Elk Lake looks to refinance bonds

The Elk Lake School Board will take advantage of lower interest rates later this year by reissuing bonds issued years ago for the expansion of the Susquehanna County Career and Technology Center and district wide energy conservation project begun in 2014.
Interest rates when the bonds were first issued were slightly above 5% but have since dipped to 3.56%, explained Audrey Bear, vice president for banking at the Pennsylvania Public Financing Group, part of the Robert W. Baird & Co., which has an office in Harrisburg.
While Thursday’s vote did not formally authorize the reissuance of the bonds, the board unanimously adopted a resolution setting the gears to reissue those bonds into motion.
The board’s action puts the board in a position to act when the most favorable interest rates appear by directing the district’s financial advisors to complete the necessary paperwork in advance.
Reissuing the bonds would help pay off at a lower rate the 2012 bond for the construction of the SCCTC and would pay off part of the 2014 bond for the district energy project. Because of banking regulations, tackling both at the same time would violate a $10 million threshold set for borrowers to obtain lower interest rates, Bear said.
By the end of this fiscal year in June 2018 the district will pay out a total of $998,697 on the two bonds, but that payment will eventually be adjusted down to $668,580 by PlanCon reimbursements and other forms of state aid. PlanCon is a program by the state Department of Education which helps fund education based construction.
“The reimbursement percentage – 83% on that project – is really high,” Bear observed. “You did a really good job based on how you spent the money, classroom size, and other things that are reimbursed by the state. That’s unusually high. That’s good planning on your part,” she said.
But reissuing the bonds, a process which would take several weeks to complete, would result in a savings of over $170,000, she said.
“I don’t see any issues with this or any problems with this, unless anybody else does. This makes sense if we can save $185,000 over the next five years,” said board president Eric Emmerich.
In 2012 the board did a similar refinancing on the original $7.6 million loan to save $1.4 million. The district now has a gross debt on the SCCTC project of $7.15 million, according to an informational packet Bear presented to the school board.
In April the board heard an update on the 2014 energy conservation project from energy manager Kim Guiton, who told board members that energy savings estimates performed well over expectations and will translate into more than $50,000 in savings to the district.
Since April 2015 projected savings of $130,000 actually came in at $168,101.
In January 2014 the board agreed to borrow nearly $4.9 million to pay for the project, at an interest rate of three percent. The loan was expected to cost a total of $6.8 million. The gross debt on the energy project is now $6.36 million, according to Bear’s figures.
In its 2014 decision the board approved a total capital contribution of $702,120, with Elk Lake School District contributing $491,562 and the SCCTC contributing $210,558. Much of the project involved a $3.2 million retrofit for the secondary school building’s HVAC system and a $1 million retrofit of the boiler plant.
In other business, Superintendent Kenneth Cuomo briefly discussed his understanding of current Keystone Exam requirements for high school students looking to graduate. Cuomo said that students looking to graduate must pass exams in basic areas as such as English and Algebra and if they fail must take the exam again but that a second fail would result in the student having to complete a project.
“The state has kept delaying or postponing or changing the graduation requirements. At this point we have no indication that they’re looking at postponing or delaying it. It is definitely feasible but we want to make sure that this information got out now as soon as possible,” he said.
Cuomo said that Elk Lake would continue to work on the project component of the graduation requirements and would welcome further guidance from the state. He said this issue has been discussed with other school superintendents across the county.
“We’re all kind of on hold with this, just kind of up in the air as to where the state is going to go,” he said.
High School principal Brian Mallery lauded the school’s Dual Enrollment program, which allows high school students to take college courses while still in high school.
Mallery said that Elk Lake High School has 63 students taking over 800 credits.
“That would be a savings of about $175,000 for our students. It’s an excellent program,” he said.
“It’s a great opportunity. There are some students who you would not normally think would be there,” the principal said.
Mallery also thanked the school’s mysterious and anonymous benefactor. Most recently the school received a box of raspberry pies and other gifts.
“So there’s some gentleman out there, we don’t know who he is. He just happens to send boxes every now and then, and so we really appreciate it,” Mallery said.
Mallery also said his school is collecting ties and old sheets for the Ugly Quilt Project. Quilts made from those fabrics will be then donated to the homeless.
Elementary school principal Marc Weisgold invited people to visit the Tunkhannock McDonald’s on Wednesday, October 11, for “McTeacher Night.” Proceeds go to the Elk Lake PTO.
“McDonald’s really helps us out in Tunkhannock,” Weisgold said.
Emmerich announced that the board entered Executive Session at 5:30 to discuss contractual and personnel issues.