In an 8-1 vote, the State College Area School board approved a 25-year term financing plan to pay off its $85 million referendum debt for the new high school scheduled to begin construction in July.
According to a report from district spokesman Chris Rosenblum, the 25-year option has a present value of total debt service of $85,975,550 and an anticipated total interest cost of $60,245,306.
District business manager Randy Brown said that would cost $177.25 for the average homeowner with a house assessed at $71,686 and an estimated annual tax rate of 2.47 mills.
The second option was a 30-year term with a present value of total debt service of $88,196,148 and an anticipated total interest cost of $73,813,083.
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It would have cost an estimated annual tax rate of 2.25 mills and an average annual tax of $161.65 once the entire cost has been phased into the budget, Rosenblum added.
Board member Penni Fishbaine was the lone no vote. She said she favored a 30-year term instead, highlighting its flexibility with an option to pay off the debt early.
She said the 30-year term offered about $15 less a year for the average homeowner, and had trust in future board members to budget wisely in hopes to pay off the debt sooner than 30 years.
On the contrary, board member Ann McGlaughlin said the 30-year term would add $13.6 million to taxpayers.
“That’s a high price to pay for five years of flexibility,” McGlaughlin said. “Flexibility comes with a price.”
Board President Amber Concepcion agreed.
“That’s real money to be saved,” she said.
Both options assume borrowing at an estimated interest rate of 75 basis points higher than the current market rate, based upon guidance from the district’s financial adviser and underwriters, Rosenblum said.
They both also included a three-year phase-in before the district starts principal payments that would begin in the 2017-18 fiscal year.
Additionally, State High Principal Scott DeShong announced that the high school will move to an A/B block schedule in the fall.
The block schedule would include a rotation of two, four-period days. Each block would be 90 minutes, and each day would include a 30-minute lunch.
The school day currently consists of eight, 47-minute periods.
The block schedule idea was established by a 16-member committee headed by DeShong.
Dehong said he met with the student leadership council to keep students in the loop.
In early February, the committee will conduct a “needs assessment” to design strategies and workshops for professional development opportunities for teachers, DeShong said.
In March, a discussion will be held with faculty about the pace of curriculum and lesson planning.
DeShong said that before the 2015-16 school year starts, teachers will have 25 hours of professional development time to plan for the schedule change, and he and the committee will work to address the science department’s concern about the loss of instructional time for labs.