School board keeps 2.88-percent tax hike
A successful bond offering to provide $9.9 million toward the Lehigh Elementary School project has been approved unanimously by Northampton Area School District Board of Education at the May 7 meeting.
Also, school directors voted 6-3 to approve the proposed NASD 2018-19 budget with a 2.88-percent tax hike and voted 5-4 to reject the Bethlehem Area Vocational Technical School budget.
The school board authorized Janney Montgomery Scott LLC, the successful bidder, to issue general obligation bonds in the amount of $9,980,000 to fund a portion of the Lehigh Elementary School project or other related capital projects.
The interest rate that NASD will pay is 3.647441 percent. The cost to the district is 0.84 of one mill over four years — or 0.38, 0.25, 0.15 and 0.16 mill in each of the four years, respectively.
The administration included $400,000 — or the equivalent of about 0.38 mills — toward the Lehigh Elementary project financing in the proposed 2018-19 district budget.
NASD will save about $41,000 by not having to provide bond insurance because of its AA3 rating by Moody’s Investors Service, according to Wesley Hall, senior analyst, PFM. Hall, the NASD financial consultant, stipulated the legal details in a 25-minute presentation to the board that included Atty. Kevin C. Reid of King, Spry, Herman, Freund & Faul law firm, Bethlehem.
Hall read Moody’s credit analysis summary.
“NASD’s moderately sized tax base will experience moderate growth as a new FedEx facility is added to the tax rolls for fiscal 2019. The district’s stable reserve position will remain strong in the near term due to conservative budgeting and active management. The debt burden of the district is elevated due to the growing enrollment and capital needs of the district. Despite the elevated debt and growing pension liability, the district’s fixed costs are still manageable.”
There were 27 bids received from five underwriters during an online auction held noon-12:15 p.m. May 7. Settlement is expected June 13 when the bonds will be available. The earliest date for the bonds to be called by the district is Aug. 1, 2023. The bonds mature in 2035-36 and 2036-37. Interest costs will be $6.2 million.
“We think it all worked out very well in your behalf,” Reid said.
“I think we got a very good result on our bond sale,” said David Gogel, school board president.
“We have broken it into three or four bond sales, so we don’t have to borrow it all at once,” Gogel concluded, addressing the $34.2 million Lehigh Elementary School project.
During a 40-minute discussion, school directors debated the merits of approving the proposed 2018-19 NASD general fund budget of $106,902,338, which includes the administration-backed 2.88-percent tax hike.
Voting for the proposed budget were Dr. Michael Baird, John Becker, James Chuss, Chuck Longacre, Robert Mentzell and Ross Makary.
Voting against the proposed budget were Roy Maranki, Chuck Frantz and Gogel.
Before their votes, Frantz reiterated he backs a 2.18-percent tax hike, and Maranki again said he supports a 2.0-percent tax hike. Gogel also supports a 2.0-percent tax hike.
NASD Superintendent of Schools Joseph S. Kovalchik, NASD Business Administrator Terry Leh and NASD Solicitor Atty. C. Steven Miller said school directors could still lower the tax hike percentage before a vote on the final budget, expected at the June 11 board meeting in the NASD administration building, 2014 Laubach Ave.
Pennsylvania law requires school districts to approve budgets for the upcoming school year by June 30.
Because of the May 28 Memorial Day holiday, the next school board meeting is May 21, also in the administration building.
“This is not the final vote on the budget,” Kovalchik emphasized. “The board can still make adjustments to lower it.”
Kovalchik said the board could cut $100,000 from the contingency budget and plan for $300,000 in tax revenue from the FedEx Ground facility, set to be operational this fall, to reduce the tax hike to 2.18 percent.
Leh updated the board on changed fiscals, including $120,000 expected in increased assessments and a $150,000 real estate transfer tax payment.
“Things have changed in the last two weeks,” Gogel observed.
“This year has probably been the most challenging ever,” Leh said of the NASD 2018-19 budget calculations.
Leh told a reporter for The Press after the meeting the proposed budget is expected to be posted May 11 on the NASD website, nasdschools.org.
Increased revenue should allow the addition of a Spanish teacher and restoration of the family consumer sciences teacher to the NASD staff.
Kovalchik said the contingency fund may need to be tapped to hire a longtime substitute guidance counselor to implement Pennsylvania Department of Education-mandated truancy documentation and corrective action plans.
“I’m not sure how this is going to map itself out,” Kovalchik said.
Voting against adopting the 2018-2019 Bethlehem Area Vocational Technical School general fund budget of $12,151,210, with the NASD portion of $1,934,121 required to fund the budget, were school Directors Becker, Chuss, Frantz, Maranki and Mentzell. Voting for it were Gogel, Longacre, Makary and Baird.
“I think this sends a clear message,” said Longacre who, along with Gogel, represents NASD on the BAVTS board.
Gogel noted the BAVTS budget approval is based on the total number of yes or no votes from representatives of NASD, Saucon Valley School District and Bethlehem Area School District. Even though NASD didn’t support the BAVTS 2018-19 budget, it still could be approved.
Frantz said not only the BAVTS budget demands scrutiny, but the Colonial-Intermediate Unit 20 and Northampton Community College budgets also should stay within the parameters of NASD budget percentage increases.