Board of Supervisors and School Board Joint Meeting on Sept. 8, 2021
Facing a sudden, sharp economic downturn related to the COVID-19 pandemic in April 2020, and with lingering uncertainty over its duration and severity, the Chesterfield County Board of Supervisors decided to wait one year on a planned bond referendum for capital projects until November 2022.
For members of the Board of Supervisors and School Board, however, waiting until 2022 to even begin the process of funding much-needed middle school construction wasn’t an option.
With many of the county’s 12 middle schools already operating at or above capacity, adjusting school boundaries and shifting students from one attendance zone to another figured to provide limited relief at a cost of significant disruption to families and children. So both elected boards tasked their respective finance teams to work together and find a way to pay for two new middle schools now without adding to the county and school division’s existing debt service obligations.
They came up with a plan that does much more than that.
The Board of Supervisors and School Board convened a rare joint work session Wednesday, Sept. 8 to discuss issuing $130 million in bonds: half for a new middle school in the western U.S. Route 360 corridor to relieve capacity issues at Tomahawk Creek Middle and address future student enrollment, and an equal amount to replace Falling Creek Middle with a larger, modern building that meets the needs of 21st century education.
County and school staff are proposing to make a one-time, $27 million payment to a supplemental retirement plan (SRP) for Chesterfield County Public Schools employees -- thereby eliminating the unfunded liability in its trust fund -- and reallocate the school division’s future SRP contributions to pay off the new school construction bonds over time.
The plan will position CCPS to open two new middle schools in fall 2024 – the western Route 360 school will be located on the county-owned, 2,057-acre Upper Magnolia Green property, while Falling Creek will be rebuilt at its existing site -- and bring its once-troubled SRP to fully funded status several years earlier than expected.
It also will effectively increase by $130 million the school division’s share of the 2022 bond referendum, which if approved by voters next November, will provide CCPS another $300 million to address capacity challenges and continue revitalizing its aging buildings without having nearly half of that money tied up in just two school sites.
The School Board is expected to vote on the middle school construction projects at its Sept. 14 monthly business meeting. The Board of Supervisors has scheduled a public hearing for its Sept. 22 meeting, after which it also is expected to vote on the proposed bond issuance.
While CCPS won’t submit official 2021-22 enrollment figures to the Virginia Department of Education until October, Tomahawk Creek and Falling Creek were Chesterfield’s most crowded middle schools last year.
During the 2020-21 school year, Tomahawk Creek had 1,648 students in a school built to accommodate 1,358 and operated at 121% of design capacity. Falling Creek had 1,431 students in a school built for 1,152 and operated at 124% of design capacity. Both extensively utilize modular classroom units.
The School Board’s current 5-year capital improvement program calls for opening a new middle school to relieve Tomahawk Creek and a replacement for Falling Creek, with proceeds from the county’s next bond referendum, in fall 2025.
"Students and staff at Tomahawk Creek Middle School have been in need of more space for some time, as have those at Swift Creek Middle. A new 360 West Middle School will help ease the burden on both of those schools while providing a new state of the art facility for our county,” said Dorothy L. “Dot” Heffron, the Clover Hill District’s representative on the School Board.
Tomahawk Creek Middle School
Falling Creek Middle School
"Now is the right time to replace Falling Creek Middle with a larger, 21st-century building,” added Dale District School Board member Debbie G. Bailey. “Despite renovations and improvements over the decades, it is showing its age. The new building will boost the community and reduce the need to teach students in trailers."
None of the five current School Board members were in office in 2016, when the gap between the SRP’s pension obligations and assets was $99 million. After discussions between the county and school division, the Board of Supervisors approved structural changes to the plan in April 2017 designed to maintain its solvency, increase administrative oversight and ensure that annual trust fund contributions are adequate to cover employee benefit payouts.
Since then, both elected boards have been diligent in consistently funding the plan above the actuarially required threshold, positioning it to be restored to full health immediately with the proposed lump-sum payment. (It was closed to new participants in 2013).
"The supplemental retirement plan (SRP) is very important in retaining our veteran teachers. We have been working on fully funding the SRP over the last few years and are grateful to the county for stepping in to fully fund this initiative,” said the Bermuda District’s School Board representative Ann C. Coker, the board’s vice chairwoman. “Having the SRP fully funded leaves no doubt about its long-term viability, and will offer peace of mind to those employees who are nearing and reaching retirement age. We are also excited to get some much-needed relief in some of our over-capacity middle schools. New schools always bring excitement to the community they are built in!"
According to county finance staff, resolving the SRP’s finances now will free up approximately $11 million annually in the school division’s operating budget. About $7 million will be allocated to pay down the debt on the two new middle schools, leaving the remainder for other school priorities – including staff compensation, which remains a priority for both boards.
“The benefits from our good decision-making regarding the SRP are expanding well beyond taking care of our veteran teachers in retirement,” said Clover Hill District Supervisor Christopher M. Winslow, vice chairman of the Board of Supervisors. “With only one more payment to the SRP, which we can now afford due to our diligence, we’re turning what would have been future SRP contributions into bricks and mortar that support education right now.”
The $27 million SRP allocation will be funded from the county’s fiscal year 2021 operating surplus, which is larger than usual due to a confluence of factors. Chesterfield has seen a surge in state sales tax collections during the pandemic as more residents began telecommuting (and as a result, shopping and eating closer to the home) instead of driving to offices in neighboring jurisdictions. Likewise, revenue from residential real estate assessments has outpaced staff’s projections, fueled by unprecedented demand for housing in the county.
County administration also was proactive early in the pandemic, adopting several cost-saving measures to mitigate the potential impact of a protracted economic downturn on the local government’s budget.
Such conservative financial management practices are a major reason why Chesterfield remains one of a select few U.S. jurisdictions to hold AAA bond ratings from each of the three top rating agencies: Moody’s, Fitch and Standard & Poors. That’s significant because it enables the county to borrow money at the lowest possible interest rates and results in significant cost savings for local taxpayers.
Having impeccable credit allows Chesterfield to be more nimble than other localities and address public infrastructure needs without having to hold a referendum for voters to authorize the issuance of general obligation bonds.
Just last year, the Board of Supervisors approved the sale of $50 million in bonds for school major maintenance and $30 million to make road improvements along Otterdale Road in a flood-prone section of the Matoaca District.
The board then transferred $24 million to the Chesterfield Economic Development Authority for strategic land purchases. More than half of that money, about $13 million, was used to acquire the Upper Magnolia Green tract – including sites for as many as three new schools.
More recently, the county announced plans to purchase and redevelop the Spring Rock Green shopping center at the intersection of Midlothian Turnpike and Chippenham Parkway. The new vision for the public-private partnership includes construction of a consolidated CCPS headquarters building, which will allow the school division to bring all of its central-office employees under one roof and free up space for technical education programming at the Career and Technical Center on Route 360.
And in late August, the Board of Supervisors and School Board jointly announced an initiative to provide $3,000 bonuses for school bus drivers and increase starting pay by $3 to $20.21 an hour. CCPS began the 2021-22 school year with a shortage of about 100 drivers, mirroring a trend nationwide.
The county and school division also have worked out an initiative to install synthetic turf on the main rectangular athletic fields at each of Chesterfield’s high schools, with two schools starting now (Bird and Monacan) and the remainder as part of the referendum in 2022; that will increase the fields’ durability and allow for dual use by the schools and community members.
“The actions we’ve taken are a direct response to the public input we’ve received to address overcrowding in schools while also effecting positive changes throughout the community,” said Matoaca District Supervisor Kevin P. Carroll. “The plan before us to bring two new middle schools online well ahead of schedule is yet another example of effective cooperation among elected officials on both boards and respective staff. I’m very pleased that one of the new schools will serve the Matoaca District, where it will accommodate the high demand for homes within the western Route 360 corridor.”
As part of their fiscal year 2022 budgets, Chesterfield’s two elected boards approved $32 million in funding to implement new pay plans for more than 6,000 police officers, firefighters, sheriff’s deputies and teachers, alleviating compression in their salary scales and rewarding veteran employees for their experience, loyalty and institutional knowledge. County and school leaders have committed to making similar adjustments for employees who weren’t covered in the initial round of salary increases; a compensation study has been initiated for that purpose.
Prior to implementing the new pay plans last year, the supervisors cautioned staff not to take on any new initiatives that would add to the county and school division’s current debt service obligations, noting it could have an adverse effect on their operating budgets and potentially threaten the long-term sustainability of the employee compensation initiative.
The finance teams’ creative solution complies with that directive by paying for the new middle schools over time with money that’s already in the CCPS budget.
“Paying off the unfunded liability in the schools’ SRP and reallocating those future trust fund contributions is enabling us to take on more debt without impacting either the county’s or the schools’ respective operating budgets, including our ability to sustain new public service and school pay plans. We’re meeting needs sooner than planned while not having to sacrifice elsewhere to make it happen,” said Midlothian District Supervisor Leslie Haley.
Because of the pace of housing construction in western Chesterfield over the past decade, county and school officials have been preparing for several years to locate new schools in that area. (Moseley Elementary is scheduled to open in August 2022, providing relief for both Winterpock and Grange Hall elementary schools, and the school division’s CIP includes funding for another elementary school in Upper Magnolia Green).
Until the launch of the StratIS projection tool last year, though, they found it challenging to anticipate where growth will occur countywide, balance student enrollment and available seats, and ensure efficient use of taxpayer funds.
StratIS data confirmed the Tomahawk Creek reliever school and Falling Creek replacement are the top candidates for accelerated funding, and showed that all five of Chesterfield’s magisterial districts will benefit from construction of two new middle schools.
Specifically, by preserving the school division’s expected $300 million share of the 2022 bond referendum, it will be able to tackle capital projects that could have been delayed until 2030 or later. That includes construction of another new middle school in central Chesterfield and replacements for three aging facilities: A.M. Davis and Bensley elementary schools and Midlothian Middle.
CCPS has achieved significant savings of both money and time on projects from the recently completed 2013 bond referendum by utilizing prototype architectural designs for its new elementary and middle schools. To increase the number of available seats in grades 6 through 8 countywide and accommodate future growth, school officials have discussed plans to build new middle schools to a maximum design capacity of 1,600 students.
"Student enrollment is rising in Chesterfield, and we need to provide top-quality teaching and learning environments to affirm to families that they are making their home in the right place,” said Kathryn S. Haines, who represents the Midlothian District on the School Board. “The issuance of Virginia Public School Authority bonds and an expanded capital improvement program reflects our commitment to addressing growth with buildings, not trailers.”