Law could restrict school construction projects
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School districts in Pennsylvania may find it more difficult to embark on construction or renovation projects after legislation signed by Gov. Tom Corbett last month limited their ability to raise property taxes.
Mr. Corbett insisted on the property tax legislation to accompany the $27.15 billion budget, which included $900 million worth of state funding cuts to schools. He signed the legislation -- which limits the occasions when school boards can raise property taxes -- in a move to prevent the funding cuts from translating to higher taxes at the local level.
The new legislation eliminated six of the 10 exceptions previously allowed in the Act 1 state law, which has limited school district tax increases to an inflationary index. Districts can still raise taxes above the Act 1 limits to pay for construction projects, but first they will have to put the construction project to a voter referendum.
Dave Davare, director of research services for the Pennsylvania School Boards Association in Harrisburg, said the change could limit construction and renovation of schools in the state.
"I think it's going to take a while to get used to the idea, both on the school side and the voter side, of voting to construct a school facility," he said. "So I think we are going to see some aging buildings in the short term."
Yet the legislative change may not be so noticeable, at least in the short term, in school districts in the greater Pittsburgh region. Over the past decade, many school districts have undertaken renovation or construction projects to update their buildings, and now can wait years, or even decades, before they have to do another major project.
The Post-Gazette reported in March that approximately $453 million in major school projects had been proposed, and about $325 million in major school construction projects were under way in the region.
For many of those districts, the latest project is the final one in a districtwide building update that has spanned years.
That's the case in North Hills School District, which renovated all of its buildings in the past 12 years but never asked for an Act 1 exception for construction funds, said David Hall, director of finance and operations for the district. He doesn't anticipate another renovation for several years.
The reason so many districts have undertaken construction projects in the past decade has a lot to do with an increase in the number of children in Western Pennsylvania when the baby boomer generation came of school age, he said.
"If you built a school in 1965 or 1968, it was pretty much reaching the end of its useful life by the early 2000s," Mr. Hall said.
That, coupled with low interest on bonds, made the cost of renovation low when it was necessary, he said.
Over the past 11 years, the Upper St. Clair School District completed renovations for its high school, two middle schools and three elementary schools, said Patrick O'Toole, district superintendent.
The district won't need to do any major renovation or construction for several years, he said, so the change to Act 1 exceptions regarding construction has not been on the district's radar.
The same is true in Bethel Park, where an $88 million high school renovation is scheduled to be completed in early 2012, said spokeswoman Vicki Flotta. Over the past decade, the district has updated its other school buildings, so it will not be doing more construction in the near future.
And in Penn Hills, the district will complete its high school construction project in about 18 months and will begin its elementary school project in November. But the district does not anticipate raising taxes to pay for the projects, so the new legislation won't affect the district, said Richard Liberto, business manager.
In Mt. Lebanon, the district has been planning to renovate its aging high school and hoped to break ground for the project in April. But the start of the project was delayed due to bids that came in well above the $113.2 million amount projected by the architect and project managers.
Now the district is in the process of finding cost savings so the work is within the budgeted amount. To pay for the project, the district has borrowed $75 million and plans to use money from its capital fund -- as well as institute a second bond issue sometime around 2014 -- to pay for the remainder of the work.
"Our focus in borrowing the second bond issue is to minimize the millage increase, if necessary, to raise those funds," said Janice Klein, finance director. "What the state has done, it has taken away the ability to have an exception to raise millage. We want to keep any millage increase, if necessary, as low as possible."
Once Mt. Lebanon finishes its high school renovation project, it won't need to do any renovation projects for the next several years because other buildings have been renovated in the past 15 years.
Deer Lakes School District finished a $39 million renovation of its high school about a year ago and has no projects looming in the near future, said Dean Casello, superintendent. But he said the prospect of requiring districts to put a construction project out to vote, when typically only 20 percent of the community has school-age children, is worrisome.
"You are going to have a situation where you are going to have schools that are in need of repair, and districts not having the ability to do so," he said.
First Published July 28, 2011 5:08 am