By SUSAN EVANS
The Tribune-Democrat
July 28, 2007 11:01 pm
—
Student enrollments are declining in this region and across the state, but school districts are on a building binge – ranking Pennsylvania first in the nation in long-term debt.
School construction, financed mainly through property tax increases, is a political hot button.
Some examples:
• The Central Cambria school board is agonizing over whether to abandon its 80-year-old middle school building in Ebensburg and build a new, $20 million structure – or opt for a renovation option at a much lower price. The fate of the middle school will be an issue in this fall’s school board election.
• The State College Area school board was unanimous in supporting a $117 million high school renovation plan, but abruptly scrapped the idea after angry voters rejected five board members in the May primary.
• Current construction or renovation projects – $13.5 million in the Northern Cambria school district and $44 million in Richland – load new long-term debt on each district and require property-tax hikes to finance them.
Those numbers are important, because higher construction costs take away instructional costs, critics say. Pennsylvania school districts spend 54.2 percent of their annual budgets on instruction cost, while the preferred level is 65 percent.
Building boom
So with a declining population in general, and fewer school-age children than ever before, why are Pennsylvania schools doing so much construction?
Part of the answer is age of their existing structures. About 25 percent of the state’s schools are 55 years or older. The average age nationally is 42 years.
That often means inadequate wiring for modern technology. And in some cases it means the presence of asbestos, or other potentially dangerous conditions concerning the buildings’ materials.
And, it’s remarkably easy in Pennsylvania to decide to build a new school, because this is one of the few states that does not require a referendum to approve tax hikes or borrowing for construction projects.
But referendums aren’t the best answer, local officials say. Instead, they argue, business savvy is what counts.
That’s the viewpoint of Richland School district administrators, who are using a a somewhat complicated business approach to finance their $44 million high school project.
With existing outstanding long-term debt of $12 million, officials wanted to keep the new project “off the books,” Richland school board president Rex McQuaide said.
“Our new construction is financed through a state authority, so it’s kept off the balance sheet,” McQuaide said. “That way we preserve our borrowing capacity.”
And the district applied $8 million in savings to the project costs, so it carries a new outstanding debt of $48 million, McQuaide said.
“We took the junior high and senior high and combined them under one roof to achieve economies of scale,” he said. “It will result in considerable savings in operating expenses, which we believe will be close to $1 million a year.”
Richland had lowered taxes three times in recent years, but then raised millage by about 10 percent to support the construction project.
“Our (property tax) millage rate remains at the low end of the spectrum,” McQuaide said.
The current Richland High school building will be rented to Penn Highlands Community College on a long-term basis.
The renovation route
A more traditional, and fiscally conservative, approach is being used with current projects in several other area school districts.
In Northern Cambria, a recent high school renovation was paid off before the current $13.5 million elementary/middle school renovation was taken on, said Superintendent Thomas Estep.
“Our project is a renovation with some new construction,” he said. “We needed some new areas, because there have been a lot of changes in education since it was built 35 years ago.”
The option of renovation instead of new construction was an easy choice at Northern Cambria, he said.
“This is a good building, and when you renovate, there are real advantages,” Estep said, adding that he expects a state reimbursement of almost 50 percent for the project.
Estep is opposed to requiring a referendum to increase taxes to pay for construction.
“School boards are elected by the people to carry out the wishes of the people,” he said, “so it should be the elected representatives who are making the decisions. We do have a representative form of government.”
A similar construction approach is being used in the Chestnut Ridge school district, where the total outstanding debt is $20 million.
That stems from a $13 million renovation of the middle school, already completed, and a $13 million renovation of the high school, nearly completed.
The debt is less than the total costs of the projects because the district was able to invest more than $6 million in savings to help with the projects, and is expecting a state reimbursement on the renovation of about 48 percent.
Another local school district – Somerset Area – is also putting some savings into the costs of a renovation project.
Already carrying a long-term outstanding debt of $25.9 million, according to the Pennsylvania Department of Education, Somerset is putting $4 million of its savings into its current $5 million high school renovation and stadium project.
Somerset Area, which has the highest property tax millage rate in Somerset County, will not increase taxes to pay for the renovation. Instead, an increase will be needed to help pay for operating expenses next year, officials say.
Burning debate
Central Cambria officials are viewing these and other construction projects across the state, as well as awaiting an updated feasibility study on the various options for their middle school.
The district, already carrying a long-term outstanding debt of $10 million, is facing criticism from some residents who are urging fiscal constraint.
But some teachers are lobbying against less-expensive solutions that would place middle school students at the high school. An advisory group could not reach a consensus on whether to build a new middle school or turn to other options – such as renovation.
Superintendent Susan Makosy said that nothing will be decided until more information has been gathered.
“So far, our decisions have been directed by the 2000 study,” she said, referring to a document that recommended $2 million in immediate renovations “assuming that a new middle school will be constructed in the near future.”
Now, with taxpayer objections in a district that has raised property taxes three years in a row, that direction might be revamped.
“The educational program should drive our decisions,” Makosy said. “Teachers as a group support the middle school for seventh and eight grades. Parents want kids of that age to be separate from high school students. And, there is some sentiment in Ebensburg supporting keeping the middle school open.”
State Sen. John Wozniak, D-Westmont – whose home base is Johnstown but whose district includes parts of five counties – said that school districts must try harder to avoid tax increases and mounting debt.
“We have tried to lower construction costs: We’ve attempted to use incentives so that every district would use the same template,” Wozniak said. “But, unfortunately, you see situations get out of hand, like the $117 million school proposed in State College.
“I urge the school districts in my area to look out for each other to save costs, to look at joint purchasing, insurance costs, administrative costs, etc. I ask them, ‘Do we really need a superintendent for each district?’ ”
Wozniak requested a statewide study of potential school district consolidations. That report is being released this summer.
“You have to look at the population trends and planned accordingly,” Wozniak said. “But Pennsylvania’s propensity to change is about zero.”
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