Avon Grove Taxpayers for Responsible Spending

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        Citizens, Parents, and Schools working together to bring Avon Grove into the 21st Century!

Facilities Planning Meeting*
Committee of the Whole Meeting
February 27, 2018



The School Board met to continue discussion on the school facilities. The objective of the meeting was to present a land use analysis of the current High School and Middle School site and to discuss scenarios for financing the needed funds for the proposed facilities. The rationale for a 6 to 8 grade configuration for the Middle School was also discussed.  School Board members include: Ms Tracy Lisi (Chair), 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 for the discussion.

Land use analysis of the current High School and Middle School Site
The meeting started with a land use analysis of the current High School (HS) and Middle School (MS) properties by Keith Lieberman from T&M Associates.  The overall conclusion is that the current site is “maxed out”.   Numerous variances (parking, storm water, building height) will be needed from the Township to progress all of the options except for the one that demolishes the MS (Option 1A; new HS on Sunnyside property).
A land use analysis was not presented for the Sunnyside site though in past meetings it was stated that there are environmental limitations to the site that would preclude the building of needed sports facilities along with a new school.


Scenarios for financing the needed funds for the proposed facilities
The School Board has previously agreed to consider the following 4 options for school facilities:

FIG Option 1A: Estimated Cost = $138 million
Convert PLES to K-1 grade configuration
Convert AGIS to 2-5 grade configuration
Build new HS on Sunnyside site
Renovate and convert existing HS to 6-8 MS
Abandon/demo/sell existing MS

FIG Option 1C: Estimated Cost = $137 million
Convert PLES to K-1 grade configuration
Convert AGIS to 2-5 grade configuration
Build new grade 6-8 MS on Sunnyside site
Renovate existing HS, Build new Core Facilities between HS/MS combine to make a HS

 FIG Option 1D: Estimated Cost = $128 million
Convert PLES to K-1 grade configuration
Convert AGIS to 2-5 grade configuration
Renovate and add to existing MS (6-8 grade structure)

Renovate and add to existing HS
Option 4A: Estimated Cost = $93 million
Renovate and expand HS to appropriate size (remove modular)
Expand MS (7-8) to remove modular classrooms and build to demographic projection
Expand PLES (K-2) to remove modular classrooms and build to demographic projection
AGIS (3-6) build to demographic projection

RBC Capital Markets started the presentation by acknowledging that the Avon Grove School District (AGSD) has a current debt of $2.7  million that will be paid off in 2028. They then presented borrowing strategies for the following amounts:  $52 million (no increase in taxes needed), $77 million, $102 million, and $127 million.  Based on the cost of the options being considered, we will focus on the scenario for borrowing $127 million.  Please note that this amount of money does not cover the full cost for 3 of the 4 facilities options being considered by the School Board.  

Borrowing $127 million will likely require the issuing of 4 bonds with interest rates ranging from 4.53% to 4.61%.  For a house with an assessed value of $169,600, taxes will increase from $5048.99 in 2017-18 to $5550.49 in 2022-23 at about $100 increase per year for 5 years.  This tax increase is only to secure money to build the new facilities; it will never go away.  In addition, taxes will need to be raised to also cover the operation costs of the current facilities. 

Mr Dan Carsley’s (Director of Business Administration and the Chief Financial Officer of the school) presented a 5 year plan that described an overall budget that includes tax increases to support the borrowing of $127 million and tax increases needed to pay for the operational costs of the current facilities.  Even with these tax increases the 5 year budget demonstrated deficit spending in each of the 5 years which resulted in the fund balance (e.g. savings in the school budget) decreasing from $23 million to a deficit of $272,000. Mr Carsley agreed that it is unacceptable for the fund balance to be reduced to such a low level.  He stated that the fund balance should contain $20 million so that AGSD can maintain its double A bond rating.  One way to maintain these levels in the fund balance was to increase the tax rate on residents even more.  Mr Carsley recommended that AG residents be taxed at the maximum rate allowed by law for the next 5 years.  It is anticipated that this rate will increase from 3.1% to 4.1% over the next 5 years due to higher interest rates and an improved economy.

Slide 5 in the RBC slide deck shows the impact of “Taxing to the Index” on taxpayers.  For a house with an assessed value of $169,600, taxes will increase from $5048.99 in 2017-18 to $5996.51 in 2022-23 (approximately $1000 or 19% increase in taxes). Houses with a higher assessed value will pay even more taxes.

In summary, if the AG School Board agrees to borrow $127 million for new facilities:

Taxes would need to increase to the maximum allowed by law for at least the next 5 years
The 5year budget scenario for borrowing $127 million includes “optimistic” assumptions for the next 5 years which may not occur:  Charter school costs will decrease, Technical School costs (CCIU) will decrease, and the leases for the modules will go away. 
The tax impact of the hospital sale is not included in the 5 year plan which could result in a loss $540,000 in tax revenue each year
Increased operational costs for the new facilities which is estimated to have an annual cost of $632,000 ($3.86 per sq ft of new facility) and cost for new staff are not included in the budget
Additional money may need to be borrowed since 3 of the 4 options being considered cost more than $127 million.

One has to question if the AGSD can realistically afford to spend $127 million or more on new facilities.The School Board needs to identify what changes and improvements in facilities are essential to students’ success so that money can be directed there.It is obvious from this financial analysis that the AGSD cannot afford to do everything included in 3 of the 4 options being evaluated.

Rationale for a 6 to 8 grade configuration for the Middle School
After Mr Carsley’s presentation, Mr Marchese discussed the value of a 6-8 grade configuration in the Middle School. Agreeing to pursue a 6-8 grade configuration in the Middle School will require new or renovated facilities for the Middle School.There were also two videos demonstrating how easily room configurations can be changed in newly designed facilities. 
The School Board requested that Mr Marchese come back to the next meeting with details on what benefits the new facilities will provide the students.They want to understand what we will be given up if the new facilities are not built.


The next facilities planning meeting will be March 8th at the Penn London Elementary School at 6pm.  The March meetings will narrow the discussion to 2 options.  A final decision is planned for April.


*Call to Action
It is important that your position on increasing taxes and building new school facilities is heard. It is critical that community members attend upcoming school board meetings and/or send letters via e-mail to the school board and administration to make their position known. The District Calendar can be found
here.  Watch the district calendar for updates. Information about the board, including E-mail addresses, can be found
here.

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