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Special Board Meeting Agenda/Minutes 10-6-14
All attachments in pdf
October 6, 2014 Special Board Meeting
7:00 pm – Board Room
131 W. Nittany Avenue
State College, PA 16801
I. CALL TO ORDER AND PLEDGE OF ALLEGIANCE
II. COMMUNICATIONS
III. ACTION
A. A motion to accept or reject the Fact Finder’s recommendations pertaining to the SCESPA Collective Bargaining Agreement. (no attachment)
IV. INFORMATION/DISCUSSION
A. Financial Planning
High School Project Financing (attachment IV-A)
B. 2013-2014 Financial Statement for Discussion (attachment IV-B)
V. PUBLIC COMMENT
VI. ADJOURNMENT
I. CALL TO ORDER AND PLEDGE OF ALLEGIANCE
Ms. Fishbaine called the Special Board Meeting of the State College Area School District Board of Directors to order at 7:02 p.m. She welcomed all attending and those viewing from home. She announced the Board held an executive session September 29, 2014 on negotiations and on October 1, 2014 on negotiations and a personnel matter. With the agenda before them, Ms. Fishbaine asked board members for any changes, there were no changes.
A copy of all materials distributed to board members for discussion and/or action is included with the official minutes, unless otherwise indicated.
Board members present: Amber Concepcion, Penni Fishbaine, Scott Fozard, David Hutchinson, Jim Leous, Ann McGlaughlin, Jim Pawelczyk (by phone), Dorothea Stahl, Laurel Zydney
As you can see no other action items are scheduled for this agenda. The State High project financing is on the agenda as an information and discussion item. Since the financing of the State High Project is significant, we will be discussing this item for many meetings prior to any issuances of bonds.
II. COMMUNICATIONS
Dr. O’Donnell provided a reminder for the October 29 Information Fair for the High School Project 30% Review, 6:00 p.m., at the High School South Cafeteria. Information is on the website and he will also provide a reminder at the October 13 meeting.
III. FACT FINDER’S RECOMMENDATIONS for the SCESPA COLLECTIVE BARGAINING AGREEMENT
Ms. Fishbaine asked Dr. Etter to provide an explanation of the Fact Finding process. Dr. Etter reviewed the process. A motion to accept or reject the Fact Finder’s recommendations pertaining to the SCESPA Collective Bargaining Agreement. Ms. Stahl moved and Ms. Concepcion seconded to accept the Fact Finder’s recommendations pertaining to the SCESPA Collective Bargaining Agreement. All board members present voted aye on a roll call vote. The motion passed unanimously. (Dr. Pawelczyk connected by phone.) Mr. Brown noted that SCESPA was also meeting tonight and would vote to approve or reject.
Dr. Pawelczyk disconnected at 7:10 p.m.
IV. FINANCIAL PLANNING - HIGH SCHOOL PROJECT FINANCING
Mr. Brown noted that Mr. Eckhart and Mr. Beckett were back this evening to present and discuss the High School Project financing. They have been working with him and Ms. Watson and have done a lot of work already to provide detailed schedules and scenarios. This meeting was a night of learning, not decision making. The information presented will go on the District Business Office site, State High Project site, along with being attached to the agenda.
Mr. Eckhart confirmed that they are also speaking with banks. He spoke on negotiated financing vs. competitive financing and if we were looking for local participation, competitive would be the way to go.
Mr. Beckett reviewed and provided clarification for all the definitions, explained that the average life is a statistic, they kept the value of the mill the same over 30 years (it will change), showed how quickly we will need money for the high school project and how quickly we will run out, we will need the first financing in March, $30 - $50 million will get us through the first year, and they went on the scenarios outlined in short on page 3 - phased, etc. Banks will most likely not go past 15 years, banks give a drawdown loan, the interest is over construction, and the bond rate is lower. Non-Referendum debt is a wrap around, looked at longer term financing at that price, and all debt is for 20-years.
In Appendix B, Mr. Beckett noted that on the left side showed non-referendum debt and the right side showed the referendum debt. He reviewed each scenario 1A through scenario VII explaining Existing Debt Service, General Obligation Bonds, the Total District Non-Referendum Debt, and the Obligation Bond series for the Referendum, Aggregate Debt, State High Project Debt Service and the Referendum Mills. He reviewed very extreme wrap or accelerated wrap, phasing in debt service, millage impact, and noted there is $5 million difference over all the scenarios. With interest rates this low, people are borrowing long term, and if interest rates start rising or go high, then people borrow short term. Phased vs. all at once would save the District $1.8 million. They spoke on the historical average of interest rates and the basis points from September 2013 to current being a difference of a total of 80 basis points and interest rates going from 4.7% (September 2013) to 3.9% (current).
Board members discussed: a timeline for various decision points, anything for next year’s budget, filing for exception (Referendum Debt), assumptions made for 2017 and 2021 for elementary projects, projections will be updated in the next few weeks, the Feasibility Study, defined what the request for exception is, getting the exception to tax up to a maximum, the capacity in the Capital Reserve, the decisions that need to be made, a negotiated sale and RFP needing done, will be doing financing in March, initiating the RFP process if that is the direction to go, local people voicing to participate and having to go the negotiated way for this, the Finance topic will be at the Information Fair, and it is part of the process, not part of the 30% review.
Mr. Brown spoke on the graphs of each of the different scenarios with the color code as follows:
● Green Area - Referendum Debt
● Dark Blue Area - Existing Debt Service
● Red Area - Non Referendum Debt
● Light Blue Area - Capacity for additional Capital Projects
V. 2013-2014 FINANCIAL STATEMENT
Mr. Brown noted that they have the Financial Results for the 2013-2014 fiscal year. He referred to the current debt and that the audit needs completed. This is the final review with auditors. The 2013-2014 Audit will be published October 16 and referred to page 29 - projected to actual. Revenue - ended being up $1.9 million more than projected, and Expenses were down $2.1 million for a total of $4.3 million going to Capital Reserve. The audit will be presented for approval at the next meeting and District policy 622 requires that the Management Discussion and Analysis be included in the audit statement be approved by the board prior to publication of the audit statement. The Proposed Preliminary MD&A and the Resolution confirming the transfer from the General Fund to Capital Reserve Fund as of June 30, 2014 will be presented as action items and at the end of the month meeting, the board will be accepting the audit for the year. For your information, ParenteBeard, L.L.C. merged with Baker Tilly Virchow Krause, L.L.P. (Baker Tilly) so Baker Tilly will issue the District’s June 30, 2014 audit statement.
Now that we have these numbers, we will bring the 2015-2016 budget to you. Board member asked to have variances explained so they could understand. Mr. Brown and Ms. Watson explained that expenses were significantly less, the SWAP payment was in twice (an error) so it was the “other” in athletic fees and other, Professional Services - for Real Estate tax collectors amount projected to pay them was higher than needed to be, there was nothing significant in salaries and benefits, estimates for retirements were over, and the revenue side was due to collections for property tax. We are not projecting that salaries will decrease and will be more conservative for retirements.
VI. ADJOURNMENT
Ms. Stahl moved and Ms. McGlaughlin seconded to adjourn the meeting. Ms. Fishbaine announced the meeting would adjourn to an executive session on negotiations and legal matters. She adjourned the meeting at 9:02 p.m.
7:00 pm – Board Room
131 W. Nittany Avenue
State College, PA 16801
I. CALL TO ORDER AND PLEDGE OF ALLEGIANCE
II. COMMUNICATIONS
III. ACTION
A. A motion to accept or reject the Fact Finder’s recommendations pertaining to the SCESPA Collective Bargaining Agreement. (no attachment)
IV. INFORMATION/DISCUSSION
A. Financial Planning
High School Project Financing (attachment IV-A)
B. 2013-2014 Financial Statement for Discussion (attachment IV-B)
V. PUBLIC COMMENT
VI. ADJOURNMENT
MINUTES
Special Board Meeting
October 6, 2014 - 7:00 p.m.
October 6, 2014 - 7:00 p.m.
Board Room
131 W. Nittany Avenue
State College, PA 16801
I. CALL TO ORDER AND PLEDGE OF ALLEGIANCE
Ms. Fishbaine called the Special Board Meeting of the State College Area School District Board of Directors to order at 7:02 p.m. She welcomed all attending and those viewing from home. She announced the Board held an executive session September 29, 2014 on negotiations and on October 1, 2014 on negotiations and a personnel matter. With the agenda before them, Ms. Fishbaine asked board members for any changes, there were no changes.
A copy of all materials distributed to board members for discussion and/or action is included with the official minutes, unless otherwise indicated.
Board members present: Amber Concepcion, Penni Fishbaine, Scott Fozard, David Hutchinson, Jim Leous, Ann McGlaughlin, Jim Pawelczyk (by phone), Dorothea Stahl, Laurel Zydney
Board members absent:
Board Secretary: Mary Jenn Dorman
Solicitor: Scott Etter
Solicitor: Scott Etter
Superintendent: Robert O’Donnell
District Personnel: Randy Brown, Ed Poprik, Donna Watson Guests: Tom Beckett, David Eckhart
Statement by Penni Fishbaine, Board President
The purpose of tonight’s special meeting is to allow the board of director’s to take action on the fact finding report released on September 29, 2014 related to the collective bargaining process with the State College Educational Support Personnel Association.
The Board of Directors and the SCESPA union have been negotiating in good faith since January 2014. I would like to thank those members on both bargaining teams for their many hours of good faith negotiations. We appreciate the SCESPA leader’s positive, professional, and respectful work throughout negotiations process.
The purpose of tonight’s special meeting is to allow the board of director’s to take action on the fact finding report released on September 29, 2014 related to the collective bargaining process with the State College Educational Support Personnel Association.
The Board of Directors and the SCESPA union have been negotiating in good faith since January 2014. I would like to thank those members on both bargaining teams for their many hours of good faith negotiations. We appreciate the SCESPA leader’s positive, professional, and respectful work throughout negotiations process.
As you can see no other action items are scheduled for this agenda. The State High project financing is on the agenda as an information and discussion item. Since the financing of the State High Project is significant, we will be discussing this item for many meetings prior to any issuances of bonds.
II. COMMUNICATIONS
Dr. O’Donnell provided a reminder for the October 29 Information Fair for the High School Project 30% Review, 6:00 p.m., at the High School South Cafeteria. Information is on the website and he will also provide a reminder at the October 13 meeting.
III. FACT FINDER’S RECOMMENDATIONS for the SCESPA COLLECTIVE BARGAINING AGREEMENT
Ms. Fishbaine asked Dr. Etter to provide an explanation of the Fact Finding process. Dr. Etter reviewed the process. A motion to accept or reject the Fact Finder’s recommendations pertaining to the SCESPA Collective Bargaining Agreement. Ms. Stahl moved and Ms. Concepcion seconded to accept the Fact Finder’s recommendations pertaining to the SCESPA Collective Bargaining Agreement. All board members present voted aye on a roll call vote. The motion passed unanimously. (Dr. Pawelczyk connected by phone.) Mr. Brown noted that SCESPA was also meeting tonight and would vote to approve or reject.
Dr. Pawelczyk disconnected at 7:10 p.m.
IV. FINANCIAL PLANNING - HIGH SCHOOL PROJECT FINANCING
Mr. Brown noted that Mr. Eckhart and Mr. Beckett were back this evening to present and discuss the High School Project financing. They have been working with him and Ms. Watson and have done a lot of work already to provide detailed schedules and scenarios. This meeting was a night of learning, not decision making. The information presented will go on the District Business Office site, State High Project site, along with being attached to the agenda.
Mr. Eckhart noted that this is the first analysis of the District and hopes that as it is developed further, it will be clear. They have developed a total of eight different offers, and explained types of variables:
1) Timing of Debt Issuance, 2) Number of Issuances, 3) Measurability of Debt Finances, and 4) Bank Financing for some Debt vs. Bond Financing.
1) Timing of Debt Issuance, 2) Number of Issuances, 3) Measurability of Debt Finances, and 4) Bank Financing for some Debt vs. Bond Financing.
Mr. Eckhart confirmed that they are also speaking with banks. He spoke on negotiated financing vs. competitive financing and if we were looking for local participation, competitive would be the way to go.
Mr. Beckett reviewed and provided clarification for all the definitions, explained that the average life is a statistic, they kept the value of the mill the same over 30 years (it will change), showed how quickly we will need money for the high school project and how quickly we will run out, we will need the first financing in March, $30 - $50 million will get us through the first year, and they went on the scenarios outlined in short on page 3 - phased, etc. Banks will most likely not go past 15 years, banks give a drawdown loan, the interest is over construction, and the bond rate is lower. Non-Referendum debt is a wrap around, looked at longer term financing at that price, and all debt is for 20-years.
In Appendix B, Mr. Beckett noted that on the left side showed non-referendum debt and the right side showed the referendum debt. He reviewed each scenario 1A through scenario VII explaining Existing Debt Service, General Obligation Bonds, the Total District Non-Referendum Debt, and the Obligation Bond series for the Referendum, Aggregate Debt, State High Project Debt Service and the Referendum Mills. He reviewed very extreme wrap or accelerated wrap, phasing in debt service, millage impact, and noted there is $5 million difference over all the scenarios. With interest rates this low, people are borrowing long term, and if interest rates start rising or go high, then people borrow short term. Phased vs. all at once would save the District $1.8 million. They spoke on the historical average of interest rates and the basis points from September 2013 to current being a difference of a total of 80 basis points and interest rates going from 4.7% (September 2013) to 3.9% (current).
Board members discussed: a timeline for various decision points, anything for next year’s budget, filing for exception (Referendum Debt), assumptions made for 2017 and 2021 for elementary projects, projections will be updated in the next few weeks, the Feasibility Study, defined what the request for exception is, getting the exception to tax up to a maximum, the capacity in the Capital Reserve, the decisions that need to be made, a negotiated sale and RFP needing done, will be doing financing in March, initiating the RFP process if that is the direction to go, local people voicing to participate and having to go the negotiated way for this, the Finance topic will be at the Information Fair, and it is part of the process, not part of the 30% review.
Mr. Brown spoke on the graphs of each of the different scenarios with the color code as follows:
● Green Area - Referendum Debt
● Dark Blue Area - Existing Debt Service
● Red Area - Non Referendum Debt
● Light Blue Area - Capacity for additional Capital Projects
He noted that with different graphs, you see the capacity that is the amount of tax revenue allocated for projects. Six to seven years out, there is a visual difference but not a significant difference, Scenarios IV and V have wrapped Referendum debt, in the early years spread Referendum out, in scenarios VI and VII the Referendum Debt stopped and is paid off in 20-years. There was a lot of information provided tonight. If any board members have any questions that have not been asked or discussed, Mr. Brown asked that board members send to him so that answers can be given.
V. 2013-2014 FINANCIAL STATEMENT
Mr. Brown noted that they have the Financial Results for the 2013-2014 fiscal year. He referred to the current debt and that the audit needs completed. This is the final review with auditors. The 2013-2014 Audit will be published October 16 and referred to page 29 - projected to actual. Revenue - ended being up $1.9 million more than projected, and Expenses were down $2.1 million for a total of $4.3 million going to Capital Reserve. The audit will be presented for approval at the next meeting and District policy 622 requires that the Management Discussion and Analysis be included in the audit statement be approved by the board prior to publication of the audit statement. The Proposed Preliminary MD&A and the Resolution confirming the transfer from the General Fund to Capital Reserve Fund as of June 30, 2014 will be presented as action items and at the end of the month meeting, the board will be accepting the audit for the year. For your information, ParenteBeard, L.L.C. merged with Baker Tilly Virchow Krause, L.L.P. (Baker Tilly) so Baker Tilly will issue the District’s June 30, 2014 audit statement.
Now that we have these numbers, we will bring the 2015-2016 budget to you. Board member asked to have variances explained so they could understand. Mr. Brown and Ms. Watson explained that expenses were significantly less, the SWAP payment was in twice (an error) so it was the “other” in athletic fees and other, Professional Services - for Real Estate tax collectors amount projected to pay them was higher than needed to be, there was nothing significant in salaries and benefits, estimates for retirements were over, and the revenue side was due to collections for property tax. We are not projecting that salaries will decrease and will be more conservative for retirements.
VI. ADJOURNMENT
Ms. Stahl moved and Ms. McGlaughlin seconded to adjourn the meeting. Ms. Fishbaine announced the meeting would adjourn to an executive session on negotiations and legal matters. She adjourned the meeting at 9:02 p.m.
Submitted by,
Mary Jenn Dorman Board Secretary
Mary Jenn Dorman Board Secretary