School Business Administrator Peter Curro outlined the school district financial review with the Budget Committee at their Thursday May 30 meeting.
“Let me give you some good news. As you can imagine when we do the budget every year there’s a whole bunch of internal processes that we go through. One of them is ‘have you looked at refunding any of your bonds?’” Curro said. Curro added that refunding a bond isn’t like refinancing a mortgage.
“There’s call dates on a bond and when you call a bond, you almost got to be within a year before that call date to get any value and after the call date you can’t call the note,” Curro said.
Curro said that the high school is a non-call note which they did on purpose because non-call notes get a two to four points lower add rate because of the security of the investors knowing that it won’t be called. He said the high school one ends in 2022 or 2023.
“The Middle School note ends in 2017 but we are right in the middle and we have a public meeting on June 6 to refund the North School note. The North School note, if you remember, was for five and a half million and was to replace the aged portables with brick and mortar and to do some renovations inside,” Curro said.
Curro said that if all goes according to plan what will happen is that over the course of the next 10 years, that note will save the district about $150,000 over the ten year period in interest. “There’s a whole bunch of fees involved with refunding. You need a bond counsel, what you do is you actually pay the investors and there’s a whole process and legal gets involved. In the end, we think we’re going to save about $150,000 to $200,000 over the ten year period,” Curro said.
Curro said that Bedford just did a refunding, and that their interest rate was 1.43 percent. “That gives us an idea of where the market (is at). We were expecting anywhere from one to two would be our interest. It was the same amount, about $6 million. They’re rated the same as us so we’re going out in about a week or two. It doesn’t change that fast and we’re happy that we should be around 1.5 (percent) or 1.4, and that would materialize more than $150,000. So that’s some good news for you,” Curro said.
According to Curro, Food Service should break even, “give or take a couple thousand either side.” Curro said that the school board did agree to raise out of the high school lunches by $0.15 and the middle school and elementary school lunch cost by $0.10. “By federal law there’s a calculation that we do that the feds give us and by the new Child Nutrition Act, until we reach the magic number. I think it’s $2.69, we have to raise our prices yearly by ten cents to get to that number. $2.69 is the federal reimbursement rate that we get for free and reduced meals,” Curro said.
Curro said that he understood both sides and that the argument on the federal side is that “by us (the feds) giving you $2.69 for free and reduced lunch, you are able to take that revenue, apply it to your program, and keep your rates lower than they would be had we not given you the revenue.”
Committee Chairman Chris Melcher said that they could “literally open the doors to the high school and let the public go in. They would love to pay these prices every day.”
Curro said that the law had changed to say that if a program is financially stable “meaning you made a dollar or by policy it’s 3.5 percent of the revenue, if you’re continually above that line, you do not have to raise your price by a dime.” “For us we’re probably in this dime increase for four or five more years. We are the second lowest price for lunches in the immediate area for Class L schools. I think Salem is lower than us,” Curro said.
Curro then said that the operating budget will probably generate a surplus of about $700,000.
“Of that $700,000 about $100,000 is revenue, $300,000 is premium holiday credit from healthcare providers surplus return and the rest is credits from overages and underages from the budget throughout the general fund. The voters agreed to use $100,000 of that for one of the equipment lines that passed on the warrant. The other one didn’t,” Curro said.
Curro said that he wouldn’t know for a while how much money that they wanted to keep in surplus and how much will go as revenue to reduce the tax rate.
“That will count on a number of numbers that we get back from Department over the months of August and September,” Curro said.
Melcher asked if part of the revenues was the 60 tuitioned students from Hooksett that will be attending Londonderry High next year and Curro said that it was.
“Is there any concern Manchester suing Hooksett and Hooksett suing Manchester, is ther any concern at all that Hooksett has to take their kids out of Londonderry? The way I look at it parents can send their kids anywhere they want,” Melcher said. Curro replied in the affirmative. “I have to say yes there is some. On a scale of one to ten if you ask (Greenberg) and I, I think it would be a 2. It’s between them (Manchester and Hooksett), I mean we’re not the only ones accepting students, Pinkerton has taken a few, so it’ll get tied up.”
Curro said that there had been a meeting about two weeks ago regarding the cost of transportation services and that the bus company will provide a bus at the same price as they charge the Londonderry school district. “Thirty parents attended the meeting and all 30 were pretty much in. I think one or two weren’t because students had after school activities,” Curro said. Curro said that the parents met with administrators of the high school and toured the school and that they were “very excited” to have their students coming to Londonderry. He said that out of the 60 students about 55 were eighth graders entering the high school as freshmen.
As far as maintenance, Curro said that the warrant article had failed by 11 votes and that because it failed, the work that the work it was to authorizs, such as roofing and paving. the warrant to be done such as roofing and paving could not be done. He said that it hurt because the cost of petroleum, which are a key ingredient roofing and paving materials are made of is going up and it could be more expensive by the time the work is approved. He also said that the rates were favorable now and also could be higher at a later date.
“We can’t replace the roofing and paving projects because it failed without going to cout, but we can make repairs if they are needed,” Curro said.
He said that some of the projects have already been pushed back for several years. Committee member Tom Dalton asked about school security improvements and what was to be done. Curro said that in September there will be an additional (School Resource Officer) and that they will looking to addsecurity to the entrances and upgraded communications via radios and specialized telephones with a line to the police directly.
Dalton also asked about surplus funds and where they would be put. “The parameters are that we can return all of it, or we can return non of it up to $2.5 percent of the net assessment. That’s somewhere around $2 million,” Curro said. Curro said that the power lines at the schools will be looked at and over the next several years the power lines for each school will be updated. He also said that generators will be placed at each of the schools over five years to serve as emergency back up for essential components like computers and other essential infrastructure.