Last week, the board reviewed finances for its ongoing and planned capital improvement projects, including two completed gymnasiums, a four-phase high school renovation and a new central office. School Finance Officer Lisa Dickerson said unexpected expenses and changes to the original plans have created a possible $2.3 million shortfall, assuming each of their intended projects is completed. Construction costs are estimated at $27 million, with only $24.7 million in current funding sources.
“We are not in a deficit at this point,” Dickerson said. “The deficit would be caused by all the projects we are hoping to do or we had planned to do originally. We are just at the point right now where we’re making hard decisions.”
At Thursday’s work session, board members were presented five bond options for $3 million or $5 million as one alternative to see all of its projects to completion. The Sylacauga High School renovation will be completed no matter what, Dickerson stressed, but the board must still decide on furnishings and technology for the additions, as well as whether or how to continue with its intended $2.1 million central office.
Without the central office, there would only be a $200,000 shortfall at the end of their scheduled projects; however, the current Fourth Street office is in deplorable condition with extensive roof and ceiling leakage, mold and other serious issues that must somehow be addressed in the near future.
As of now, the BOE has spent roughly $10.5 million on completed projects entailing about $2 million for a new kitchen hood and gym at Indian Valley Elementary and a new gym at Pinecrest Elementary; $7.8 million for a 31-classroom addition, or Phase I, at SHS; and about $600,000 for various other improvements. The next three phases of SHS are estimated at $10.6 million, plus furnishings and technology for all four phases estimated at roughly $1.5 million.
Funding sources that were acquired before these construction projects began in 2010 are as follows: $16 million through a 30-year city bond issue; $5 million through a 17-year federal Build America bond; $250,000 in local capital project funds; $3.1 million in public school funds for fiscal years 2010-2015; and $445,000 in PCSA funding.
The bond options, presented by Merchant Capital investment banking Thursday night, included: a $3 million, 12-year bond with 1.84 percent interest; a $5 million, 12-year bond with 1.84 percent interest; a $3 million, 20-year bond with 2.81 percent interest; a $5 million, 20-year bond with 2.81 percent interest; or a $3 million, 20-year bond with 2.47 percent interest.
The options take some variables into account, such as a 9.5 mill ad valorem tax on the city bond that reduces to 9 mill in 2025, as well as savings on the Build America bond, which requires a payback of only $4.1 million.
Dickerson asked Merchant Capital Senior Vice President Reid Cavnar, who was present at the meeting, what his choice would be based on where the system is at this point.
“This is the math of how it works out, and it all depends on what you’re comfortable with and what the city is comfortable with,” Cavnar said.
Dickerson added that the system currently has an additional $700,000 in escrow at the city, though city CFO Karen Beane said it is closer to $450,000. Board member Steve Marlowe suggested tapping into that money.
“If we’ve got $700,000 sitting there, there may be some smaller projects we could take care of with that, knowing the central office is the big project that’s looming down the road and/or (Legion Stadium), depending on what happens with that,” Marlowe said.
The board eventually agreed to submit a request to the city for $200,000 from its escrow to fund: $45,000 in painting at Nichols-Lawson, Pinecrest and Indian Valley schools; $95,000 for a band practice field; and $50,000 for four external security cameras at each school this summer.
The next regular BOE meeting is June 27 at 5:30 p.m. at the central office.
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