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Kennett closes final bond for elementary school program; finance report shows modest state subsidy shortfall
Summary
The district closed the fourth borrowing for its elementary-school building program, netting about $37.9 million in premium proceeds from a 20-year bond issue at roughly a 3.38% yield. Finance staff told the board the preliminary budget will be adjusted for a modest state-subsidy decrease and potential local assessment and tax changes.
Kennett Consolidated School District officials told the school board on March 10 that the district closed the fourth and final borrowing for the elementary-school building program and received roughly $37.9 million in net proceeds from bonds sold at a premium.
Business administrator Mr. Tracy said the bond issue was structured as a 20-year borrowing with an overall average yield of about 3.38 percent and that the district will make full settlement in early April. The proceeds were described as premium bond proceeds of $37,900,000, with settlement processes continuing in early April and an account already established to hold the funds.
The finance report attached to BoardDocs also included operational and capital details: an assets-and-investments listing of $49,631,461.48; an expenditure summary and capital projects detail documenting $2,582,430.85 in capital-projects payments associated with the new elementary schools; and a food-service monthly net income of $29,785 and a year-to-date food-service net of about $244,000. Tracy noted the district had not yet received February's National School Lunch subsidies or certain vendor invoices, which affects timing of food-service accounting.
On operating revenues, finance committee members said the governor’s proposed state budget produced smaller increases than the district had assumed in its preliminary budget. Finance committee chair Mr. Finnegan reported preliminary projections now show about $96,554 less in state aid than assumed, driven by a lower-than-expected basic education subsidy increase and modest ready-to-learn grant adjustments. The finance report also flagged two recent tax-assessment appeals concerning borough properties that could reduce local revenue by roughly $340,000 and the possible enactment of an earned-income tax in a neighboring township that could reduce district revenues further (a potential impact figure discussed at the meeting was about $500,000, depending on the township’s action).
Tracy and finance committee members said the bond terms improved the district’s debt-service outlook: the district was able to reduce about $500,000 that had been budgeted for debt service in the preliminary budget. The board was reminded that the preliminary tax-increase planning figure would likely be adjusted upward from an earlier 2.81 percent estimate to nearer 3.52 percent under current revenue projections unless other offsets are identified.
Enrollment figures included in the February report showed a small decline of eight students from the prior month to 3,788 total pupils.
Board members acknowledged the improved bond terms but emphasized ongoing budget pressure from state-aid uncertainty, assessment appeals and potential local tax changes. Administration and finance staff said they will return to the board with refined budget recommendations ahead of the June deadline for adoption of the final budget.
