Commissioners weigh school budgets, bond plan PAYGO and tax impacts; board debates swap of county land for new elementary site

County staff presented a detailed overview of K–12 funding and the capital improvement plan during the May 15 budget work session, including enrollment counts, per-pupil calculations and three alternate financing scenarios for a proposed school bond program.

Travis (county staff) explained the way budgeted students are calculated using average daily membership (ADM) and how out-of-district and charter students are excluded or treated differently in the county's funding formulas. For 2025–26 staff reported budgeted student totals of 11,018 for Chapel Hill–Carrboro City Schools and 7,925 for Orange County Schools.

Travis said the manager's recommended current-expense budget for the school districts produces a countywide per-pupil figure of $5,877 — an increase of $211 per pupil from the current year — and that when Chapel Hill–Carrboro's special district tax is added the comparable per-pupil total for that district is $8,491. Staff said total recommended current-expense funding in the manager's budget is about $111.3 million.

On capital, Kirk (capital planning) walked commissioners through the school construction priorities and a proposal to begin design of replacement schools, including Carrboro Elementary and a replacement elementary in Orange County. He said Chapel Hill's plan would allow the district to build on a different side of a campus to maintain swing space; Orange County Schools has discussed a site at the county-owned property next to the soccer.com complex.

Several commissioners said a site swap could yield joint-use opportunities — for example, a larger gym that could serve community recreation — and would avoid purchase costs and speed construction. Commissioners discussed joint-use terms, potential equipment and operating-cost sharing, and whether Mebane or other municipalities might be partners for utilities or annexation. Staff said a transfer of county land would not produce a tax change by itself but could reduce project costs because the district would not have to purchase a site.

Staff also reviewed the bond/PAYGO financing plan. The manager's recommended capital plan included $6.4 million in PAYGO the first year and a proposed longer-term goal of roughly $10 million a year PAYGO to reach a $100 million PAYGO target over 10 years. Staff described three alternative frameworks the board could consider:

- Framework 1: Reduce PAYGO in the coming budget year and add the reduced amount to later years' PAYGO, preserving the $100 million PAYGO total but shifting timing. This reduces the immediate PAYGO pressure but accelerates a tax equivalent in the following year as debt service begins earlier.

- Framework 2: Reduce PAYGO this year to a minimal amount (staff suggested a lower bound such as $500,000) and borrow more early; add less PAYGO back into the plan later. That preserves near-term tax relief at the cost of reduced PAYGO-funded maintenance later and more near-term borrowing.

- Framework 3: Delay PAYGO and projects for one year, maintaining the $100 million PAYGO goal over a later 10-year window; this reduces near-term tax pressure but increases project costs through inflation and pushes high-priority facility work later.

Staff provided tax-equivalent estimates for each approach. Using current assumptions, the manager's base plan produced an estimated PAYGO tax equivalent of about 1.94¢ in 2026 and a debt-service equivalent that would raise total capital pressure in 2027 by an estimated 3.5¢ (PAYGO plus new debt). Under the alternate frameworks the timing and distribution of tax pressure would shift; staff warned that delaying PAYGO increases inflationary cost pressure on projects.

Commissioners expressed competing priorities: some said they preferred to "stay the course" to preserve the quantity of projects in the bond plan and avoid losing PAYGO-funded high-priority needs; others said spreading or delaying capital costs could reduce immediate tax pressure for residents coping with recent revaluations.

Beyond the bond and PAYGO discussion, commissioners heard that the county would allocate Article 46 sales-tax proceeds to schools and capital projects and that borrowing and pay-go timing affect the county's debt metrics, which staff monitor for credit-rating implications.

Why it matters: the board's decisions about PAYGO versus borrowing will determine how much capital work the school districts can complete, the timing of those projects and short-term tax pressure on county property owners. The board must balance construction inflation, debt-service impacts and affordability for taxpayers undergoing revaluation changes.

Ending: Staff said they will provide more refined options and run additional fiscal permutations; commissioners asked for analyses that show the trade-offs between near-term tax relief and long-term capital costs, and asked staff to consult school-district leadership before the board finalizes any changes to the CIP.