The cash-strapped Bristol Township School District may have no other choice but to borrow money in the future.
District officials plotting out the financial future for the school system indicated last week that taking out another bond to pay for building upgrades are being looked into. The district currently has roughly $140 million in debt it is working to pay off. The majority of the debt was incurred as the district built three new elementary schools and consolidated from nine aging buildings.
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If the new borrowing happens, the district would likely use it to make some improvements to existing facilities and upgrade the recently vacated Clara Barton Elementary School on Green Lane to the district administrative, transportation and operations center, Business Manager John Steffy said.
In the first half of 2016, the district took out a $10 million bond to complete roof work at the aging Harry S. Truman High School and construction on the new Keystone Elementary School in Croydon. The debt was added to roughly $130 million in existing debt.
In February, Moody’s Investors Service lowered the district’s financial outlook to negative. “The negative underlying outlook reflects the significant challenges management faces to maintain structural balance, avoid further draws on fund balance, and restore reserves to healthier levels. The outlook also reflects the possibility of a draw on fund balance in 2016, due to state aid delays and unsettled collective bargaining contracts,” a press release from Moody’s stated.
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The downgraded financial rating likely would make it more difficult for the district to borrow money. Lenders use fund balances, financial outlooks and existing debt when looking at options on the bond market.
The district has made painful cuts in staffing and less severe cuts to services in the past decade to reign in spending.
The district’s financial trouble goes back years, like even decades. Budget cuts and deferred maintenance on the building left the district with few viable choices as the elementary schools aged. The choices were leave the building to continue to get expensive temporary repairs, a pricey renovation of each school or to consolidate and build three new buildings. The consolidation is expected to save around $3 million per year and also bring in some money as old school properties or sold or leased.
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Steffy said in early summer that the district has had success in trimming operating costs but fluctuations to state and federal funding, decreasing tax revenues, increased wage costs, rising education budgets and pension contributions weigh down on the budget. The district had made strides in adding money to its general fund in recent years, but without a tax increase, it was expected to fall short of existing revenues by as much as $5 million this fiscal year. The gap is being bridged with taxes and possible borrowing from the reserve fund.
Going forward, rising costs, shrinking revenues and legacy costs are the district’s biggest financial enemies.
