School Board Organizational Meeting
December 6, 2018
New President and Vice President elected, new calendar approved and a statement by Ms Lisi responding to a AGTRS post
The Avon Grove School Board met on Thursday, December 6, 2018 to agree the School Board’s organizational structure for 2019. School Board members include: Ms Tracy Lisi, Mr John Auerbach, Mr Charles Beatty, Mr Jeff Billig, Mr Rick Dumont, Mr Herman Engel, Ms Lynn Weber, Mr Bill Wood, and Ms Bonnie Wolff. All were present at the meeting.
The meeting started with picking a temporary president to conduct the elections. Mr Herman Engel was nominated and unanimously approved. Ms Tracy Lisi was the only nomination for President and was approved 5-4, with Mr Auerbach, Ms Weber, Mr Dumont and Mr Beatty voting No. Mr Bill Wood was the only nominee for Vice President and was approved 9-0.
The next item on the agenda was to approve the calendar of meetings for 2019. Ms. Weber asked if the meeting start times could be changed to 6:30PM as she has trouble getting to the meeting by 6PM and perhaps a later time could help more of the public attend as well. A contentious discussion followed in which Ms Weber was told by Mr Billig that her request was petty; she knew what time the meetings started when she ran for the school board and he doesn’t want the meeting to start any later. Superintendent Marchese offered a compromise by suggesting that the Committee meetings continue to start at 6PM while the Committee of the Whole and School Board Meetings start at 6:30PM. Superintendent Marchese’s compromise was approved by all.
The final item was a statement read by Ms. Lisi to respond to the Summary of the November 15th School Board Meeting posted by the Avon Grove Taxpayers for Responsible Spending (AGTRS). The statement was presented as an "OFFICIAL STATEMENT" of the Avon Grove board of school directors; however, the board did not have a vote to approve the statement. Mr. Beatty asked where the statement came from and Ms. Lisi said it was from the administration.
The statement was presented as a "fact check" to dispute the information in the AGTRS meeting summary. Please see our response to Ms Lisi’s statement which is written below exactly as it was presented by Ms Lisi at the meeting. Please note that the statement issued by Ms Lisi does not refute any information we have posted. The opinions Ms Lisi offered simply provide her viewpoints on the items we reported. In the case of the vote to approve the issuance of General Obligation Bonds in the maximum aggregate principle amount of $139 million, it provides background information on parameter resolutions that was not previously presented to the public.
Ms Lisi’s FACT CHECK #1: By a vote of 9-0 the Avon Grove School Board voted to waive its policy in order to hold the meeting on November 15, 2018 due to several action items that were time sensitive. This was the first action taken by the Board before engaging in its regular business meeting.
Our Response:Ms Lisi is not disputing the fact that normally the meeting would have been postponed due to the dangerous conditions created by the weather since she acknowledges the board had to vote to waive its policy. She states that the meeting was held because there were time sensitive issues that required board action. Wouldn’t it have been better to follow school policy and postpone the meeting a week so that the public could attend and hear the discussion?
Ms Lisi’s FACT CHECK #2:The Avon Grove School Board remains at $127 million dollar number in terms of the actual dollars to be borrowed.
The Board at its October 2018 COW meeting directed the Administration and its financial advisors from PFM and RBC Capital Markets to prepare a parameters resolution as the consensus of the Board that evening was to issue an immediate bond of $40 million dollars.
To be clear, the School Board has previously authorized total actual borrowing within a $127 million dollar ceiling. For technical purposes, and in order to allow the financing team to price the bonds in the most advantageous way for the School District and its taxpayers, the $139 million dollar figure was listed as a potential outside maximum amount in the parameter filing. The Board, however has clearly instructed the total actual amount borrowed to be set at a maximum no greater than $127 million.
Parameters Resolutions have been used for over a decade in PA since the adoption of Act 1. The Parameters idea is to set interest rates and borrowing amounts greater than expected to provide flexibility to the borrower on timing and financing structure. More importantly this process saves money on borrowing and legal costs as there is one resolution not multiple resolutions. Once the total financings are completed the remaining Parameters amount is eliminated at the state and does not count against the borrower’s debt limits.
The approval of the 2006 Parameters Resolution, commonly known as the Pre-Act 1 Forward has been dissolved as a result of the adoption of this new Parameters Resolution.
Our Response: It is helpful to now have some background on how Parameter Resolutions work. This should have been communicated to the public before this vote was taken. Motion 5.30 from the meeting agenda for the November 15th meeting stated the following: “To approve the Parameters Borrowing Resolution for the issuance of General Obligation Bonds in the maximum aggregate principle amount of $139,000,000.” It did not provide any context as to why the maximum borrowing amount was increased from $127 million to $139 million.
This vote represents part of the approval required to borrow up to $139 million if needed despite the School Board continuing to indicate that $127 million is more than sufficient to achieve all the objectives of the facilities project. The “savings” in legal fees will only be realized if the project overruns by millions of dollars for some reason and it becomes necessary to borrow more funds. The timing of this vote also ensures that the action is taken by the currently seated board.
Ms Lisi’s FACT CHECK #3: The total interest costs for the series 2018 (40 million issuance) outlined in the RBC presentation on November 15th was 3.77% with a total payback of $54,698,259. Pricing as of the sale of the bonds on November 29th resulted in an interest amount of 3.39% with a total payback of $52,878,806, a difference of $1,819,453 positive to the Avon Grove residents. The millage required to fund $127 million in projects has gone down from initial estimate of 2.95 mils or .59 annually for 5 years to 2.82 mils over the same five year period in accordance with the following estimates:
Year 1: .58 mils
Year 2: .56 mils
Year 3: .56 mils
Year 4: .56 mils
Year 5: .56 mils
The actions of the Board by approving the resolution has paid off for the District and its taxpayers with the initial borrowing. The district will close on this transaction 12/20/18.
Our Response: AGTRS never commented on the first individual bond. Now that it has been brought up by Ms Lisi, AGTRS believes it is confusing to those reading the school district’s communications, that the day after a resolution is approved for the maximum borrowing of $139 million, the district puts out a communication that only reports on the first issuance of $40 million without commenting on the resolution regarding the $139 million. An explanation is also needed for why the school district needs to borrow $40 million when the plans for the facilities are still being developed. What will this money be spent on?
It appears that the borrowing of the $40 million now was the result of the School Board’s plan to hedge against the risk of rising interest rates which was a success and has resulted in real savings. However, it is important to remember that the long-term financial implications of a $139 million Parameters Borrowing Resolution are significant. The $40 million debt issuance mentioned above is just the beginning of a five-year borrowing cycle needed to complete a $127 million project. It is interesting to note that the table provided by Ms. Lisi does not include any future borrowing amounts.
In addition, the Administration often chooses to focus only on the tax increases associated with the borrowing needed for the facilities project, implying that this is the only element driving an increase in school taxes. There will also be an increase in operational costs that will be built into school contracts as well as other aspirations that will drive the total annual school tax increase much closer to the Act 1 limit.
Ms Lisi’s FACT CHECK #4: The issue of implementing an EIT was discussed in greater detail at the November Finance Committee. The administration was asked to research how an EIT works. This request came during the September Finance Committee. After much discussion, no action regarding an EIT will be made by the Board at this time for various reasons, such as required referendum and implications for Boroughs that already have enacted the full 1% EIT.
Our Response: The November 13th Finance Committee meeting did not make a recommendation on the EIT. Mr Bill Wood requested that further discussion take place with the affected townships and boroughs before a final decision is made. The School Board has not formally voted to remove the EIT from discussion so there was no way for the public to know that an EIT is not being considered by the school board.
*Call to Action
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