Canon-Mac discusses financing of construction projects
CANONSBURG – If the Canon-McMillan School Board borrowed $72 million for construction, it would cost the equivalent of 10.82 mills in taxes over six years to pay for the debt service, according to the board’s financial advisor.
John P. McShane, managing director of Boenning & Scattergood, gave the a board a presentation about the district’s financial situation Monday night. He will be back each month until at least December with updates.
The board is considering whether to build new elementary schools, among other construction projects. However, no decisions have been made.
McShane said the dollar figures could change, depending on interest rates. He also said the increased debt service costs don’t automatically mean taxes will be raised by 10.82 mills. Some money will be saved in operational costs of new buildings, he said.
McShane said all of the money cannot be borrowed at once because the board could not raise property taxes enough in one year to pay for the debt service on the loan. School boards can raise taxes only to a certain index level without voter approval.
“It would be great to borrow it all now because rates are so low but you can’t afford it,” he said.
He said there is an exception that would allow the board to raise taxes to cover roughly 50 percent of the project cost in addition to what is permitted to be increased under the index.
There is also a program that runs until Dec. 31 where the federal government pays 35 percent of interest on bonds, McShane said. It’s not clear whether that program will be extended.
Business Manager Joni Mansmann said she asked McShane to present the financial analysis to the board so members could determine whether the district can afford it.
She said she asked McShane to use $72 million because it reflects Option C from the architects, which iss the plan that calls for two new elementary schools at the Wylandville and Muse sites and renovations of South Central and Hills-Henderson with an option of increasing enrollment capacity at Hills-Henderson.
McShane also briefly gave the board an update about one of its swap agreements. The board must decide whether to end the agreement by Dec. 1.
Join the Observer-Reporter’s conversation about education at our blog at http://www.observer-reporter.com/or/behinddesk/
John P. McShane, managing director of Boenning & Scattergood, gave the a board a presentation about the district’s financial situation Monday night. He will be back each month until at least December with updates.
The board is considering whether to build new elementary schools, among other construction projects. However, no decisions have been made.
McShane said the dollar figures could change, depending on interest rates. He also said the increased debt service costs don’t automatically mean taxes will be raised by 10.82 mills. Some money will be saved in operational costs of new buildings, he said.
McShane said all of the money cannot be borrowed at once because the board could not raise property taxes enough in one year to pay for the debt service on the loan. School boards can raise taxes only to a certain index level without voter approval.
“It would be great to borrow it all now because rates are so low but you can’t afford it,” he said.
He said there is an exception that would allow the board to raise taxes to cover roughly 50 percent of the project cost in addition to what is permitted to be increased under the index.
There is also a program that runs until Dec. 31 where the federal government pays 35 percent of interest on bonds, McShane said. It’s not clear whether that program will be extended.
Business Manager Joni Mansmann said she asked McShane to present the financial analysis to the board so members could determine whether the district can afford it.
She said she asked McShane to use $72 million because it reflects Option C from the architects, which iss the plan that calls for two new elementary schools at the Wylandville and Muse sites and renovations of South Central and Hills-Henderson with an option of increasing enrollment capacity at Hills-Henderson.
McShane also briefly gave the board an update about one of its swap agreements. The board must decide whether to end the agreement by Dec. 1.
Join the Observer-Reporter’s conversation about education at our blog at http://www.observer-reporter.com/or/behinddesk/
Labels: Canon-Mac construction
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