BOARD FINANCE COMMITTEE MEETING MINUTES

NOVEMBER 1, 2004

 

 

Chairperson Charlene Koch together with Board Members Loretta Leeson, Julie Venanzi, William Heske, Diane Rowe, and Craig Haytmanek met with Superintendent Joseph Lewis, Director of Business Affairs Stanley Majewski, and Associate Superintendent Michele Kostem, in the Dining Room at the Education Center Also in attendance were

Les Bear from Arthurs LeStrange and Company, Matt Kirk from Access Financial Markets, Genevieve Marshall from the Morning Call and Precious Petty from the Express Times.

 

OPEN FORUM – No items for discussion

 

SWAP AMENDMENT – Les Bear and Matt Kirk presented a proposed amendment to the district’s existing 2005 and 2007 Forward Starting Swap Agreements. Through a restructuring of the district’s existing swaps, the district can take advantage of current market rates which would enable the district to reduce or eliminate the negative drag that results when the variable cost of its bonds is greater than the variable receipt under its swaps.

 

The Amendment proposes changing the calculation for the 2005 Swap which uses 68% of LIBOR to 60% of LIBOR plus 34.5 basis points. The 2007 Swap would be amended from 68% of LIBOR to 60% of LIBOR plus 36.5 basis points. Discussion followed.

Mr. Majewski recommended amending the Swap Agreements to take advantage of favorable market conditions. This amendment will be on the November agenda.

 

ACT 72 CONSULTANT – Mr. Majewski advised the committee of a consortium of school districts within Intermediate Unit 20 that will be engaging PFM as a consultant to prepare districts for the potential participation in Act 72. The May 2005 deadline is rapidly approaching and Mr. Majewski would like the board to be fully informed before they decide if the adoption of Act 72 will benefit the district. Mr. Dave Sallack from PFM will provide a one day session on the implications of Act 72 to participating districts.

Discussion followed. Mrs. Koch questioned whether the district is using resources provided by PSBA and PASBO. Mr. Majewski responded that the information provided by those organizations is global. Bethlehem’s tax base and economic conditions may be different from other school districts and we would benefit from the one-on-one information Mr. Sallack will provide. The cost of a one day session will be $3,500.

 

 

November 1, 2004

Board Finance Committee Meeting Minutes

Page -2-

 

 

ACT 72 BUDGET DISCUSSION – Mr. Majewski discussed the affects of Act 72 on the budgeting process. If we opt into Act 72 we must work on the 2006-2007 budget in September, 2005. The budget process will end in one month and start again three months later. The next Act 72 activity is the EIT Certification. By December 15, 2004 we will need to make certification of how much we anticipate collecting from the 1/10 of 1% earned income tax increase. Planning and financing capital improvements will be more difficult. We have been using capital funds for bus purchases, technology upgrades and replacements, and other capital needs. By 2008 we will need approximately $16,000,000 more financing for existing construction projects and routine capital improvements because current capital funds will be depleted. Discussion followed on Act 72 and whether the district should opt into it. Mr. Majewski stated that we will need more information and hopefully gain more knowledge from the session with Mr. Sallack.

 

COLONIAL ACADEMY PARTICIPATION AGREEMENT – Currently the Colonial Academy (Second Chance School) is housed in the Rhinehart Elementary School in Hellertown. The building is in need of extensive repair. IU 20 wants to construct a new school in Wind Gap. The district uses the services of Second Chance for several students with special needs at an approximate cost of $11,000 per student. The proposed school would be funded by member school districts with payment based upon market valuation. BASD is approximately 25% of total assessed valuation for this project. Availability for member districts would be based upon the number of slots allotted each district using $3,680 as a value per student slot. If a district’s guaranteed pay is $36,000 based upon market valuation and enrollment figures it would be eligible for ten slots. Bethlehem’s payment is estimated at $220,000 for the first five years and will allow us 60 slots. Districts that do not use their prescribed slots may be rebated at the end of the year if surplus funds are generated by enrolling higher paying non-participating school district students. Discussion followed regarding the advantages of becoming a charter member. Mr. Majewski is recommending the district becomes a charter member since we need the services and going elsewhere for services provided by the Colonial Academy will be more costly. The Participation Agreement will be voted on at the November 15, 2004 board meeting.

 

The meeting adjourned at 10:05 pm.

 

Minutes prepared by_________________________________________               

Adele Embardino, Confidential Secretary to the

Director of Business Affairs