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District to borrow $5 million

Published October 20. 2010 05:00PM

Palmerton Area School District has agreed to borrow an additional $5 million to fund maintenance and repair projects.

Also as part of that decision, the board agreed to refinance a pair of bond issues and the energy performance lease on Tuesday.

After several votes and much deliberation, the school board on a 5-4 vote agreed to the measure with the stipulation that unused borrowed money be used to pay down the debt.

Directors Darlene Yeakel, Michael Ballard, Susan Debski, Clarence Myers and board President Barry Scherer were in favor. Directors Carl Bieling, Carol Dwyer, Stuart Henritzy and Tina Snyder were opposed.

The board's decision came after two prior motions, one to borrow $5 million, and the other, to borrow $2 million, were defeated.

Before the vote, resident Bill Ravert questioned how the board could agree to borrow $5 million when a list of projects it deemed top priority only totaled under $2 million.

"Can you tell me specifically what you'll spend the other $3 million on?" asked Ravert. "Consciously, I don't know how you can vote to spend this money if you don't know where it's going."

Scherer told Ravert the board previously came up with a list of 98 items that was whittled down to 23, and added it was contingent on whether the board elected to re-bond.

"We are in a budget crunch," Scherer said. "This is an opportunity for the district to borrow money to get these projects done."

But, Bieling questioned how the district would be able to pay back the money.

"Where's that money going to come from to pay the bond? asked Bieling. "In the past, there was a plan; here, there is not."

Ravert then asked whether the payments would remain the same.

District business manager Lisa Vignone said that while the payments will go up, the district will not exceed the $1.6 million a year in debt service without impacting the amount of the loan payments for the next eight years.

As a result, the debt service for 12 years will be about $1.6 million, Vignone said, with the remaining four years at about $1.2 million, she said.

Had the board not agreed to borrow, the debt service would have decreased to $1.2 million in 2019, Vignone said. From 2020-2023, it would have been about $670,000, and from 2024-2026, about $470,000, at which point the district would have been done with its debt service, she said.

That would have amounted to over $18 million in debt service, Vignone said. The overall debt service that would be paid would be $24.7 million over the next 16 years.

Resident Randolph Getz told the board he couldn't understand why it felt the need to borrow so much money.

"I can't understand why you need to borrow $5 million, which has to be repaid, and who's paying it? The taxpayers," Getz said. "I realize you need to have the best interests of the students in mind, but you also need to have the best interests of the taxpayers in mind."

After Bieling made a motion to borrow $2 million, Debski said that amount wouldn't be nearly enough to pay for the projects.

"I personally don't believe $2 million is enough to borrow for everything that needs to be done," Debski said. "To say there's very little to be done, that's disappointing."

Ballard then suggested the board arrive at a middle ground, and suggested it borrow $2.5 million. But, that motion died for lack of a second.

Bieling reiterated his belief that the district doesn't have that high of an itemized cost to justify such a large sum of money to borrow.

"We don't have to do all these things in one year," Bieling said. "That's not going to happen."

Again, Debski said she disagreed with that trend of thought.

"Costs are going to change; you can itemize that," Debski said. "I think this is a very good time to do projects that need to be done."

Resident Josann Harry then asked when the last time all of the board members toured each of the buildings in the district, to which she was told last year.

Snyder said that while there was a list of 23 priorities deemed of high importance by the board, some of those only received one point.

"I don't know that all of these on the list are top priority," Snyder said. "I'm not for borrowing $5 million when we don't have that much."

Dwyer said she agreed with Snyder, and offered her own take on the situation.

"Of the (list of) 98 (items), I think 38 are maintenance," Dwyer said. "I'm not in agreement with $5 million."

After the board's vote, Ravert reiterated his stance.

"I'm not against spending money or making repairs," Ravert said. "But, it's that gray area of where the $3 million is being spent."

An initial motion to borrow the $5 million was defeated on a 5-4 vote, with Bieling, Dwyer, Henritzy, Snyder and Yeakel opposed, and Scherer, Ballard, Debski and Myers in favor.

A subsequent motion by Bieling to borrow $2 million was then defeated on a 5-4 vote, with Scherer, Ballard, Debski, Myers and Yeakel opposed, and Bieling, Dwyer, Henritzy and Snyder in favor.

After consultation with board solicitor David Shulman, the board again made a motion to borrow $5 million, which was approved. After the vote, Dwyer openly questioned how the board could take such action.

"I've been on the board for six years, and never had a motion (that's) been defeated and in the same meeting, comes back and is approved," Dwyer said. "I question the procedure."

Resident George Ashman asked how much the district would save through the refinancing of the 2006 and 2007 bond issues, to which it was said about $135,000.

Debski said that while she understood the caution, borrowing the money was a positive so long as the district doesn't spend it "foolishly."

"There comes a point where you have to reinvest; otherwise, nobody will want to come to Palmerton when the buildings fall apart, and industry won't want to come here," Debski said. "This is not just flippantly decided."

Recently retired school teacher Audrey Larvey said she agreed with Debski.

"In Carbon County, we are the oldest, unrepaired high school in the entire county," Larvey said. "You pay now, or you pay later."

Debski then suggested the board hold a special meeting to discuss what it plans to spend the money on now that it has determined how much it plans to borrow.

Ravert then asked how much the district has left in the McCall grant, to which Vignone replied about $200,000.

Earlier this month, the board heard from representatives from Performance Roofing Systems, which said it could replace the high school roof for $900,000, complete with a 30-year warranty. Or, it could replace the high school roof for $600,000 with a 20-year warranty.

Last month, a review of the board's project priority list showed the repair of the roof was clearly at the top of its to-do list.

In June, Alan Behnke of Tremco Roofing, said the cost to restore the high school roof would be about $583,090, and would include the restoration of the boiler room roof. Or, he said, the district could replace the roof at a cost of about $2 million.

Behnke also noted at that time the weightroom roof is also in dire need of repair, and added that it couldn't be done until the bleacher system is addressed. He said the cost to replace that roof would be about $133,076.

The district could also have done a combined project that would cost $350,000; $200,000 for the bleachers, and $150,000 for the roof, Behnke said at that time.

Next on the board's project priority list was the generator at S.S. Palmer Elementary; the junior high school gym floor, tiles and bleachers; Parkside Education Center building repairs; and high school renovations.

Projects that rounded out the top 10 were the junior high boiler; oil tank removal; tennis courts; S.S. Palmer steps; and the high school hot water boiler.

In all, the list of 23 projects on that priority list came in at $1,641,039, said Superintendent Carol Boyce, who cautioned the figure was a best guess estimate at that time.

In August, the board reviewed a potential three-year expenditure supposition created by Vignone at the behest of the board. The supposition presumed level funding on all department line items, as well as a 3 percent increase in salary and 5 percent increase in benefits in each of the next three years.

It also presumed a category known as other, which refers to the other agencies with whom the district does business, such as the Carbon Lehigh Intermediate Unit, outplacement providers where some of the district's students receive services, and places with whom the district has educational service contracts, whereby the district anticipates a possible 10 percent increase.

Boyce said at that time the district had lost $23,000 in grant funding it was counting on in the 2010-11 school year in the educational areas, and added that it appeared the only way it will be able to afford to pay for any major facilities and buildings and grounds projects is through the bonding process.

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