June 5, 2018
Finance Committee Meeting
The Finance Committee includes: Mr Herman Engel (Chair), Ms Lynn Weber, and Ms Bonnie Wolff. All attended this meeting. The following items were presented at the meeting:
Project Financing Options
Representatives from RBC Capital Markets presented options for borrowing $127million to build a new high school and convert the current high school to a middle school.An option to hedge a possible increase in interest rates was discussed. A hedge is like an insurance policy and can be used to reduce the uncertainty of what the interest rate environment might be at the time the money is borrowed, i.e. school bonds are issued.Currently, it would cost approximately 0.11% of the amount of money being hedged.If interest rates go up when the district is ready to issue the bonds, the district will receive a payment from RBC. This money can be used to reduce the size of the bond issue. If interest rates go down, the district will need to make a payment to RBC resulting in a larger bond issue amount but at a lower interest rate. The administration needs to work with school board to decide how much money they might consider hedging.
Mr Carsley, the Director of Business Administration and the Chief Financial Officer of the school district, reviewed the budget which includes a tax increase of 3.09% for the 2018/19 school year. This is very close to the maximum tax increase allowed by PA law. This level of tax increase is being recommended by the administration even though there is no explicit addition of new debt associated with the major facilities projects in the proposed budget. Ms Weber challenged the administration on the change in the tax increase from 2.55% in the initially proposed budget to 3.09%.She recommended that the tax increase remains at 2.55%.
Mr Carsley attempted to explain why the 3.09% tax increase was necessary.There are several unknowns that need to be planned for including the possible loss in tax revenue due to the hospital sale. Ms Weber continued to challenge the administration’s position and proposed that the administration use money set aside in the school budget for teacher’s retirement costs (Committed Fund Balance for PSERs) since the increase in retirement costs is one of the items driving the increased expenditures in the budget.
This is the 4th year that the rates have remained the same.The district should anticipate a rate increase for the 2019-2020 budget.
2018-19 Photography Contract – alternates were reviewed. Cost to parents could not be reduced but remained the same.
Hospital Sale Update
The denial for non-profit status is currently being appealed by Tower Health.The school solicitor has filed documents for oral arguments to support dismissing Tower Health’s motion to appeal.
*Call to Action
It is important that your position on increasing taxes and the construction cost of 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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