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Private school welfare 

An Arkansas Democrat-Gazette report last week on a Pulaski County housing bond issue that went sour mentioned very briefly something of greater interest.

I've now discovered that the Pulaski County Public Facilities Board has become a friendly provider of low-cost, taxpayer-subsidized financing to private schools. This is particularly interesting in light of a huge controversy in 2000, when the Arkansas Development Finance Authority declined to issue bonds for a Pulaski Academy expansion.

The argument then – and now – is that Arkansas government shouldn't be lending a financial hand to institutions that contribute to declining white enrollment in public schools. Nor, I might add, is it sound public policy for a county government to give cut-rate financing to projects that encourage urban sprawl.

In June, the Facilities Board – a virtually anonymous agency without office or even a filing cabinet – quietly authorized a $31 million bond issue to refinance Pulaski Academy debt, mostly to buy the neighboring Fellowship Bible Church. It also approved a $2.5 million bond issue for Arkansas Baptist School, a government subsidy to an overtly sectarian enterprise.

I was shocked. But it turns out I'm way behind the times. I've learned Episcopal Collegiate and Little Rock Lutheran have received ADFA financing help and Fort Smith Christian, Conway Christian and Ridgefield Christian have received taxpayer-subsidized financing from local facilities boards. Virtually every church-related college in Arkansas has floated bond issues that will cost less thanks to the tax-free status of interest earned on the bonds (this means a reduction in taxes otherwise paid for public services.)

A local securities dealer provided me with a list of hundreds of tax-free bond issues nationwide to aid private secondary schools. The notion that municipal bonds are a low-cost financing vehicle for strictly public purposes is sadly outdated.

Just because it's legal doesn't mean the Pulaski County board or any other has to approve such bonds, as happened in the Pulaski County votes. Pulaski Academy, a fine school with a demonstrated commitment to diversity in recent years, nonetheless has roots as a seg academy. It has been a safe haven for hundreds of students who might have attended public schools. By all means let them go. But what's the public interest in helping the institution save $500,000 a year in debt expenses? What's the public interest in subsidizing an institution with a long-festering neighborhood traffic issue? The question of support for a religious institution like Arkansas Baptist, particularly one located on the city's western fringe and thus an incentive to more sprawl, is even more intriguing.

Public policy considerations are irrelevant to Ro Arrington, a municipal finance consultant who chairs the Pulaski County Facilities Board. He told me he views bonding authority for a non-profit a “right.” If a school qualifies as non-profit under the federal tax code, he's going to vote for their bonds.

It would be nice if legislators and Congress reconsidered this development, as happened when Wal-Mart's use of tax-free industrial development bonds for retail stores finally kicked up a national controversy.

In the meanwhile, note this: The resolutions for bonds for PA and Arkansas Baptist were sponsored by Justice of the Peace Doug Reed. He's a teacher at Pulaski Academy. In other words, a public official sponsored legislation that will produce millions in benefits for his employer. I ask you to think, for a second, what the Arkansas Democrat-Gazette and other noisy white folks would say if Little Rock School Board President Katherine Mitchell had done something so bodacious.

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