Might. Might not. Might.

From last week's Almanac.  I am printing the entire article, including the comments that appeared online. As I have said in the past, I do not get the Almanac. I am reprinting the entire article, in addition to the link, since they do not archive their stories.

9/21/2011 

Mt. Lebanon hopes to limit second bond issue
http://www.thealmanac.net/alm/story11/09-21-2011-ML-HS-bond-

By Nick Lewandowski For The Almanac
writer@thealmanac.net
This year's property assessments will likely impact millage rates in Mt. Lebanon, according to a Sept. 19 presentation by director of fiscal services Jan Klein. She said that if assessment values increase--a likely outcome--the district will have to lower the millage rate proportionally.
Millage rates are of concern to the district as it prepares to rebid its $113 million high school renovation project.

Act 1 of 2006 limits the potential millage increase for a given year in proportion to an inflationary index calculated from both Pennsylvania wage increases and a national index for education salary increases.

Klein estimated that number to be 1.7 percent for the 2012-13 budget year.
This could impact the strategy the district uses to fund its renovation project, as it, combined with the elimination of exemptions contained within the recent Act 25 legislation, limits the district's ability to raise taxes to fund debt. While all current debt is considered "pre-Act 1," any additional bonds floated to pay for the renovation will be subject to both Act 1 and Act 25 restrictions.
As it stands now, the district faces a second bond issue of $36,640,000, likely to be needed in 2014.
Klein stressed this was the maximum the district would have to borrow, however. She urged the board to consider alternative funding sources to limit the amount borrowed. These include the $8 million capital projects fund, the $600,000 food services fund and the $1.7 million asbestos abatement fund.
Any money used would still be considered part of the project budget, but would reduce debt issuance, thus leaving the district more flexibility financially.
This could prove critical in a few years as pension and healthcare obligations pressure district finances, especially given the murky legislative climate.
Asked to speculate on the impact of future legislation, Klein replied, "there are so many possible changes you're really going to have to look at it (when something is passed)."
The board also heard recommendations from an eight-member revenue review committee co-chaired by Klein and Kirsten Fudeman, which looked at possibilities for supplementing the district's current sources of income. These included advertising opportunities within the new high school building.
"We have a very attractive demographic in this community," said committee member Marc Field, who worked on that portion of the presentation. "But it would take a real commitment of resources to develop policies to determine what is and isn't appropriate."
More traditional suggestions included a planned giving program and alumni fundraising.
School superintendent Dr. Tim Steinhauer said he along with the administrative team would review the suggestions before making recommendations to the board.
Finally, on Sept. 19 the board voted 9-1 to submit revised PlanCon documents for the renovation for the high school project to the Pennsylvania State Board of Education for approval.
Vice president Dale Ostergaard was the lone dissenter, citing previous concerns regarding add and deduct alternates specified in the bid documents.
"I don't believe (the auxiliary gym, tennis courts and rifle range) should be listed there," he said. "I feel we committed to including them in the Act 34 document."
Just because an item is included on the add/deduct list does not mean it will be deleted from the project. It does, however, give the board options if project bids again come in high.
Several board members have indicated they might not support the project if any of these items had to be removed.
2 comments

Love that last sentence : 9/22/2011
"Several board members have indicated they might not support the project if..." Now there is a commitment to a plan if I ever heard one. Might not?! Might?! Might not?! Might?! I love decisive leadership.
Fed Up

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What???? : 9/23/2011
Board members... "MIGHT NOT SUPPORT THE PROJECT IF ANY OF THESE ITEMS HAD TO BE REMOVED." Woul someone please analyze that sentence and tell taxpayers exactly what it says! Could one sentence sum up exactly what is wrong with the Mt. Lebanon School Board and the high school project. If they "might not" support the project, then they are also saying subtly "we might support the project too!" Love it when elected officials show decisive action... don't you?
Thinking about being disagreeable!

"...it's easier to say 'I'm sorry' than it is to ask for permission."

With Act 25 passed, I hope the Board isn't planning to forge ahead and half way through construction say, "I'm sorry.  I guess we need a referendum to complete this project." Word on the street is that the Board is being advised that we "shouldn't" need a referendum.  Now that we no longer have an Audit and Finance
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.

JULY 23, 2009 10:02 AM

 Bill Lewis 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.

JULY 25, 2009 11:46 AM 

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.  http://www.youtube.com/watch_popup?v=gQD9IaGoLWk 

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.)