School And Finance Boards Discuss Capital Projects, Planning Strategy

By John Voket

Members of the school board and town administration sat opposite the Board of Finance during a special meeting Wednesday night for an exchange of questions and answers. The session was the second time the two boards met in just over two weeks, prompted by a looming $47 million capital proposal for a high school expansion and renovation.

That single project was no longer the primary focus of finance board, however, as Chairman John Kortze explained. Since the Board of Education has submitted a prioritized Capital Improvement Plan (CIP) projecting its requests going forward five years, the finance board and taxpayers now must grapple with how the town will underwrite more than $101 million in priority school projects.

School board Chairman Elaine McClure laid out the list of projects, many of which split design and build phases out over two years or more. Her board voted recently to make the high school project the school district’s number one priority, virtually assuring that some level of expansion and/or renovation will move forward.

“The high school can’t get pushed back anymore,” she said.

Among the other major school projects the school board chair detailed in the district’s CIP were replacement or renovations to the Sandy Hook, Middle Gate and middle schools’ heating and air conditioning systems, roof repair or replacement at the middle school, and renovations to the cafeteria and auditorium at the middle school.

“Every project is important,” Ms McClure told the finance board. “We hope to get started immediately for the 2007-2008 projects.”

Ms McClure said the district was aiming to begin design work on the high school in the 2007-2008 budget cycle, despite earlier requests by the finance board and other local officials that the project begin ramping up in the 2008 fiscal year.

The delayed start date on the high school expansion was recommended months ago so finance officials could work to fund the project while keeping the town’s debt service below a self-imposed cap of ten percent of the overall budget. Although the cap is not statutory, maintaining the ten percent ratio has remained a primary goal of the finance board.

The cap is also strongly recommended by Moody’s Investors Service, the organization that issues the town’s favorable bond rating. This allows the town to borrow or bond capital projects at some of the lowest rates available, saving taxpayers millions in long-term interest payments on outstanding debt.

During the early stage of Wednesday’s meeting, Mr Kortze took the opportunity to answer questions that had been submitted by members of the Board of Education, Po Murray, co-founder of the special interest group WeCAN (We Care About Newtown), and other residents.

One question concerned comparing the interest savings on debt against the escalating costs of materials and labor on jobs that are continually pushed out in the timeline. Mr Kortze said to the extent his board and the town could accomplish it, there was always an effort to fund all projects at the level requested in the timeline stipulated by the requesting agency.

The Cost Of Money

Another question asked whether or not Moody’s has, in effect, warned the town it might face a downgrade in its bond rating if the ten percent debt cap was exceeded. Mr Kortze answered that he felt Moody’s has, inadvertently, articulated as much in its recent reports.

“All of the Moody’s reports articulate the reasons for our financial well-being, so one could infer that lack of those practices would contribute to our instability,” Mr Kortze said. “And at least one report has articulated the declining growth in this town.”

Addressing another question about the immediacy and impact of a bond rating downgrade, Mr Kortze said a downgrade would immediately affect the cost to borrow, and would be reflected in every project going forward until and if a future upgrade was awarded.

“There are many working parts to the puzzle, but at the end of the day Moody’s is going to make a business decision from the enterprise that we run versus how much money we borrow, and they are always going to look at total indebtedness as a function of our ability to pay,” Mr Kortze said.

A question pointed out that towns like Fairfield and Ridgefield have gone above the debt cap and not suffered downgrades in bond rating, and asked to clarify why Newtown was different.

“We’re not a Fairfield or a Ridgefield. We don’t have an I-95 or Route 1, or a Route 7. We don’t have the industry in those towns or their ability to fund what they do. Their [commercial tax] resources are much greater that what we saddle on the backs of homeowners in the form of taxes,” Mr Kortzes said.

Project Scalability

After several more minutes of discussion, it was time for the school board to answer questions from the Board of Finance members. School board member Thomas Gissen replied to written questions that were submitted in advance.

The first regarded the potential scalability of the high school expansion to accommodate flexible student population numbers in the long term. Mr Gissen answered that virtually any project was scalable and flexible, but added that the board would have to arrive at a consensus over what aspects might have to come out to downsize the existing proposal.

“We are building to the highest recommendation for student population,” Mr Gissen said. “Our town has a history of shortages.”

He referred to the last high school expansion that was built to more conservative student population estimates, and was virtually at capacity the day the expansion opened. He also explained that at a certain point, it becomes much more cost effective to build bigger, if possible, adding additional space for future use.

“When you make a [facility with] larger square footage, you end up paying less per square foot overall. It’s cheaper square footage,” Mr Gissen said.

Board Chairman Paul Mangiafico added that the school board had “made a mistake” in adhering to the population projections the last high school building committee used. “I don’t want this to happen again,” Mr Mangiafico said. “I want to look long-term.”

The two boards talked for approximately a half-hour about the nuances of state and consultant population projections, the possibility of shifting certain grades to other buildings to alleviate space concerns, and how current building and home sale trends might help predict the student population cycle going forward five to ten years or more.

Before the meeting wrapped up, finance board member Harrison Waterbury requested a breakout on any optional exterior work that might be delayed to conserve core building costs. Mr Kortze then asked the school board to produce costs to build to several lower population figures, to provide the projected costs to staff the expansion and for utilities.

Finance member and former school business director John Torok echoed the need for his board to see an operational impact analysis.

“For planning purposes, we need to know what the educational needs in the new building are going to cost,” Mr Torok said.

Mr Mangiafico asked if reviewing the operational figures might have any impact on the finance board’s decision to fully fund the proposed expansion, and finance board member Joseph Kearney said it might.

School Superintendent Evan Pitkoff said ultimately, the town has to weigh the cost for the expansion and the cost to run it against the probability it will eventually be filled to capacity.

“You have to plan on the long-range,” Dr Pitkoff said. “You have to evaluate what would happen if we’re building to a [student population] number and having fewer versus building to a number and having more.”