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Building projects lead to financial hole for Butler County schools

Debt dilemma

Butler County school districts, along with Butler County Area Vo-Tech, were nearly $320 million in debt as of June 30, 2013:

• Allegheny-Clarion: $3.5 million

• Butler Area: $96.5 million

• Butler County Area Vo-Tech: $16,536

• Freeport Area: $13.2 million

• Karns City Area: $4 million

• Mars Area: $80.1 million

• Moniteau: $13.8 million

• Seneca Valley: $79.7 million

• Slippery Rock Area: $8.7 million

• South Butler County: $19.7 million

Total: $319.2 million

Source: Butler County 2014 Comprehensive Financial Annual Report

Saturday, Aug. 16, 2014, 6:03 p.m.
 

A spending spree on school building projects in the last 15 years is catching up to local districts, a nonprofit public policy group says.

“School district debt payments are growing a lot faster than classroom spending,” said Nate Benefield, vice president of policy for the Harrisburg-based Commonwealth Foundation.

A report from the Butler County controller's office says the county's nine school districts, along with Butler County Area Vo-Tech, owed nearly $320 million in debt at the end of June 2013. For many districts, that means annual debt payments in the millions.

As startling as those numbers may be now, a change in state law means that districts will have to start listing their benefits and pension liabilities as debts in 2015.

“Those other debts will look small by comparison,” Butler Area School Board member Bill Halle said. “It will be in the hundreds of millions of dollars.”

Seneca Valley Area School District has paid off about $6.3 million in principal in the last year, lowering its debt to about $74 million, business manager Lynn A. Burtner said. The district budgeted about $9.3 million in debt payments for the 2014-15 school year.

The district had no choice but to expand in the late 1990s and early 2000s, said spokeswoman Linda Andreassi.

“We had an enrollment boom, and we had to address it,” Andreassi said of the expansion and renovations. She said that for several consecutive years, enrollment rose 5 percent annually.

Very few districts borrow money for operating expenditures, Benefield said. Instead, like Seneca Valley, they borrow for new buildings and improvements to existing ones.

“The big school construction boom was mostly debt-fueled,” Benefield said. “Some are deeper and deeper in debt, and that's taking away what's available for teachers, traditionally what's spent on classroom spending.

Wythe Keever, spokesman for the Pennsylvania State Education Association, said the state needs to provide more revenue to districts.

“There is a considerable backlog of funds the Commonwealth has already promised to school districts on reimbursement programs,” Keever said.

The Tribune-Review reported last month that funding for school construction projects is overcommitted by $1.7 billion statewide. The state Department of Education said the budget for payouts increased to $306 million, a bump of about $10 million in the current fiscal year.

Seneca Valley doesn't have any large construction projects on the horizon, Burtner said, because enrollment has leveled off. However, she said the district will likely borrow money for upkeep, including new roofs and boilers, paving roads and similar maintenance.

She said it's important for a district to ensure taxpayers aren't hit with sharp tax increases to pay debt.

Butler Area, which has the largest enrollment in the county with about 7,700 students, also carries the largest debt, with more than $96 million as of the end of June 2013. A current total was not available.

“I'm significantly concerned,” said Butler Area school board member Bill Halle. “I don't know how to state how strongly concerned I am.”

He said most of the debt is tied to upgrades to district buildings within the last several years. Debt payments make it difficult for the district to rein in expenses, he said.

The district is awaiting the results of a study on whether it should consolidate some of its buildings.

“It's just beyond our ability to continue this way,” Halle said.

Bill Vidonic is a staff writer for Trib Total Media. He can be reached at 412-380-5621 or bvidonic@tribweb.com.

 

 

 
 


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