CLEARFIELD – Far more seats were vacant than filled when the Clearfield Area School District Board of Directors conducted its Act 34 public hearing Monday night for the proposed renovation and expansion project at the Clearfield Elementary School.
The board is considering the consolidation of the Clearfield Area Middle School and the Centre and Bradford Township Elementary Schools into one building. It’s also considering the conversion of the CES into a kindergarten through sixth grade campus. The board is limiting the maximum CES total project costs to $10,669,360 and its new construction only costs to $8,008,000, according to Superintendent Dr. Thomas B. Otto.
Project Rationale
Otto presented the rationale behind the CES renovation and expansion project. He had analyzed the possibility of keeping all the elementary buildings open and returning fifth and sixth grades to them from the middle school. He said this option would have reduced the addition at the CES and resulted in the bare minimum renovations to Bradford Township and Centre.
He said this option would have cost the district $.9.3 million for its proposed plans at all three elementary buildings. In addition, he said the Centre and Bradford Township renovations would not have been reimbursable by the state’s Department of Education (PDE).
According to Otto, this option had many drawbacks regarding adequate classroom space for all students at Centre Elementary. He said this option would have prevented the district from equalizing its class sizes. For example, he said kindergarten class sizes range from 18 students at Centre to 25 students at Bradford Township.
Otto said that enrollment figures showed that in 2004-05, the district had 2,968 total students. In 2012-13, he said the district currently has 2,330 total students, which is expected to drop to approximately 2,201 total students by 2019-20.
He said the CES has an enrollment of 589 students, Bradford of 134 students, Centre of 145 students and the middle school of 674 students. He said it costs the district $6,427 per student at the CES; $9,302 per student at Bradford Township; $9,895 per student at Centre; and $7,047 per student at the middle school.
Otto said he’s asked the district’s staff to do a lot in recent years. Since coming to Clearfield, he said teacher and staff retirements have not been replaced. He said since 2010-11, the district has gone from 390 staff members to 362.5 staff members this year.
By consolidating into the CES, he said the district would experience a personnel savings of $951,153, in addition to the utilities and maintenance savings of $454,462. He said this would potentially result in a total annual savings of $1,405,615, which he considered to be a “conservative estimate.”
Otto said the district would consider increasing its debt service by approximately $700,000 per year. However, he said if it’s saving $1.4 million, it still gives the district an additional $700,000 in capital to use for operating expenses every year.
He said the district is anticipating challenges and preparing for them. For example, he said the district is concerned about increased expenses for the State Public Employee Retirement System (PSERS). In 2011-12, he said its PSERS rate increased to 8.65 percent and then to 12.36 percent in 2012-13. He said its rate is expected to be 16.75 percent in 2013-14 and up to 25.56 percent in 2015-16.
In case the board would ever have to raise property taxes, Otto presented a millage impact. For example, he said taxpayers with a home valued at $123,750 would pay an additional $25 per year for a one-mill increase. He said a median-valued home is $50,100 in Clearfield County; in the same one-mill scenario, taxpayers would pay an additional $12 per year.
Project Overview
Architect J. Greer Hayden of HHSDR Architects/Engineers of Sharon said the board is currently focusing on two options so far as the CES renovation and expansion project.
He said Option 1 would include a two-wing expansion and a kitchen addition at the CES. He said the second option is similar but would have a “reduced scope” and eliminate the kitchen addition, which significantly reduces its costs.
Hayden said each grade level would have seven classrooms, except kindergarten with 10 classrooms. Each grade would be “clustered together” within the building.
According to him, the first floor would house kindergarten through second grade. He said it would also contain the “core facilities,” such as the library, cafeteria and kitchen, multi-purpose room, music and art rooms, etc. and an expanded guidance office area.
Hayden said the second floor would house grades three through six. He said these classrooms are generic in nature, so that a classroom’s grade assignment can be more easily adjusted and moved around based on student enrollment from year-to-year.
He said classrooms would be “sprinkled throughout” the first and second floors for the special needs, life skills and autism students. In addition, he said a computer lab would be located on both floors of the CES.
He said a security vestibule would be added to the school’s entrance. Further, every door would have access controls to monitor anyone who is entering and exiting the building during and even after school hours.
Hayden said some CES project decisions are still ongoing, especially related to the kitchen area. He’s currently in discussions with the district’s administrators and food services director regarding what makes the most sense.
Under Option 1, he said the existing kitchen would undergo improvements to permit more dining space. He said Option 2 proposes the construction of a new kitchen and to expand the current cafeteria to what is now part of the existing kitchen.
When asked after the public hearing, Hayden said the kitchen addition has advantages that are two-fold.
According to him, the current kitchen/cafeteria area would be overcrowded with the kindergarten through sixth grade configuration.
He said a kitchen addition would allow them to consolidate lunch periods into kindergarten through second grade and then third and fourth and fifth and sixth grades. He said they’d switch to three or four service lines so students had their lunches within seven minutes. He said this would allow the school to begin the student lunch periods later as well.
Hayden said new construction costs were limited to $8,008,000 for the CES project. However, he said its costs included renovations and soft costs, which is why the total project cost is capped higher at $10,669,360.
He said if the new construction bids would exceed $8,008,000 by more than 8 percent, the district would be required to conduct another Act 34 hearing. He said if the district would have to exceed the $10,669,360 total project cost, the CES project must gain approval through a voter referendum.
Financial Analysis
Zach Williard of Public Financial Management said PFM had examined four financing alternatives: cash or a short-term loan; general obligation bond/note issue; a local authority issue; or financing through the State Public School Building Authority (SPSBA).
He said they have determined based on review of the district’s financial statements and discussions with its administration that financing the entire project with cash is not feasible. He said the district neither has the funds necessary to pay enough cash for its share of the project nor does it appear that it would be able to raise the required amounts from its anticipated cash flow to meet the proposed construction schedule.
Williard said PFM then analyzed the remaining three alternatives in detail, which would require the district to incur long-term debt. For each alternative, he said PFM estimated a bond/note issue size and calculated the average annual debt service requirements.
From there, PFM constructed a repayment schedule and assumed equal annual payments over 20 years at the current interest rate levels for the general obligation, local authority and SPSBA issues. Financing costs were slightly higher for the local authority and SPSBA, which resulted in larger issues and higher average annual payments, Williard said.
He said bonds/notes issued through either a local authority or the SPSBA would be classified as revenue bonds/notes instead of general obligation bonds/notes. He said interest rates on revenue issues are slightly higher than those received on general obligation issues, which, in turn, results in a higher annual debt service for the district.
According to him, the general obligation alternative offers the district the advantage of lower interest rates, more favorable refunding provisions and keeps more control with the local school board. He said based on this analysis, the least costly option for financing the project is the general obligation issue.
Williard said the general obligation issue (4.00 percent) would have an average annual payment of $778,079 over 20 years, as compared to $785, 595 for a local authority issue and $785,228 for SPSBA financing.
He said a local authority would also have annual administrative expenses, which weren’t included in PFM’s calculations. He said the local authority and SPSBA annual payments were calculated assuming 4.10 percent as a result of higher interest rates that are associated with selling revenue bonds.
Williard said the state would reimburse the district for portion of the principal and interest, which the district pays each year on the bonds. He said the amount of the reimbursement is determined by two factors, the percentage of project determined by PDE to be reimbursable and the district’s Market Value Aid Ratio. He said it’s estimated that the state would reimburse the district $2,539,542.
Williard said the district has estimated an annual savings of $1,405,615 upon completing the CES project. He said assuming a collected mill provides $122,316, the indirect cost savings would have a millage impact the equivalent of 11.49 mills annually, which is significantly higher than the cost of the project so far as debt service. Williard said with the general obligation bonds for $10.7 million, or 5.13 mills, and the indirect cost savings of 11.49 mills, the district would tentatively “come out to the good” by 6.36 mills.
Business Administrator Sam Maney reported that he initially anticipated a $1.8 million loss at the time he started the 2011-12 budget in June of 2011. He said he budgeted very conservatively since the state budget had not yet been released.
As he began figuring the current-year’s budget, he recalculated the prior year’s deficit. He determined the district had cut the deficit to only $400,000, which has now been “wiped out” by incoming revenues.
Maney said the district will not have to use its fund balance to balance the budget, since it “finished in the black” last year.
During the public comment, resident Gail Ralston was the only audience member to address the board. She said the library was listed as one of the “core areas” of the CES renovation and expansion project. She asked if that is the case, why it isn’t being expanded just as the Clearfield High School library.
She said the CES library for kindergarten through grades six would be receiving book collections from Bradford Township, Centre, Girard-Goshen and the middle school. She said this would expand and address the reading needs of students that are above and below grade level. But she asked where these books would be shelved, as the current CES library wasn’t constructed to address its projected new student population.
In addition, she said there are currently two elementary principals. While reviewing the proposed options for the CES project, she said two designs had designated offices for a principal and two assistant principals. She said Option 1, which includes the kitchen expansion, is designed for three administrators.
She asked the board about its administrative intentions, because when asked previously about reductions to staff due to the consolidation, Otto said there could be with some by attrition and others by layoffs. She said the proposal, as presented, doesn’t reflect any reductions in the administrative area and actually indicates an increase.
When asked after the meeting, Hayden said he hadn’t discussed the library issues raised by Ralston with the district. However, he planned on addressing her concerns with the district.
