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Sullivan commissioners approve $15.4 million bond issue for Ketron

BLOUNTVILLE — The Sullivan County Commission agreed Wednesday to enter into a loan agreement with the Tennessee State School Bond Authority to get up to $15.48 million to renovate and expand Ketron Intermediate School.

Details on the low-interest bond issue — such as the exact interest rate and the payment schedule — continue to be “a moving target,” Sullivan County’s top finance officer said before the commission’s vote, which came during a called meeting to discuss the issue.

Unchanged, however, are the deal’s positive aspects, Accounts and Budgets Director Larry Bailey said: The bonds, coming through the TSSBA “pool,” are a good buy compared to what the county would spend if it went it alone — and the bond issue is unique in the county will not have to share the proceeds with city school systems.

That last point is an “overwhelming” plus, Bailey said — noting for the county school system to get the same amount of money through a regular bond issue would require borrowing more than $30 million in order to split the proceeds with Kingsport and Bristol city school systems.

The publicly discussed plan is to use the $15.48 million to overhaul Ketron Intermediate School.

That is the proposal the county school system submitted in a competitive process earlier this year as school systems from across the state applied for the federally funded TSSBA bond issue.

It will cost the county an estimated $1.2 million per year to pay off the bonds, Bailey said Wednesday.

Bailey said that while a 15-year payback period has been most mentioned during the early negotiations, 17 years has been mentioned this week — and payments will be made monthly, not yearly.

Initially, county officials were told the bonds might be interest free. Earlier this week, Bailey said the most recent figure he’s heard is an interest rate of 1.3 percent.

And earlier predictions that the first payment will not be due until August 2011 are likely not going to come true, Bailey said Wednesday — the first payment could be due in February.

That could require alternative planning for how to make the payments. County officials favor repaying the bonds with money already in the county school system’s budget — through cost-saving measures, including potential closure of some schools.

If monthly repayments of an estimated $100,000 become due beginning in February — and the money comes from existing funding for the school system — that will mean the school system will need to find $400,000 in its current budget to make the payment until the next budget cycle begins in July.

The Sullivan County Board of Education went on record last week that it plans to close Kingsley, Cedar Grove and Akard elementary schools and will consider closing Brookside Elementary.

But those closures wouldn’t occur until work on Ketron is completed — so those cost savings won’t be available to cover repayment of the bonds by February.

The Akard closure could occur by the start of the 2010-11 school year in August 2010. Under tentative plans the BOE has discussed, Akard students would be moved westward to Blountville Elementary School.

BOE Chairman Ron Smith said at least one public comment session will be scheduled for the Akard community, just west of Bristol.

Director of Schools Jack Barnes has said of about 154 students at Akard this year, 18 or so are in a special education program put there to help the building not be so underutilized. Those students might be placed in Blountville or sent elsewhere, but the others likely would come to Blountville, Barnes said.

Brookside could stay open to house K-2, while Ketron could be expanded from its current 5-7 to handle 3-7, or Ketron could become a pre-K-7 school. Sullivan North serves 8-12.

Closing Cedar Grove and Kingsley would save about $740,000 a year, according to earlier school system estimates, while adding Akard to the closures would bring the projected savings to about $1 million. Closing Brookside could save an estimated $281,000.

The Sullivan County Commission did not vote on school closures Wednesday. Closing schools is not under the commission’s authority. That action must be taken by the Sullivan County BOE.

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