaling approximately $14 million.
The city would retain the remaining 2022 obligation, totaling slightly more than $12 million.
The 1997 county-wide education sales tax would remain associated with the 2022 debt.
That revenue source generated approximately $2.9 million during the previous year, while payments on the remaining obligation range from approximately $750,000 to $1.5 million annually.
Representatives said the existing tax collections provide sufficient coverage for those payments.
Under the proposed agreement, the school system would independently issue new debt and pledge available revenue sources toward repayment.
Without changes to the existing agreement, officials estimate the district could borrow approximately $55 million.
With restructuring, borrowing capacity could increase to approximately $75 million.
That additional $20 million would allow the district to include projects that might otherwise have to be postponed.
One of the central concerns raised involved the amount the school system would be required to pay annually over the life of the proposed financing.
The discussion referenced approximately $2.4 million in existing annual debt payments and an estimated additional $2.8 million in annual debt service associated with the proposal.
Those figures have not been independently reconciled with the complete financing schedule.
Under the proposed structure presented during the work session, annual payments would increase over time based on projected revenue growth.
Financial representatives said their projections assume annual revenue growth of approximately 1.5%.
However, concerns were raised about the potential impact if school revenues fail to increase as expected.
Unlike a financing arrangement in which payments remain level or decrease as debt is retired, the proposed structure would require larger payments in future years.
In an interview with The Clarion, City Council President Richard Bailey questioned the district’s ability to address future maintenance needs, unexpected expenses and additional facility problems while meeting its increasing debt obligations.
Council member Patrick Stewart expressed concerns about what programs, services or positions might be affected if revenues fail to keep pace with scheduled payments.
The school system does not have independent authority to increase tax rates to generate additional revenue.
Williams told council members that school officials developed the proposed payment schedule based on what the district believes it can reasonably afford.
She said the school system maintains approximately 5.35 months of operating reserves and has attempted to use conservative revenue projections.
However, the complete proposed repayment schedule and the precise annual payment obligations throughout the financing period were not established during the work session.
Council members also questioned the financial consequences of refinancing debt carrying relatively low interest rates.
Of particular concern was the 2020 bond issue, which carries an interest rate of approximately 2.25%.
Financial representatives acknowledged that refinancing could involve an interest rate of approximately 4% to 4.5%, depending on market conditions and the district’s credit rating.
The additional financing cost associated with refinancing the lower-interest obligation was estimated at approximately $1 million.
Representatives explained that the 2020 obligation, scheduled to be retired in 2033, limits the school system’s ability to structure additional debt payments within its projected budget.
Without refinancing, some improvements might have to be postponed until the obligation is paid off.
School officials argued that delaying construction for seven years could ultimately prove more expensive because of rising construction costs.
Council members expressed concern that the district would be increasing the cost of existing debt to access additional borrowing capacity.
They also questioned whether the school system should proceed with such a substantial financing plan before final construction bids and interest rates are known.
Financial representatives said the district expects to receive its credit rating in mid-November, which will help determine borrowing costs.
Stewart and Bailey each raised concerns regarding the distinction between major construction projects and routine facility maintenance.
While acknowledging that several school buildings have significant infrastructure deficiencies, questions were raised about why the school system would need long-term financing to address roofing and heating and cooling systems.
The concern centered on whether ordinary maintenance and capital replacement needs have been adequately funded in previous budgets.
Both council members also expressed concerns about how the district would handle additional maintenance needs arising during the proposed 30-year financing period.
Bailey stated, “Even if the current construction projects address existing problems, school facilities will continue to require repairs, replacements and upgrades.
The concern is whether increasing annual debt payments could reduce the money available for those future expenses.”
Questions were also raised about the school system’s existing financial commitments, including school resource officers, student supplies and other operating expenses, and whether those obligations would remain affordable alongside additional debt payments.
The city provides annual appropriations that include approximately $325,000 and $100,000 through its regular budget process.
A separate $500,000 annual appropriation is also provided to the Scottsboro Board of Education in connection with improvements at Caldwell Elementary School.
The Caldwell-related arrangement was described as a 10-year commitment at $500,000 annually, followed by four years of decreasing payments of $400,000, $300,000, $200,000 and $100,000 before ending.
The smaller annual appropriations are approved through the city’s yearly budget process and may be subject to future council action.
The city and school system also have a separate financial agreement covering school resource officers, another expense mentioned during the discussion.
A School Resource Officer Agreement executed May 21, 2024, between the City of Scottsboro, Scottsboro Police Department and Scottsboro City Board of Education provides additional insight into the financial relationship between the city and school system.
The agreement provides for one school resource officer at each of five campuses: Scottsboro High School, Scottsboro Junior High School, Collins Intermediate School, Nelson Primary School and Caldwell Elementary School.
Under the agreement, the city assigns two full-time active police officers to Scottsboro High School and Scottsboro Junior High School.
The city pays the salaries, benefits and other employment costs of those two officers, while the school district reimburses the city $100,000 annually for both officers combined.
The agreement further provides that if the city grants a cost-of-living increase to its full-time police officers, the $100,000 reimbursement amount increases by the same percentage.
For the remaining three schools, the agreement provides for retired law enforcement officers serving as school resource officers.
The school district is responsible for reimbursing the city for compensation and benefits for those officers, with the agreement listing an annual salary reimbursement of $37,400 per officer.
The district is also responsible for specified payroll taxes, hazard insurance and expenses associated with vehicles, uniforms and other required law enforcement equipment for those three officers.
The police chief is required to provide monthly reports of hours worked, with reimbursement due within 14 days after the report is submitted.
The contract demonstrates that school resource officer expenses involve both city funding and school board reimbursement, rather than a single annual payment made entirely by one entity.
The agreement does not establish the total net annual cost to the city because the actual salaries, benefits and other expenses for the active officers are not included.
Both Stewart and Bailey expressed concern that the city’s existing school-related financial commitments could limit its ability to fund other services and programs for youth throughout Scottsboro.
The council members also questioned how a new long-term financing agreement could affect future city councils, school boards and taxpayers.
The current funding arrangement involves pledged tax revenues that support existing school-related debt. Questions remain about how those pledges would change under the proposed restructuring and whether the new agreement would affect the duration of existing financial commitments.
The distinction between extending debt payments and extending a tax is significant. Whether a tax would have to be extended depends on the legal authority governing that tax and the proposed financing documents.
Officials considering the proposal will need to evaluate not only the immediate reduction in city-held debt, but also the financial arrangements that would remain in place.
According to Stewart, the school system’s long-term ability to meet debt payments without adversely affecting educational services remains an important consideration.
The school board could proceed with a smaller financing plan without the city’s participation, but representatives said its borrowing capacity would be limited to approximately $55 million.
Reaching the higher funding level would require changes to the existing city-school funding agreement.
Financial representatives said the district hopes to complete financing before Christmas if the necessary arrangements are approved.
Williams has emphasized that the proposed investments are intended to provide students with modern educational facilities, address infrastructure problems that have developed over decades and strengthen Scottsboro’s appeal to families and businesses.
However, the number of students each proposed or renovated facility would accommodate without future additions was not discussed during the work session.
The proposal remains under discussion, and no final agreement was approved during the November 2 work session.
The decisions now facing city and school officials extend beyond the construction of new buildings.
They involve how Scottsboro will finance its educational infrastructure, distribute school-related tax revenues and balance immediate facility needs against financial obligations that could continue for another 30 years.
by Heather Dohring
