Judge approves loan request
A Fayette County judge signed off on a request from Brownsville Area School District to borrow $4 million to cover existing debt following a brief hearing Monday. District Superintendent Dr. Philip J. Savini Jr. said that the loan, paid off over 10 years, will result in a seven or eight mill increase for taxpayers spread over two to four years. Without taking out the loan through restructuring bond issues, Savini said that taxpayers would have seen double that increase immediately because the loans would have to be paid off in two years.
The money is largely owed to the Intermediate Unit 1 and Brownsville Bus Lines, Savini said. He indicated that about $2.4 million is owed to the IU1, which has already threatened legal action on the delinquent debt.
The bus line is owed about $1 million, Savini said, noting that they have not yet threatened legal action over the debt. Under questioning by district solicitor James T. Davis, Savini said that if the amount goes unpaid, he expected that officials from the bus line would resort to litigation.
In October, the board voted to borrow $4 million and restructure two bond issues. The money will be put in a sinking fund from which debt payments will be deducted.
Savini said that real estate tax revenue in the district have gone down over the past three years from $4.3 million to $3.8 million. There is also a 70-percent collection rate in the borough and township of Brownsville as opposed to a 90-percent collection rate in Redstone and Luzerne townships, Savini said.
During the fiscal year, which runs from July 1-June 30, Savini said the district expects to collect about $1 million.
At the request of the state, the district conducted a study of their finances, Savini said. One of the recommendations made was that they hire a financial advisor to help sort out the district’s financial difficulties.
They hired the Susquehanna Group Advisors Inc., from Harrisburg.
Jay Wenger, an advisor to the district from the Susquehanna Group, said the bonds will be sold in the market place to a variety of investors, then there will be a closing and the district will get its $4 million to pay off the debt.
He said he is confident that the bonds will fund the debt.
The hearing, which was open to the public and advertised, was required under the Local Government Unit Debt Act, Davis said.