Cobb school board OKs $100M in loan requests to get ahead of SPLOST projects

Dec. 10—MARIETTA — The Cobb school board Thursday unanimously approved issuing a request for $100 million in notes to fund the district's Special Purpose Local Option Sales Tax construction projects in 2023.

Brad Johnson, the district's chief financial officer, said the construction note "is a short-term borrowing tool," a loan request the district would issue for the next calendar year. The loans will be paid back using the district's SPLOST funds.

"The short-term notes would be received at the end of January and they would be repaid back in December of '23," Johnson said. "Short-term notes are not considered long-term debt, they are short term debt."

Superintendent Chris Ragsdale said during the board's work session Tuesday that the district's annual request for loans has become standard operating procedure and is used to "front-fund" the district's SPLOST projects. He added that the move is especially beneficial in a time of high inflation.

"As interest rates are moving up, unfortunately, it is not as unfortunate for us, because that means that the money that we are borrowing is still gonna cost us a little bit this time, but we're getting back to the point of actually being able to make money on the loan," Ragsdale said.

Johnson said construction costs are estimated to increase by 30-50% in the coming year, so it is prudent for the district to move early on the loan requests.

He said estimates show the notes will not cost the district, adding that using the notes should bring "substantial savings" for Cobb schools, though he said the savings would be difficult to calculate without knowing the interest rates on the loans. Johnson said the district will not know the rates until the notes are bid out in January.

Johnson and Ragsdale both stressed the district's AAA credit rating makes the move even more advantageous.

Ragsdale clarified that the item the board voted on Thursday evening was just bids for the loans. He noted board members Dr. Jaha Howard and Charisse Davis would be voting on the bids in what was their final board meeting, while incoming board members Becky Sayler and Nichelle Davis will vote on approval of the bids at a later date.

"That's why I kind of focused on that we have established this as a standard operating procedure, so it's not unique, it's not a one-off, this is basically how we do business for SPLOST," Ragsdale said.

In other business, the board also approved the promotion of Charles Amica from supervisor of student discipline to director of student discipline at Thursday's voting meeting.