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Florida Stiffs School Districts Sending all $55 Million in PECO Funds to Charter Schools


BRADENTON -- It might take a great deal of explaining to understand why all of the $55 million in PECO (Public Educational Capital Outlay) program funds are going to Florida's 350 charter schools while not one dollar goes to the 3,000 traditional public schools for construction and repairs. Public school officials throughout the state are fuming, wondering how this happened? But it seems like legislature may be defining a problem for their fix, rather than fixing a defined problem.


If the facts show funding went to where it was needed most, so be it, but those school officials who are forced to work under leaky roofs, around struggling air conditioners and in ill-equipped facilities certainly don't see it that way. The Orlando Sentinel reported Seminole County's Superintendent, Bill Vogel, as saying "We desperately need the PECO money, it's essential for maintenance of our buildings." He takes issue with the poor plumbing, carpets and paint. 


PECO funds are generated through a gross receipts tax on the sale of utilities then funneled to schools through a very complicated maze into the general fund. The South Sun-Sentinel reported that all of the state cash budgeted for school construction and maintenance is going to the independent, tax-financed charters favored by the Republican-dominated Legislature and Gov. Rick Scott. 


State Sen. David Simmons, R-Maitland, the chair of Senate's subcommittee on school appropriations, told the Sentinel,: "The reason the traditional schools aren't getting any PECO cash this year is simple: They don't need it."


In April of this year when the Florida Legislature passed it's halfway mark in the 2011 general session, it was obvious Tallahassee had planed to cut the PECO funds for traditional schools and that charters would be the recipients of the PECO funds. At the time, neither the State Senate or the State House proposals contained any PECO funding other than for charter schools. The House proposal provided $33.9 million and the Senate $29.4 in PECO funds to charters. Both the Senate and the House authorized a specified system of charter schools to acquire status as a local education agency (LEA) for purposes of receiving federal funds.


According to Florida Watch, as of the 2010 debt affordability report, an annual report detailing the impact of future debt obligations, PECO bonds account for $11.2 billion of the states outstanding debt. Out of the $28.2 billion in total state debt, 15.8 billion is for the construction of educational facilities, with PECO as the primary issuer, followed by the lottery. Over the last decade, there has been a net increase of $4.2 billion in PECO bond issuances. It is projected that over the next decade there will be another $5.8 billion in PECO issuances. PECO bonding for this year alone is over $300 million of which half has been appropriated to institutions so far. 


For at least the next couple of years, the PECO revenue stream has been fully leveraged. Looking back, Florida's insistence on issuing close to the maximum amount of PECO bonds possible during the period of high tax revenue has effectively tied the state's hands from issuing any new bonds during lower growth periods, regardless of need. This means that a sharp enough drop off in revenue from the gross receipt tax could leave the PECO fund insolvent and reliant on other state revenue to meet their debt obligations. 


Florida's PECO bonds are currently rated AAA (Prime) by both Fitch and Standard and Poor's, but have a negative rating outlook. Moody's has rated these bonds as Aa1 (High Grade) with a stable outlook.

Much like the Social Security Trust Fund, legislatures just can't keep their hands off money within reach for their preferred projects. It appears likely the current state government is following that tradition and using whatever means are available to implement a larger placement of charter schools, at the expense of all others.


How the amount of $55 million grew from what was initially proposed from the state Senate and House, might want to be looked at. And how Legislatures came to the conclusion that all institutions other than charter schools fell short of needing any assistance, may also need some investigating. But one thing is clear, all is not on the table when it comes to how Tallahassee does business, and if they need a compass, they might want to visit the Florida Constitution, and they might find it on the floor.


Article IX, Section 1 reads as follows:


The education of children is a fundamental value of the people of the State of Florida. It is, therefor, a paramount duty of the state to make adequate provision for the education of all children residing within it's borders. Adequate provision shall be made by law for a uniform, efficient, safe, secure, and high quality system of free public schools that allow students to obtain a high quality education and for the establishment, maintenance, and operation of institutions of higher learning and other public education programs that the needs of the people may require.


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