Octorara Area SD board weighs refinancing, potential new bonds to cover $2M shortfall and fund HVAC work
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Summary
Board finance report showed an approximate $66 million budget and a $2 million shortfall; committee presented two debt-restructuring scenarios that could reduce annual costs by $600,000 while extending repayment and free funds for middle-school HVAC work if state grants fall short.
At its meeting, the Octorara Area School District Board heard a finance update that identified an approximate $66,000,000 budget and an approximately $2,000,000 shortfall, and discussed two debt-restructuring options to address the gap and fund facilities needs.
Speaker 3, reporting for the facility and finance committee, said the district is still closing last year’s fiscal accounts because of new accounting software and that anticipated solar funding did not materialize. "Currently, our budget's 66 approximately $66,000,000. There's an over budgeting of about $2,000,000," Speaker 3 said.
The committee outlined two proposals: restructure existing debt and take out an additional $15,000,000 (option 1) or $20,000,000 (option 2). Speaker 3 said the $15 million scenario would reduce gross debt service by about $600,000 and stretch repayments from 2036 to about 2039, while $20 million would push the repayment horizon to about 2041. Both options would provide funds for priorities such as middle-school HVAC units and cover the discussed $2,000,000 shortfall.
Board members asked how the bonds are paid. Speaker 7 explained the district budgets twice a year: an interest-only payment in October (about $500,000) and a principal-plus-interest payment in April. "Interest only is October. Right. So the interest only is around 5 a little over $500,000," Speaker 7 said. He added that refinancing and taking on new money would keep the district’s budget amount near the current planning number and avoid having to add roughly $600,000 to next year’s budget if the district does nothing.
Speakers emphasized that refinancing need not mean immediately borrowing the full $15 million to $20 million; amounts can be adjusted when the board is ready to sign documents. Speaker 7 also noted the board is about four months from knowing the Commonwealth grant outcomes and that a feasibility update will likely change cost estimates: "the feasibility study was over a year ago, and those numbers will change." The district has engaged financial and technical advisers, including Raymond James and consultants from Schneider Electric, to prepare for next steps.
No formal vote on a bond issuance occurred at the meeting. The board’s next steps, as described in the discussion, are to await updated feasibility numbers and state grant decisions before finalizing any refinancing or new borrowing amounts.
The meeting adjourned after a routine motion and voice vote. The board announced it will meet next on Tuesday, Feb. 17 for committee and regular meetings.