BKW Board approves two props for capital projects

The Enterprise — H. Rose Schneider

A new steam boiler was installed this winter at the Berne-Knox-Westerlo Elementary School. The district is looking to replace steam with hot-water in a proposed capital project.

BERNE — Following a lengthy and sometimes heated debate among board members and audience members alike, the Berne-Knox-Westerlo Board of Education voted on Sept. 7 to put up two capital projects for a November referendum: $15 million primarily for the elementary school, and $5 million for technology upgrades at the secondary school.

About 80 percent would be covered by state aid.

Board President Matthew Tedeschi, and board members Nathan Elble and Kim Lovell voted “yes” to put the two items on the ballot. Board member Lillian Sisson-Chrysler, who has been wary of the project’s high cost despite state aid, voted “no,” saying she felt responsible to the community.

Helen Lounsbury, a former BKW teacher and board member who was elected to the board again this May, abstained, saying she wanted upgrades that would support education, but was also unsure about the funding of the project, finding what was presented too vague.

“I’m thinking of education, that’s very, very important to me,” she said. “But I also know that we have a fiscal responsibility here.”

The capital project

The $15 million project would mostly consist of upgrades to the elementary school, ranging from improving the school heating system to restructuring classrooms.

The additional $5 million proposition to improve technology at the secondary school was introduced at last month’s meeting by Tedeschi, out of concern that the technology upgrades at the elementary school would be inconsistent with the older technology at the secondary school. At a previous meeting, it was noted that students in the district may live in areas with poor or no internet access, and the school could provide that access.

The biggest concern for some audience and board members at the Sept. 7 meeting was the lack of anything more specific than the pricing of different portions of the projects, to the frustration of others at the meeting.

 

The Enterprise — H. Rose Schneider
Crowded class: Within the first two weeks of school, Janine Sargalis’s kindergarten classroom is already overflowing. She said she is unsure about linking multiple classrooms with a “flex-space,” which an architecture firm has proposed doing in a potential capital project at Berne-Knox-Westerlo. But she would like to have more shelf-space for materials and more space for her 22 students, Sargalis said.

 

Lounsbury asked Jim Graham, of the Synthesis Architects, hired by the district, to provide something that would outline the project in more detail. Lounsbury said she was concerned about what the proposition would entail.

“But, if you look at past projects — ” said Tedeschi.

“I have looked at them … ,” replied Lounsbury. “We’re sitting in an auditorium that’s supposed to have perfect acoustics,” she added, alluding to many complaints of being unable to hear the board members at meetings.

Site work vs. inside changes

The board first heard from Graham, who noted that, after the board hired a construction manager — Sano-Rubin Construction Services — upon the firm’s recommendation, Sano-Rubin had estimated a higher cost for site work on school grounds.

Because of this, Synthesis cut back on certain projects to stay within the $14.8 million the board had requested. Synthesis eliminated a science, technology, engineering, and mathematics laboratory; upgrades to the elementary school cafeteria; and the addition of a community area in the lobby of the high school.

The board then asked Graham to, rather than scale back on these in-building projects, to cut back instead on the additional site work, leading to a discussion of whether improving the outside of the school buildings is needed. Tedeschi later asked if the board would agree to putting academic projects back in the capital project and conduct minimal sitework, which Graham said would be a dollar-for-dollar exchange.

The site work is mostly intended to restructure the parking lot and change where students, staff, and visitors park and enter the school, for added security. Lovell has noted her concerns for school security in previous meetings.

She said at the Sept. 7 meeting that, when arriving early to drop her child off for his first day of school at BKW, the school had been empty but the front door was unlocked. She added that this was later addressed and changed, but it had worried her.

“Is it going to be an issue to move that stuff around for the proposition vote?” asked Vice President Nathan Elble, of funding other projects rather than site work.

“No, we’re just approving dollars,” said Tedeschi, who went on to read the two propositions out loud.

The propositions do not review specific aspects of the project, but rather state a maximum amount to be spent to “reconstruct various District buildings and facilities, including site work, and acquire original furnishings, equipment, machinery or apparatus required for the purpose for which such buildings and facilities are to be used,” in Proposition 1; and to “ perform additional reconstruction work primarily at the High School and at other various District buildings and facilities, including site work, and acquire original furnishings, equipment, machinery or apparatus required for the purpose for which such buildings and facilities are to be used,” in Proposition 2.

Graham said his firm usually estimates six months for an approved project to begin, though he surmised that it may be longer given the animated conversations about the project during the board-of-education meetings, with four months dedicated to meetings with faculty, staff, and administration members being held after project approval.

 

The Enterprise — H. Rose Schneider
A half-century-old boiler sits in the Berne-Knox-Westerlo Elementary School basement. Its counterpart was replaced this winter after it stopped working; the district was unable to pay for the new boiler with reserves from a previous capital project, because the funds were directed to go to construction at the secondary school. BKW Superintendent Timothy Mundell said that a proposed capital project would be written to allow funds to be directed to projects at the board of education’s discretion.

 

The funding

State aid would cover about 80 percent of the project, leaving $4 million for the district to pay if both propositions pass. Graham noted that site work would also be aidable, as long as it is part of the project.

At a previous meeting, Superintendent Timothy Mundell said the school intended to spend about $2 million of its saved funds on the project. Bond payments — to cover the remaining $2 million for both projects — would be funded through the tax levy, with the school estimating an annual cost of $20 to $35 per $100,000 of assessed property value for each property owner over the 18-year stretch of loan payments.

With state aid covering about $16 million, and another $2 million coming from the district’s funds, Tedeschi said at the Sept. 7 meeting that the amount left to be paid by taxpayers would be $2 million over 18 years. He later added that the school has a $1.6 million debt-service reserve that can be used to reduce that length of time, if needed.

“You’re going to be paying $2 million in interest, Matt,” said Knox supervisor and former school-board member, Vasilios Lefkaditis, who said he had calculated that with a 1.8-percent interest rate. When Tedeschi said the district will have a 3-percent interest rate, Lefkaditis doubled his previous prediction, urging the board to cut “all the fluff.”

“What else do you want to take away from our kids?” asked Tedeschi.

“Don’t say that!” said person sitting in the gallery.

“How is a parking lot going to affect our kids?” asked another.

Lefkaditis described the project as a “blank check,” and said it could leave the school district in a situation where it would have funds left over that could only be spent on the project.

Martin Szinger, who had supported the capital project while campaigning unsuccessfully to be on the board this spring, because he said it would save money in the long-run, defended aspects of the project criticized as “fluff.”

“Clearly, they’re going to be doing the things they’re scoping for,” Szinger said; later in the meeting, he added that he knew many parents who wanted the original scope for the project.

John Judge, chairman of the BKW Budget Advisory Committee, said he was concerned that he had approved the project’s funding without fully looking into it.

“One of the things we haven’t done, at this point, is do our job that we volunteered to do,” he said, “which is chase the numbers, A to Z.”

Judge said the board should not vote on the project at the Sept. 7 meeting, because of the number of questions that had arisen in the discussion, and because he himself felt as though he had had numbers put before him by the board to approve that he had not fully understood.

The board had to vote to put the project on the ballot 45 days before the public vote on Nov. 2, meaning a decision had to be made a little over a week following the Sept. 7 meeting. Judge acknowledged that a decision made at a later monthly meeting would not meet the 45-day requirement.

“What I say is the number dropping by $400,000 … ,” he said, of the debt service, “And there’s some implications that, if we don’t maintain a certain debt level, that screws with our tax levy, something else I don’t understand. So if we don’t do this project, now do we end up in a spot where we can’t tax and we have to cut because we can’t tax enough?” he asked.

Judge added that, despite his 10 years of working in finance, he found the way public finances operate “ridiculous.”

In the audience, Molly Belmont, BKW resident and parent, suggested that taxes would go down if the population increased from people being attracted to improved towns and a school district, with Lefkaditis countering that the appearance of the school wouldn’t affect that.

Administration responds

Speaking to The Enterprise this Monday, the district’s new business manager Stacy King-McElhiney, said that, without the proposed project, the school’s debt is set to decrease to zero by 2025. For most school districts, this isn’t supposed to happen, because a district’s debt is a component in a formula for calculating state aid that allows a school to receive more aid, she said; with no debt, BKW would get less state aid.

Should the school district residents vote to enact a capital project, BKW would begin borrowing for it in 2020, by taking out a year-long bond anticipation note for $5 million, which would then be paid off by a bond enacted the following year, King-McElhiney said, stressing that these numbers are not exact predictions.

She explained the process this way: Another BAN would be taken out for $5.8 million in 2022, followed by a bond to pay that off amount the next year, and then another BAN for $5 million in 2024, followed by a bond to pay off that. The district would essentially be taking out $15.8 million in bond payments over the course of five years, and paying about $1.1 million to $1.8 million in principal payments each of those years; the district’s debt in total would go from $9.8 million in 2020 to $15.8 million in 2025. Financial advisors are conservatively estimating around 3 to 3.1 percent interest for bond payments.

State aid for the project would not be provided instantaneously, King-McElhiney said, but rather would come in as the project is completed; for example, if the cafeteria is renovated, state aid will reimburse approximately 80 percent of the costs, starting the first year after construction begins, which is anticipated to be summer 2019.

“The state doesn’t give $16 [million] up front,” said BKW’s district communications director, Bill DeVoe.

The district is currently paying off three construction bonds for projects that occurred in the 2004-05 and the 2012-13 school year, primarily for the secondary school. The district is also paying off six bus bonds. For the 2017-18 school year, BKW is paying $1.5 million in principal for these bonds and $236,288 in interest.

King said a chart of the school’s debt service — the principal and interest payments on bonds — that Lounsbury had provided, is about $4 million off. Mundell said the chart came from figures compiled by former school business manager Sarah Blood this past January, and information from the 2016-17 school year, when an additional bus bond was put through, is not included. Lefkaditis said he had requested it from Blood and sent it on to Lounsbury.

The 2012-13 capital project was under budget, and so the remaining amount was put in a reserve fund, which could not be used on items not stipulated by the capital project, such as the boiler in the elementary school that broke and needed to be replaced this past winter, said Mundell.

According to Mundell, the referendum for the proposed capital project includes the phrase “as may be determined by the Board of Education.” He said that means if the bond passes and the project ends up costing less than anticipated, the bond will be able to spend the excess funds where needed.

Board votes

“We have spent hours on it, listening to it, talking about it, listening to plans,” Tedeschi said of the capital project, following the numerous discussions at the Sept. 7 meeting. Lounsbury laughed.

“What?” he asked.

“No, I’m just laughing because it looks like we’re going to be spending hours more tonight,” she replied.

“Oh no,” he said, “Let’s put this to the vote.”

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