Liberalization of School Bond Requirements

[Twana Blevins]

The recent debate over a proposed bond issuance by the Guthrie School
District has reminded me of my observations of ever-ongoing
legislative efforts to liberalize the protocols and quality controls
which govern the bond issuance process.

I believe these all-too-often successful efforts have been driven by
special interests representing not just Oklahoma’s education
establishment but the financial interests who derive significant short-
term benefit from the issuance of massive amounts of debt without
regard to long-term consequences.

Certain items in the Guthrie proposal bring to mind the concerns I
have had about either the liberalization or the outright avoidance of
these safeguards.

For example, one of these efforts has been to water down the capital-
intensive requirements of the laws governing the issuance of bonds.
These laws were designed to ensure that bond issuance (debt) only
occurred for capital items such as brick and mortar structures which
would last for many years and would still have value beyond the time
when the debt was paid off. I do not believe it is wise to incur
millions of dollars of debt for items which will be long liquidated
while the taxpayer is still paying the debt and interest for those
items. I believe that most people would never allow their personal
budget to deteriorate to the point that they take out a bank loan to
purchase groceries. It is certainly not right for government officials
to do the same thing using other people’s money.

I am also very disturbed about the growing trend of Oklahoma school
districts circumventing the requirements of the Oklahoma Constitution
through a sort of legal shell game. The Oklahoma Constitution mandates
that schools cannot take on an amount of debt in excess of 10 percent
of the value of assessed property value of the residents of their
districts. This important safeguard keeps schools from taking on more
debt than is fiscally prudent.

However, Oklahoma schools are simply bypassing this important
safeguard by setting up third party entities which can take on much
more debt than fiscally prudent. The debt is essentially being
laundered through these third party shell groups. Because the debt is
likely to be secured by a riskier standard, the taxpayers are forced
to pay significantly higher rates of interest.

Legislators attempted to give this practice the veneer of legal
credibility with the passage of House Bil 1592 in 2009 (I was one of
19 Representatives to vote against it) but in all reality, only the
people of Oklahoma can change the constitutional requirement.

If Oklahoma school districts want to take on additional debt, they
should have the courage to ask voters to change the Constitution
instead of using a third party for a bond issuance. In my view this is
a dangerous shell game which will encumber the taxpayers with far too
much debt. I believe that unless this trend is stopped, there will be
a painful day of reckoning.

I am also opposed to the practice of logrolling expenditures for
multiple public and private entities into one proposal. This practice
has become infamous for incurring millions of dollars of spending in
order to build a large enough political coalition to support a
proposal. I very much dislike the unconstitutional legislative
logrolling which occurs in the Legislature and fail to see how this
bond issue is much different.

As a legislator, I am committed to voting against the ongoing attempts
to change Oklahoma laws to enable these types of fiscally imprudent
spending practices.

I also believe it is very important for school officials to limit bond
proposals to capital items costing no more than the amount allowed by
the Constitution where the sole beneficiary is the school district.

-- 
State Representative Jason Murphey
Chairman Government Modernization Committee
State Capitol Building - Room #400B
2300 North Lincoln Blvd
Oklahoma City, OK 73105
1(405) 557-7350 (Office)
1(405) 315-5064 (Cell)
http://www.HouseDistrict31.com


discussion

[Alfie Hardin]

We expect more intelligence and integrity from those involved in our educational system. People are always looking for loopholes - and this is one loophole that needs to be closed as soon as possible. I am sure the citizens of Oklahoma will support whatever needs to be done to stop this back-door, third-party scam. The bill always comes due.