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Avoiding State Action, East Penn Approves $20 Million to Build Elementary School: Officials Rushed Vote to Beat Legislature's Limits on Tax Hikes.

Posted on: Saturday, 29 April 2006, 12:00 CDT

By Randy Kraft, The Morning Call, Allentown, Pa.

Apr. 29--East Penn School Board on Friday unanimously authorized borrowing up to $20 million to build a new elementary school in the next two years.

The board intends to build a 750-student elementary school next to Wescosville Elementary off Brookside Road in Lower Macungie Township, for an estimated cost of $21 million.

Friday's unusual 7:30 a.m. meeting, which lasted only 21 minutes, was held to approve the borrowing before the Legislature passes a tax reform law that limits the ability of districts to increase taxes without public referendums.

The school board was concerned that such a law is imminent, and that it might be signed by Gov. Ed Rendell to take effect before the district could authorize the borrowing.

Only hours after the vote, board members learned from the Pennsylvania School Boards Association that a deal was reached between House and Senate negotiators and the governor's office on property tax reform.

The association said votes on the legislation could take place Monday afternoon in the House and Monday evening in the Senate. If both chambers approve the bill, the governor could sign it as early as Monday night. If it becomes law, districts would be required to start capping tax increases in the next school year.

"I don't think it's appropriate to pat ourselves on the back, but I'm extremely grateful that we were able to authorize borrowing the money before it was too late, before Harrisburg puts these unrealistic limits on us," said board President Ann Thompson.

All nine board members were at the meeting and all voted to authorize the borrowing, after being advised it was fiscally prudent to "grandfather" the debt before spending limits on new construction are imposed by Harrisburg.

However, with an unprecedented 40 percent increase in enrollment projected during the next 10 years, East Penn needs much more than a seventh elementary school.

Officials say the district also needs a second high school, which would accommodate 1,500 students and cost about $49 million, and a third middle school, which would accommodate 900 students and cost about $32 million.

A new law requiring school boards to get the approval of voters to raise their own taxes to fund new schools will dramatically interfere with plans for those building projects, predicted Thompson. "Where are we going to get the money?"

"This legislation is truly going to change the quality of education throughout the state -- and not for the good," said board member Francee Fuller.

East Penn hopes to build those other two schools within six years. The middle school is proposed on 24 acres it owns along Willow Lane in Lower Macungie, southwest of the intersection with Sauerkraut Lane. It will have to buy land for a high school.

"Harrisburg is trying to limit what we spend, but costs that are totally beyond our control are driving up taxes," said Thompson. In addition to construction necessary because of the growth in the district's student population, she said, the costs include medical insurance, unfunded state mandates at the same time the state is reducing its share of funding to public education.

The district doesn't intend to issue the bonds for a new elementary school until sometime next year, when it is close to beginning construction. But the board wanted to lock in the debt before referendum limits are imposed.

"It's almost like establishing a line of credit," explained Substitute Superintendent George Ziolkowski before Friday's meeting. "You have the money, but you don't have to use it until you need it."

"It doesn't cost anything at this point," said district Business Director Gary Reigal. "The school board can decide when they want to actually incur the debt."

The board's financial advisers said it could have borrowed more than $22 million, but recommended borrowing $20 million because "you don't want the state to come back and say your calculations were wrong."

Financially if not politically, East Penn will be able to borrow another $14 million after the next fiscal year begins July 1 and it anticipates being able to borrow that much in each of the next few years.

randy.kraft@mcall.com

610-820-6557

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Source: The Morning Call, Allentown, Pennsylvania

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