County Schools Gird for Impact Of Government, Wall St. Woes

Debt Cost for Construction May Rise as Revenue Falls

Prince William County school officials are bracing for another uncertain budget cycle, possibly worsened by the Wall Street crisis that has damaged corporate and municipal lending capabilities.

In interviews, top school officials cautioned that although it's too early to tell for certain, the cost of borrowing for one or more capital projects might rise. School officials said they are also waiting to gauge the fallout from expected county and state shortfalls, driven by Wall Street's problems and depreciating home values, which would translate into less revenue.

The economic dysfunction could mean that government agencies such as Prince William schools might have to issue bonds with higher interest rates and debt payments, school officials said.

Steven L. Walts, the school system's superintendent, said in an interview that these forces combined mean he probably will propose no significant new programming in his fiscal budget this year.

"Frankly, during this climate, we're not looking to add new initiatives," Walts said. He added that the system's specialty high schools and middle schools, in particular, are an example of Prince William's ability to endure continual poor budget cycles with high-quality educational services.

"Our specialty programs are very highly regarded, and there's a high degree of satisfaction with those," Walts said. "But we're a business, and in many cases, we're trying to do more with less."

David Cline, the system's newly promoted associate superintendent for finance and support services, said the credit crunch could at least affect the price tag of the new $26 million Triangle elementary school, set to open in fall 2010. "We'll be selling more bonds to support that project next spring, and the biggest issues would be that the borrowing cost could be impacted," Cline said. "We'd have to look at the issue of affordability in the sense of making debt service payments."

Other projects, such as the new high school and elementary school set to open in fall 2011 in the Kettle Run area of the western part of the county, could also have higher borrowing costs, he said.

School Board Chairman Milton C. Johns (At Large) said in an interview that the state budget's forecast was so negative that the board pared down its annual legislative lobbying priorities last week, hoping it could achieve more with a tidier and more realistic list of requests. "Rather than waste time clamoring for money that's not going to be there," Johns said, it's better to be more selective.

For instance, School Board members decided to ask for freedom from the state's "standards of quality" that govern rules such as those related to faculty-student ratios, if the state cannot provide sufficient funding. "The state requires an assistant principal for every 400 students, but we may get only the funds for 600," Johns said, referring to a potential shortfall.

Walts said the system should take solace in its annual agreement with the Board of County Supervisors that allots 56.75 percent of county revenue to schools. "This will be the third year in a row for budget shortfalls according to our five-year budget plan, but the prearranged agreement in some ways eliminates a certain amount of constraint," Walts said. "Even if it's a [low] budget year, we know we'll get our fair share."