Gov. Mark Sanford vetoed a bill Monday that would have allowed the Georgetown County School District to borrow money to pay for day-to-day operations and make up for any shortfalls caused by state budget cuts.
Sanford said in a statement late Monday that he was sympathetic to the difficulty the school district faces but that he was compelled to veto the legislation because it breaks a "cardinal rule of prudent finance."
"Bonded indebtedness should not be used by school districts to fund operating expenditures because an absolute rule of finance is that you do not fund short-term operations with long-term debt," Sanford said in the statement.
The bill, which was introduced by Reps. Vida Miller and Carl Anderson, was designed to give the school district another way to raise needed revenue.
The district has had to slash about $3.2 million from its budget this year due to state budget cuts and deficits. School districts in South Carolina are unable to raise property taxes for school operating costs under Act 388, which passed in 2006.
Instead, the bill proposed by Miller and Anderson would have allowed the Georgetown County School District to use funds from general obligation debt for such things as teacher salaries, textbooks, utility bills and other day-to-day operations expenses.
Miller did not return calls for comment Monday. Lawmakers still could move to override Sanford's veto.
The General Assembly overrode the governor's veto earlier this month in a similar bill. The bill authorized Fort Mill District 4 in York County to use up to $2 million in general obligation bonds to cover a funding deficit. The House overrode the veto on April 13 and the Senate overrode the veto April 15.
However, even if lawmakers do override Sanford's veto, there are no plans to issue more bonds, said Finance Director Lisa Johnson with the Georgetown County School District.
"It is really more of a back-up plan in case of additional cuts," Johnson said.
Even if the bill becomes law, any borrowing would have to be approved by the Georgetown County School Board, Johnson said.
So far, the district will be able to balance the 2010-2011 budget without any borrowing, she added.
But this is contingent on whether or not state lawmakers freeze teachers' annual pay raises - called step increases. The bill has passed in both houses. The House approved the bill April 20. It has been sent to Sanford for signature.
If teacher pay increases are not suspended for the upcoming budget year, it could cost the district about $900,000, Johnson said, which would mean further cuts.
The district balanced its budget this year without increasing class sizes, instead eliminating two weeks of its three-week gifted and talented program. It also cut back its International Baccalaureate program, which offers college credit, and put in place 1.5 furlough days for teachers and three furlough days for other employees. In addition, the district cut all afternoon extended-day remediation programs.
The district was also forced to dip into its reserve fund. The district will take $2 million, leaving a $6 million in the fund balance.