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INDIANA AREA: Refinancing brings savings

by on March 12, 2013 11:00 AM

If there’s any doubt that interest rates could get any lower, maybe the Indiana Area School District’s latest bond sale would be the convincer.

The district’s financial advisers, Public Financial Management of Pittsburgh, sold nearly $10 million in bonds in an online auction Monday morning, and reported good news to the school board last night.

The district sold a bond of $6.9 million to cover the balance of the costs of the improvements now under way under the Guaranteed Energy Savings Act project and additional capital projects yet to be determined, and refinanced the remaining $3.1 million of a bond sold in 2008 for an earlier project.

PNC Capital Markets offered the low bid of 2.52 percent on the bonds, according to financial adviser Jamie Doyle, of Public Financial Management.

The district expected to save about $21,000 by refinancing the 2008 bond, but will realize about twice that, she said.

“Interest rates continue to hover near all-time lows, so that was great news for your auction today,” Doyle said.

Doyle also told the board that Indiana Area School District has earned a rare “positive outlook” bond rating.

“You continue to do a great job of maintaining your ‘A’ rating with a positive outlook,” she said. “Your administration did a fabulous job, and you all are doing a fabulous job in your everyday decisions. I almost never see ‘positive outlooks’ these days.”

Doyle said the district’s rating could be raised based on its handling of its budget and fund balance in light of increases in pension contributions.

The board approved paperwork related to the bond issue at the recommendation of Chris Brewer, the district’s bond counsel from Dinsmore and Shohl LLP. The energy project bond can be refinanced in five years, Doyle said.

In other business, the board:

Approved a contract with a State College-based web development company, Schoolwires Inc., to develop a new website for the district. Indiana Area will pay $10,850 a year for software, support and other services, but qualifies for a rebate each year of $6,418, reducing the annual outlay to $4,432. The district also will pay a one-time setup fee of $7,810.

Board members said the new site would be easier for users to navigate and carry an ecommerce component, allowing site visitors to buy district merchandise and pay online.

Hired architectural firm Hayes Large, of Hollidaysburg, to design classroom alterations for Indiana Area Senior High School for a fee of $19,350.

Acting Superintendent Dale Kirsch said Hayes Large was recommended for the contract because the company offered the lowest quote and agreed to a schedule of construction management meetings.

Approved on a divided vote an application for five years of grant funding for the Pre-K Counts program. The amount, if approved, was not specified.

Kirsch said the grant would subsidize enrollment of children in income-qualifying families.

“Surveys indicate that the pre-K, or even all-day kindergarten advantage wears off by the time the child is in third grade,” said board member Diana Paccapaniccia. She didn’t cite a source.

“I haven’t seen evidence that we need this in the school district right now,” Paccapaniccia said “There are a number of preschools in Indiana, there is Head Start. I am not opposed to it; I don’t see the need for it and I don’t see evidence supporting long-term educational benefits from it.”

Director David Ferguson disagreed.

“I have not seen enough disconfirming evidence to say otherwise,” he said. He suggested that the program would not affect families with stay-at-home moms the same way as families with low-income, working parents.

“It has a huge impact for them that it would not have for upper-income people. I think, in terms of an educational advantage for these students who are starting off disadvantaged, it’s worth it. Because it’s a grant, it’s worth it. Because it could bring about the chance for equality between rich and poor, it’s worth it.”

“I don’t see the connection between being wealthy and being a stay-at-home mother,” Robert Gonga-ware replied. “Many stay-at-home mothers make that decision and sacrifice things and live at the same income level that other people do, so I object to that broad generalization.”

Gongaware said he, too, has seen the studies Paccapaniccia mentioned.

“Many of them say Head Start is a colossal waste of money in this country. It is not a one-sided argument. There are facts and data on both sides of the issue.”

Ferguson conceded household income is not always a factor in choosing to stay at home, but said, “the people who would benefit the greatest from this particular program would be people for whom there is no choice, for whom keeping two jobs is what’s needed, and having a place for a kid to go that is educationally viable is essential for their later success.”

While the advantage of additional early childhood education came under question, board member Walter Schroth asked whether a pre-kindergarten program would simply help children to read at the appropriate level by third grade.

“That’s worth the effort itself,” he said. “Once you get them on grade level, it would be much easier for teachers, moving forward, to keep them on grade level.”

“I’ve seen the arguments both ways, but the benefit to our district would be … this would house them in our buildings with direct interaction with our kindergarten teachers,” Kirsch said.

Paccapaniccia and Gon-gaware also questioned whether accepting the grant would commit the district to picking up the cost of the program after five years.

The application was approved on a 7-2 vote, with Ferguson, Schroth, board President Thomas Harley, Alison Billon, Hilliary Creely, Brian Petersen and Robert Werner in favor. Gongaware and Paccapaniccia voted no.

Chauncey Ross is the Gazette’s fixture at Indiana Area and Homer-Center school board meetings, has been seen with pen and notepad in area police stations and courts, and is something of an Open Records Act and Sunshine Law advocate. He also manages the Gazette’s websites and answers your questions about them.
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