Gov. Kemp's Executive Counsel Questions the Constitutionality of SB 113 & 114

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Buckhead students will be forced into Fulton County's Public Schools.

With the introduction of their 2023 legislation, secession supporters have hidden a previously unmentioned tax which they would like to use, to pay APS to continue to educate our children. APS has made it abundantly clear that they are not a vendor for hire to a hypothetical City of Buckhead City or any other entity, and they have no interest in that type of arrangement. What's more, the law does not allow for this to happen. No matter what the hypothetical City of Buckhead City's leaders say, no matter how much money they say they'll pay APS, the law remains intact and this cannot happen. 

So, if the City of Buckhead City were to happen and the affected families are no longer residents of the City of Atlanta, Atlanta Public Schools will not have the legal authority to educate them. Those who were drawn into the arbitrary boundaries of the new city would by default, become students of Fulton County Public Schools, the entity with the legal authority to educate. 

What Does "Legal Authority to Educate" mean?
The establishment of school systems is set forth in the Georgia Constitution of 1983, which states, “Authority is granted to county and area boards of education to establish and maintain public schools within their limits.” This means that it is up to every county in Georgia to establish a school system within its limits.
Furthermore, state law makes these county boards of education the “local school system,” and gives them the exclusive authority to “organize or reorganize the schools and fix the grade levels to be taught at each school in its jurisdiction.” The net effect of these provisions is that it is the county that has the authority and obligation to educate all students within its borders, and only the county that has this authority. City governments have no legal say in the matter. 

Sources:

1. Ga. Const. Art. VIII, Sec. V., Para. I.
2. O.C.G.A. § 20-1-9.
3. O.C.G.A. § 20-2-290(a)(1).

Why Weren't Schools an Issue With Other New Cities in the Area?
Each of the new cities in the region were formed from previously in unincorporated areas of their current counties. Since Georgia's constitution prohibits cities from establishing new independent school systems, the county school systems are responsible for education when new cities are formed. Because the counties were already responsible for education in each instance, no change was needed and students remained in place.

Don’t Most Buckhead Kids go to Private Schools?
No. More Buckhead kids attend Atlanta Public Schools than attend all private schools combined. APS’s North Atlanta Cluster schools (including six elementary schools, one middle school and one high school) have a combined enrollment of approximately 7,500 kids. The schools in the North Atlanta cluster are among the highest performing in all of APS. Approximately 60% of children in the proposed boundaries of the City of Buckhead City attend APS schools.

Sources:

1. Geoff Koski, et al., Buckhead De-Annexation Fiscal Analysis, KB Advisors (Aug. 2021) 
2. Maureen Downey, APS leader: Buckhead ‘divorce’ will leave APS students behind, Atlanta J.-Const., Oct. 7, 2021.
   Note that while these estimates come from the best sources available, the “Buckhead Exploratory Committee” has (a) changed its proposed boundaries several times, and (b) not provided citizens with a convenient way to understand the boundaries of the proposed “city,” these numbers may change on the margins. NUA will continue to seek the best data available and update this document as necessary.

How is APS allowed to Operate Independently, but Within Fulton County?
Established by the Atlanta City Council in 1872, APS predates the current structure of county school districts. APS, therefore, is classified as an “independent school district” and was grandfathered into the 1983 Constitution under a provision that allowed “existing … independent school systems [to] be continued.” Under the Georgia statute, APS still qualifies as the “local school system”— but only for residents of the City of Atlanta.

Sources:

1. Atlanta Independent School District, Comprehensive Annual Financial Report for the Fiscal Year ended June 30, 2020, at i.
2.  Ga. Const. Art. VIII, Sec. V., Para. I.
3.  O.C.G.A. § 20-1-9 (“[T]he term ‘local school system’ shall refer to both any county school system and any independent school system which may be in existence in a county.”).

Why can't the hypothetical City of Buckhead City form its own Independent School District?
While APS was grandfathered into the current schools governance structure, the Constitution explicitly states that “No independent school system shall hereafter be established” after 1983. Thus, a “City of Buckhead City” could not form its own independent school district. 

Can the Law be Changed to Allow a "City of Buckhead City" to Establish its own School System?
Changing the law would be virtually impossible. This is because the state's Constitution grants “[a]uthority … to county and area boards of education to establish and maintain public schools within their limits.” Changing this would require amending the Georgia Constitution which requires a 2/3 majority vote in both houses of the General Assembly and ratification by a majority of all Georgia voters. Such a change would create chaos for public school systems statewide and is therefore unlikely to pass the General Assembly. As a practical matter, no such amendment has been written or proposed, meaning that even if such an amendment were politically feasible, it's timetable for implementation would live Buckhead students in a state of transitional chaos.

Sources:

1.  Ga. Const. Art. X, Sec. 1, Para. II (constitutional amendments may only be “submitted to the electors … in the even-numbered years”).

How can "City of Buckhead City" Supporters Continue to say That our Kids Will Remain in APS?
Hypothetical City of Buckhead City supporters are unfortunately, not telling the truth. No matter how loud, or how many times they say that they are going to pay tens of millions of dollars to APS to continue educating our kids, that doesn't make it true or legal.

Worse, with the new, additional taxes that they have hidden in their bill, they are not only lying to parents of kids in APS, they are lying to all taxpayers in the hypothetical city area.

Their supporters also continue to cite Ga. L. 1950 as law, but in reality it is an outdated constitutional procedure that the Georgia Legislature permanently disallowed in 1983 called a "local amendment."  Moreover, that local amendment only addressed what would happen if the Atlanta city limits were to expand, but is silent on where students are educated if the city limits shrink. The silence does not leave room for ambiguity or negotiation. The fact remains that 1983 Constitution unambiguously grants local authority to educate, to the county school system. And, if there was a conflict between the 1950 local amendment and the 1983 Constitution, the Constitution would prevail.

Sources:

1. Ga. Const. Art. XI, Sec. I, Para. II.

Can a "City of Buckhead City" Create an Intergovernmental Agreement with APS to Keep Students in their Schools?
No. An intergovernmental agreement (IGA) would not be valid or constitutional because under the very limited circumstances that the Georgia Constitution allows them to happen, both parties must be legally allowed to provide the services being negotiated. Specifically, since a "City of Buckhead City" wouldn't have the legal right to educate anyone, they also wouldn't have the legal right to negotiate or insist that another entity (APS) educate their students.

It is no secret that a significant amount of money is at stake with the possibility of Buckhead de-annexing. Just as "City of Buckhead City" supporters claim that APS will be desperate to keep Buckhead’s tax base, Fulton County will want that money as well. Further, Fulton County Public Schools would be the only entity with the legal right to negotiate an IGA with APS, but it seems unlikely that they would, as they are actually constitutionally entitled to claim the tax money.

Sources:

1. Ga. Const. Art. IX, Sec. III, Para. I (known as the “Intergovernmental Contracts Clause”).
2. See City of Decatur v. Dekalb County, 289 Ga. 612 (2011) (invalidating intergovernmental agreement between the City of Decatur and Dekalb County); Greene County Sch. Dist. v. Greene County, 278 Ga. 849 (2005) (invalidating intergovernmental agreement between county and school district).

Investors view a possible "City of Buckhead City" as risky. Creation of a new city will bring increased taxes for both the new city, and for those remaining in the City of Atlanta.

The hypothetical "City of Buckhead City" will need debt to fund their startup costs. Credit ratings for the rest of the state will be at risk because investors know that in Georgia, cities can split apart at any time, for any reason. 

Investors and analysts are keenly aware of this and have expressed concern both privately and publicly, that the precedent set by secession would harm the credit ratings of both the "City of Buckhead City" and Atlanta because it is unlikely that either would have the funds to pay their existing debt. 

Cityhood supporters have not addressed payment of its portion of existing bond debt in detail. Their leaders ask the people to "trust them," that they'll pay their pro-rata share, but there is no documented indication that repayment is under serious consideration.

What you need to know about Municipal Bonds.

When a city needs money for an expensive project like the construction or repair of roads, bridges, sewers, etc., they will issue a municipal bond. Municipal bonds are attractive to investors because they are not subject to federal taxes and they tend to be good credit quality investments. Like a mortgage is a loan to a homeowner, a municipal bond sale is a loan to city. Similarly, bond debt repayment comes with terms that vary based on the city's creditworthiness and other potential risk factors.

Credit risks and interest rates.

For any potential borrower, lack of stable income or collateral, or a history of missed or late payments can have devastating effects on the interest rate assigned to a loan - if a loan is given at all. Investors view the possible secession of Buckhead as a serious risk to repayment. If it leaves, the "City of Buckhead City" takes with it a significant portion of the stable tax base that Atlanta relies on for its excellent credit score.

The "City of Buckhead City" says "Trust us" on repayment, but investors should not.

Contrary to what their leaders say, the "City of Buckhead City" cannot negotiate debt allocation with the City of Atlanta, or with its bond investors. Since existing debt is a legal agreement between the City of Atlanta and its bondholders, discussion or negotiation about division of payment responsibility would require the bondholders involvement. Like stocks, bonds have many investors; so bringing all bondholders together with City of Atlanta and "City of Buckhead City" representatives to negotiate would not be feasible. Plus, there would be little incentive for bondholders to participate in such an exercise.

The effect on Atlanta, Buckhead, and all of Georgia.

To date, Cityhood supporters have not addressed payment of its portion of existing bond debt. Their leaders ask the people to "trust them," that they'll pay their pro-rata share, but there is no documented indication that repayment is under serious consideration. Investors and analysts are keenly aware of this and have expressed concern both privately and publicly, that the precedent set by secession would harm the credit ratings of both Atlanta and the "City of Buckhead City" because it is unlikely that either would have the funds to pay their existing debt. Plus, the "City Buckhead City" will need additional debt to fund their startup costs. Credit ratings for the rest of the state will be at risk because investors know that in Georgia, cities can split apart at any time, for any reason.

Increased water and sewer rates for "City of Buckhead City" residents.

Once Buckhead is no longer part of the City of Atlanta, water consumption rates increase will increase anywhere from 21%-36% based on consumption.

Source: 

1. City of Atlanta Department of Watershed Management https://www.atlantawatershed.org/waterrates/

"City of Buckhead City" residents will also see taxes increase to cover a wealth of startup costs, their portion of existing City of Atlanta pension and bond liabilities, none of which have been factored into their plans.