Penn-Trafford to borrow $10 million for high school project
The financing plan that the Penn-Trafford School Board unanimously approved this week for a high school remodeling project is designed to stretch out the debt repayment to avoid property-tax increases specifically because of construction.
After rejecting a proposal to stop the project, school board members voted unanimously Monday night to proceed with the borrowing of another $10 million.
That amount is on top of the $9.4 million in bonds they approved last year. Board members anticipate issuing another series of bonds for at least $10 million early next year after determining the final cost of a project they agreed to cap at $32 million.
Officials are targeting a time frame in which the school district could pay off the project debt within 17 years without increasing tax rates directly related to construction costs. Another option — to repay the debt within a dozen years — likely would have required consecutive tax increases of about 1 mill each to help balance the district's budget and support construction costs, officials said.
An option to extend the debt for as long as 25 years was considered and rejected because it would delay the district's ability to start work on upgrading other aging buildings.
“This speeds things up and allows more flexibility to future boards,” said school director Phil Kochasic, who pushed for the 17-year plan.
Under this plan, the district will retain the existing debt structure by borrowing money as it pays off old debts.
Several school board members have said that they didn't want to support a construction project with higher tax rates. However, they acknowledge that other rising costs in the budget could require tax increases.
That's one reason why they considered scrapping the immediate construction plan to just use the $9.4 million already available for district improvements.
Only Nick Petrucci and Toni Ising voted for that proposal, which followed an analysis by business manager Brett Lago that showed an estimated $1.8 million increase in teacher salaries, employee pension costs and health insurance in the 2014-15 budget. That figure includes a 2-percent increase for teachers, although contract negotiations began only recently.
Officials said they might have been able to repay the $9.4 million worth of bonds within three years if they stopped the high school plan. But in doing so, they only would be kicking the problem into the future, board member Scott Koscho said.
“It's the same boat you're in, just three years down the road,” he said.
Board member Dallas Leonard, who is chairman of the buildings and grounds committee, said the district is doing work that needs to be done while taking advantage of low interest rates.
“You're not going to get much better bond rates than what we've enjoyed,” he said.
Chris Foreman is a staff writer for Trib Total Media. He can be reached at 412-856-7400, ext. 8671.