The Armstrong School District Director of Finance Sam Kirk is a happy man in his job. Because of his efforts, the District re-funded their bond and received $10.2 million in cash for building maintenance throughout the District.
As reported last week in the Kittanning Paper and on WTYM radio, the Board of school directors of the Armstrong School District (ASD) approved re-funding an $80 million bond.
According to Director of Finance and Operations Sam Kirk, “refinancing” the bond would give the District cash that can be used to repair buildings that need improvements without have to obtain additional financing in the future.
The Board met with banking investment firm PiperJaffray last week in a public meeting to approve re-funding the bond that was originally floated in 2010 as a way to pay for renovations to Kittanning, Ford City, and Elderton High School. A change in school directors changed the direction of the District. Elderton was closed and Kittanning and Ford City were consolidated to build the new Armstrong High School with the bond money.
Kirk said he has been watching the bond market since January of this year. As the rates went down, he said it made sense to re-fund the bond, anticipating approximately $9 million as a result.
“When it was all said and done Wednesday when the sale came in, we saw $10.2 million in savings for the 2010 issue,” Kirk announced at a press conference yesterday. He outlined several major capital improvements that will be made to district buildings beginning as soon as next summer.
“We have different projects planned - Dayton Elementary HVAC renovations are scheduled for the summer of 2020. We will put a new roof on Lenape Elementary, scheduled for the summer of 2020. We know West Shamokin within the next 2-5 years is going to need a new roof. At West Hills Primary, there are 16 different units that heat and cool the building on top of this roof that are between 15-20 years old - they’ve gone past their life expectancy. Last time we looked, it’s about $100,000 just to replace one, so we’re looking to replace these within the next 3-5 years. West Shamokin, that building is now 20 years old, it’s going to need repaired with some heating and cooling renovations.”
Kirk said that by getting this large sum of money from re-funding the bond, it means a tremendous savings to taxpayers.
“We’re not going to have to raise taxes. We’re not going to have to take from the general fund balance we have saved. We’re strictly taking these bond proceeds for capital improvements. We’re not putting them in to pay the electric bill, we’re not putting it in to pay salaries. We’re putting it it to deferred maintenance or capital improvements that the District’s going to need down the road.”
Kirk said that until the money is needed for payment of projects, he will create an investment strategy to make more money.
“I’m going to do a RFP with local banking institutions and I have a cash flow analysis that I’m doing as to know when we’re going to need money/when the project will be due so I can tie up some of the money for longer periods to generate more interest. So, I don’t know what that return is going to be over the life of this money, but I do know we’ll make some interest on this money also.”
“Even on Tuesday when I checked the numbers, we were still around 9.3-9.4 (million). When they called me yesterday at 1 o’clock and they told me it ended up 10.2, I was elated,” Kirk said. He also thanked the school board for their approval and cooperation in the refunding process.
“These are things that are going to need to be done and we’re going to have to figure out ways to pay for them and we weren’t sure how that was going to be. But, this makes us rest a little easier. We can finally look long-term and plan long-term. We’re not just being reactive anymore. We’re being proactive to thinking ahead. I’m hoping within five years, all our facilities will be at their best.”
Kirk said the District also refunded a smaller bond from 2013, and chose to reduce their debt payment by approximately $45,000 per year over the next seven years.
Kirk said ASD pays $10 million of the $100 million budget to debt repayment.