Committee, who will the auditors be reporting to in the Fall? There are no more checks and balances in the School District.
It is fascinating to read old Mt. Lebanon blogs. Some commenters have been consistent with their messages, while others changed direction. The bottom line is that there were previews of coming attractions in 2009.
The following comments are from an old Blog-Lebo post from two years ago.
Dave Franklin said...
There is an area of bankruptcy and corporate law known as the "zone of insolvency". In short, this is a growing legal principle created by the Bankruptcy Courts that provides that when a company is approaching insolvency, the focus of the directors' fiduciary duty should shift from the shareholders to the company's creditors. In other words, if a board is even concerned about possibly being insolvent, the best course of action is to begin acting like the corporation is insolvent. Therefore, from a practical standpoint, the board should not continue with business as usual when there are indications that the company may be insolvent.
So what am I getting at?
Well, if we are within $500,000 (or even $1,000,000) of the price tag that would require a referendum, it's pretty safe to assume that by the time this project is even close to done, we will be well above that threshold cost. Anyone who has undertaken any sort of construction project - whether at home or at work - appreciates that construction costs go up, not down. One rule of thumb that some people in the industry use is to take the anticipated costs and add 8-10%. If we apply a way more conservative potential cost increase to this project, say just 2%, that would mean an additional $2,300,000 added to the price of this project. By anyone's standards, therefore, it only seems prudent for the board to acknowledge that the *total* cost of this project (as presently considered) will exceed the amount that they can legally borrow and spend without a community-wide vote. In other words, if we're even talking about the need for a referendum, the school board should start acting like we are in the "zone of a referendum".
It was last reported that the borrowing threshold is about $115.5 million. It seems to me that there is no reasonable way (when factoring in cost increases, delays, etc) that this project (as presently considered) can come in under the threshold amount. In light of that, what are the board's obligations with respect to seeking a community-wide vote? When does that happen? I just hope that the school board isn't applying another ill-fated principle - the one that states that it's easier to say "I'm sorry" than it is to ask for permission.
And I must agree with Mr. Hart. If we're banking on a $1.7 million reimbursement from the Commonwealth, I'm not holding my breath. In case no one on the School Board is paying attention, the state today enters its 4th week with no budget and by most accounts it could be weeks yet before Pennsylvania is able to pay its vendors or the 77,000 government employees. If Pennsylvania can't pass a budget in time to pay its employees, I'm hard pressed to put any sort of faith in receiving state funds for our school project. Besides, if this $115 million project lives or dies based on $1.7 million from the state, we've got much bigger problems.
So what am I getting at?
Well, if we are within $500,000 (or even $1,000,000) of the price tag that would require a referendum, it's pretty safe to assume that by the time this project is even close to done, we will be well above that threshold cost. Anyone who has undertaken any sort of construction project - whether at home or at work - appreciates that construction costs go up, not down. One rule of thumb that some people in the industry use is to take the anticipated costs and add 8-10%. If we apply a way more conservative potential cost increase to this project, say just 2%, that would mean an additional $2,300,000 added to the price of this project. By anyone's standards, therefore, it only seems prudent for the board to acknowledge that the *total* cost of this project (as presently considered) will exceed the amount that they can legally borrow and spend without a community-wide vote. In other words, if we're even talking about the need for a referendum, the school board should start acting like we are in the "zone of a referendum".
It was last reported that the borrowing threshold is about $115.5 million. It seems to me that there is no reasonable way (when factoring in cost increases, delays, etc) that this project (as presently considered) can come in under the threshold amount. In light of that, what are the board's obligations with respect to seeking a community-wide vote? When does that happen? I just hope that the school board isn't applying another ill-fated principle - the one that states that it's easier to say "I'm sorry" than it is to ask for permission.
And I must agree with Mr. Hart. If we're banking on a $1.7 million reimbursement from the Commonwealth, I'm not holding my breath. In case no one on the School Board is paying attention, the state today enters its 4th week with no budget and by most accounts it could be weeks yet before Pennsylvania is able to pay its vendors or the 77,000 government employees. If Pennsylvania can't pass a budget in time to pay its employees, I'm hard pressed to put any sort of faith in receiving state funds for our school project. Besides, if this $115 million project lives or dies based on $1.7 million from the state, we've got much bigger problems.
said... Dave...please refer to my comments on Joe Polks posting "Energy Certification Costs Raises Eyebrows in Mt. Lebanon" on 7/23.
Another *hidden* cost of the HS project, worth repeating once again, is the proposed wrapping of proposed & scheduled 2nd.& 3rd. bond issues that would result in excess interest costs amounting to $10 million over the term of the issues. Exactly the amount we're incurring in the $50 million bond issue for the Elementary School project in 2003 that will require $103 million in tax $ to pay down. All in the name of minimizing the initial tax increase that a normal serial, and lower overall cost, bond issue would otherwise require. Equivilant to interest-only mortgages with baloon principal payments during the final 3 years of the mortgage term. And there has been no public outcry that I am aware of. Based on your comments, perhaps we are contributing to the "subprime lending" debacle ? And it is nigh-on impossible to get bond insurance these days; however, the Commonwealth backs school bonds to some degree...but they appear to be insolvent in many respects as well.
The key differences between the Commonwealth & public school boards and the general public is that the Commonwealth & school boards have taxing & police powers, and we do not. And the public referendum law and regulations are a farce.
Another *hidden* cost of the HS project, worth repeating once again, is the proposed wrapping of proposed & scheduled 2nd.& 3rd. bond issues that would result in excess interest costs amounting to $10 million over the term of the issues. Exactly the amount we're incurring in the $50 million bond issue for the Elementary School project in 2003 that will require $103 million in tax $ to pay down. All in the name of minimizing the initial tax increase that a normal serial, and lower overall cost, bond issue would otherwise require. Equivilant to interest-only mortgages with baloon principal payments during the final 3 years of the mortgage term. And there has been no public outcry that I am aware of. Based on your comments, perhaps we are contributing to the "subprime lending" debacle ? And it is nigh-on impossible to get bond insurance these days; however, the Commonwealth backs school bonds to some degree...but they appear to be insolvent in many respects as well.
The key differences between the Commonwealth & public school boards and the general public is that the Commonwealth & school boards have taxing & police powers, and we do not. And the public referendum law and regulations are a farce.
Update 8:40 a.m. I received a link to a Youtube video about Obama that reminded me of what is happening in Mt. Lebanon
Here are some bullet points from that video.
"You ignored us.
We pleaded.
You mocked us.
You signed it...in spite of us.
We said no.
November Arrives "Shellacking"
(I have no idea why this update is appearing in upper case.)
1 comment:
All these discussion on state budgets, bond floats, rebidding are all well and good. But what has gotten lost in the conversation is what does it do for OUR STUDENTS?
Does anyone out their really believe that this $113 million boondoggle is really going to enhance ou kids education?
At one time not so long ago, we were told that building B was inadequate, obsolete as a facility for a 21st century education. It just had to be taken out of service as classroom space. Now suddenly, surprise, its going to be a keystone of the high school for the next 30 years or more.
We were told building C too, couldn't be upgraded easily to accept the technology our teachers would be using in the future. So tell, where is the logic in creating a fully functioning demo 21st century classroom in - ta da - building C!
I'm betting too, that our student athletes are going to run faster and jump higher just because we moved the gyms from one side of Horsman Drive to the other.
And while we are on the topic of BS, how about those roofs that were ready to collapse on our poor darlings little heads. Mr. Celli, even before the astronomic bids came in was back pedaling and claiming they'd be good for another 10 years!!!
Its not about the money really. Residents moved here and were willing to pay a premium to make a great education available for their kids. The Harris surveys show that we at the least perceive that Lebo may not be providing the top education in the area.
Are we loosing site of the prime objective chasing construction of a Taj Mahal?
- Giffen Good
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