Brownsville school board votes to borrow $4 million
BROWNSVILLE – The Brownsville Area School Board Thursday voted to borrow $4 million to cover existing debt and restructure two bond issues to realize a savings. Both moves passed by a 6-0 vote. Board members Stella Broadwater, Sandra Chan and John Evans were absent from the board meeting.
The $4 million to be borrowed from PNC Capital Markets is owed primarily to Brownsville Bus Lines and the Intermediate Unit 1 and will be placed in a sinking fund from which debt payments will be deducted.
Another $1 million was borrowed to fund the refinancing of a 2003 and a 2005 bond issue, money previously borrowed to pay the cost of the high school and middle school renovation projects.
Through refinancing the bond issues, the district this year will realize a $450,000 savings and a savings of $430,000 next year, according to John Hewlett, director of Harrisburg-based Susquehanna Group, the district’s financial advisors.
Hewlett said the savings will occur by stretching the payment of the district’s debt service over 10 years instead of two. He pointed out that the district is not increasing its debt through the moves. Business manager Edward Yorke called the latter move “buying time.
“Essentially, we’re going to be able to make (debt service payments). As it was, we wouldn’t be able to make it,” Yorke said.
Incoming board member Nena Kaminsky, expected to take her seat on the board in December, asked if the borrowing was going to better the district.
“We’re not going to get caught with our pants down down the road?” she asked.
Dr. Philip Savini, district superintendent said, the moves were recommended in a study conducted by the Education Management Group for the state Department of Education. The study reviewed the district’s operations and recommended ways to lift it out of a financial crisis.
Board President Rocky Brashear asked everybody to keep in mind that the district is “in a crisis and doing everything to get out of that.”
In other news related to finances, Yorke said the district paid off a $1.2 million tax anticipation note borrowed in July.
The money was used to help the district meet expenses during a time when it was not receiving state subsidy payments in light of a lengthy budget battle in Harrisburg.