East Penn board reviews $95 million K–8 realignment schematic and multi‑year financing plan; no vote taken

The East Penn School District Board of School Directors on June 9 reviewed schematic designs and a long‑range financing plan for a proposed K–8 realignment that designers and financial advisors estimated at about $95 million. The presentation, given by CHA project manager Mike Sander and financial advisers from Public Financial Management (PFM) and Raymond James, was informational; the board did not vote on the plan and was told action on schematic design is tentatively scheduled for June 23.

The schematic designs presented by CHA covered two separate middle‑school projects: a renovation‑focused work at Eyer (sometimes rendered in documents as “Iyer”) Middle School and a large‑scale addition plus renovations at Lower Macungie Middle School. Mike Sander, CHA project manager, said the team had broken costs into “hard costs” (construction) and “soft costs” (design fees, approvals, testing, technology and furniture). He said the budget includes multiple contingencies to address phasing in occupied buildings and market uncertainty, and that the team is using contingencies rather than a single fixed tariff line item.

“That’s why we continue to carry contingencies for these purposes,” Mike Sander said, describing design and construction contingencies meant to manage unknowns.

PFM financial adviser Ben Kappenstein summarized multi‑scenario modeling that tested the project’s impact on the district’s long‑term fund balance. Under a “base case” that assumed paying the project largely from available cash and continuing an $8 million annual transfer to capital, PFM’s model showed fund balance deteriorating over time and projected the district would run short of reserves by about Feb. 2031. To avoid that outcome, Kappenstein said the advisers modeled a package of steps that together produced a viable five‑ to eight‑year forecast: (1) the board’s annual willingness to levy tax increases up to the Act 1 index; (2) reducing the annual pay‑as‑you‑go capital transfer from $8.0 million to $6.5 million and funding the gap with borrowings; and (3) scaling back some staffing additions tied to the reconfiguration.

“Financially, this new scenario is viable,” Kappenstein said, but he emphasized it depends on the district raising taxes to the index each year and on choosing the middle staffing option presented in the analysis.

Ally Mackey of Raymond James walked the board through a millage study that isolated the debt‑service impact of the project and of borrowing to replace the current pay‑as‑you‑go capital plan. Mackey said phasing borrowing and using existing capital reserves to smooth the early years would let the district phase in a roughly 0.22‑mill additional rate (about 1.05–1.1% of the Act 1 index) over the first several years to cover project debt service and associated operational costs such as transportation and new staffing.

Board members pressed presenters on several risks and assumptions: the scope and size of contingencies (one member asked why there was not a single 10% tariff allowance), the potential effect of new tariffs on steel and aluminum, where change orders are most likely to arise during construction, and how enrollment projections used in the decision were tracking compared with prior PowerSchool estimates. Several board members said they supported the programmatic goals but expressed serious concern about the financing approach—particularly committing to annual Act 1 index increases for multiple years. Others argued the K–8 plan addressed immediate elementary capacity needs more affordably than alternate approaches and said they wanted to keep the process moving to obtain more precise bid numbers.

No formal motion or vote was taken. Dr. Campbell, the superintendent, told the board the presentation was informational and that the administration would use the questions and feedback to refine the proposal before any future action.

Board members and presenters said the next steps are further cost‑refinement, preparing bid packages and returning with a recommended financing and schematic‑design approval. The board was reminded that adopting schematic design would not immediately obligate the district to final construction pricing; bidding and contract awards would follow further public processes.

Why this matters: the district’s advisors told the board the financing path chosen now will affect tax rates and operating flexibility for years. Board members asked for additional line‑item detail, a clearer accounting of contingencies for tariffs and construction market volatility, and more explicit enrollment and staffing sensitivity analysis before making any commitment.

Ending: Administration and advisors will return with additional detail ahead of any June 23 action; the board did not approve schematic design or borrowings at the June 9 meeting.