Tube City Almanac

October 24, 2011

Maglicco Concerned About Financial Impact of New Schools

Category: News || By

At least one member of the McKeesport Area School Board is going public with his concerns about the district’s ability to afford a projected future $3.1 million payment for three school construction projects — and he doesn’t see it happening without a tax increase.

“With the board spending this kind of money, they would almost have to raise the millage by the cost of living for several years,” school director Thomas Maglicco said in a phone interview.

At its open agenda meeting last week, the school board discussed a suggestion from Janney Montgomery Scott to proceed with a bond issue financing two of the district’s three building projects — the almost-complete expansion of Francis McClure Intermediate School and the construction of a new elementary/intermediate school at the site of the former Cornell Intermediate School.

. . .

Construction at the Cornell site is scheduled to begin once the state Department of Environmental Protection and Allegheny County Conservation District approve the erosion and sedimentation plan, school officials said. The third project — a proposed new elementary/intermediate school on part of the former Buck estate — is still in limbo, after McKeesport city council denied the district’s site plan in September.

Board members said that with interest rates at historic lows, it’s a good time to proceed with the bond issue.

At its September meeting, school board officials estimated total construction costs for all three projects at around $84 million.

. . .

According to Maglicco, the proposed financing for the Francis McClure and Cornell projects would be structured so that the district’s annual payment would be $3.1 million beginning in the 2014-15 school year.

“I know that these buildings cost money and building all three together at one time is going to cause us to come up with a large sum of money in about three or four years,” he said.

“We can’t raise the millage fast enough to come up with the money to pay for this in 2014-2015,” he added.

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Under Pennsylvania Act 1 of 2006, any real estate tax increase above the so-called index — which is calculated based upon the cost of living and the district’s aid ratio — would need to be voted on by referendum.

If the board decided to raise the millage in the district next year by the index, which is 0.44 mills — less than half a mill — that increase would only generate a little over $300,000 in additional revenue.

“I don’t think the board has any plans to increase the millage above the index,” said David Seropian, district business manager, at last week’s open agenda meeting.

. . .

Although Maglicco said he’s not opposed to building the new elementary-intermediate school, he feels the board should conduct more research and review the most recent census for a more accurate financial picture before moving forward with the project.

“I think the school could afford the two current projects, but because of the increase in these projects from what we originally believed these schools were going to be … I have some concerns about the finances that the district would have to come up with … to pay for these three elementary schools,” Maglicco said.

Maglicco also said that he wants to see a complete breakdown on the financing before voting on authorizing Janney Montgomery Scott to proceed.

. . .

Rather than incurring that much debt, Maglicco said, the district should take advantage of “other sources of income” to offset construction costs, including early retirements and grants.

One source could be a new charitable educational foundation that the board could establish to benefit the district. Superintendent Timothy Gabauer mentioned the foundation at the open agenda meeting, but said details are not finalized.

Gabauer described it as “an opportunity for us to get more partnerships and bring a lot more revenue into the district for certain things that we are currently doing and things we anticipate doing.” More information on the foundation will be revealed as the board looks into filing the necessary paperwork, Gabauer said. 

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Also at last week’s agenda meeting, the board briefly discussed a general timeline for the 2012-2013 budget. Under state law, it must soon decide between two options — either pass a preliminary budget before the general election or pass a resolution by Dec. 15 stating it will not raise taxes more than the index. 

The school board has historically opted for the latter, Seropian said, and will likely pass a preliminary budget in May and the final budget in June.

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