I got a few emails from readers last week and in response I sent an email to Superintendent Lesky and Business Administrator Rischoff on Thursday and asked the following questions:
To what extent, if any, does Nazareth currently engage in these swaps?I've not yet gotten a response, but today the Morning Call had a follow-up article. In that article (read it here) it states, "But exact taxpayer costs in Nazareth, Easton and Parkland and Nazareth were unknown. Nazareth officials could not be reached."
What impact has it had on our budget (the Call reported Bethlehem had
a $1M extra in interest in one month when rates went up)?
Can we get out of them and when can we do it?
Easton provided partial figures and Parkland explained how the swaps have saved money over time and noted their financial situation is healthy.
NASD Reserve
According to the 2008-09 Budget document (available here) NASD has just under $5M in its unreserved fund balance and budgetary reserve combined.
With the annual budget at $61.7M, the reserve represents 7.5% of the budget.
NASD Debt
The 2008-09 Budget (available here) indicates Long-Term Indebtedness (page 19 of 20) as of 6/30/08 of $87,910,000 and as of 6/30/09 it increases to $106,715,000. Our debt will increase nearly $19M in one year.
From 2001-02 to 2006-07 our annual debt service increase over those five years was 24% with annual payments of $3.6M increased to $7.9M. From 2007 to 2011 our payments are scheduled to increase from $8.5M to $12.4M.
The 2008-09 budget indicates a seven year annual average increase of debt payments of 24.88%.
Most disconcerting is that these figures and projections were made in the context of a continually growing economy and not in light of the current financial crisis.
It will be interesting to see how the NASD will be situated regarding swaps and how we will be able to pay on this debt over time while also supporting our expanded facilities and providing a quality education.
6 comments:
I think the quote "the silence is deafening" is an understatement in this case.
It appears that all the districts affected by this program are bringing it up now so they can figure out how to fix it.
For some reason, NASD has lowered the cone of silence yet again. My guess is they don't want to tell us how bad we are screwed.
There is an election coming up, and it is time we start to remove those that have put us in this position (not the ones that have bucked the trend and voted in favor of the taxpayers).
To Dr. Lesky and the Board, we are grown ups. Tell us the bad news as you are always quick to chime in with the good. Show a little integrity and own up to whatever the facts are, good or bad.
Anon 10:51 I couldn't agree with you more! I think the silence is probably because they don't understand the impact and can't explain it.
I would venture to guess that Tom Maher would be THE ONLY one would understands how this will impact us, the taxpayers. He seems to be the only one with fiscal responsibility. I'd say the Board, Lesky, and the Business Manager would be SMART to listen to him more when it comes to OUR money-he DOES have the knowledge as much as some might not care for him.
Ross, maybe send your email to Tom? If anyone can explain all this, I believe Tom Maher can.
Aparent,
You comment scares me even more. If they don't understand it or can't explain it, they should immediately resign as they are not qualified to be in the position of running anything.
Lesky is paid a huge salary, AT TAXPAYER EXPENSE I might add, and OWES is to the people that PAY HIS SALARY to give us an immediate, honest answer. If not, we should see his resignation NOW.
If the board does not understand or can't explain it, they should RESIGN NOW.
They are the ones the opted to take us down this path. If they knew what they were doing, they should be able to immediately tell us what they did and what the impact is.
If they took us down this path and can't answer those basic questions, then they are either hiding something, or they really didn't know what they were doing. Either way, they should resign immediately.
Ross-
You note that our debt will increase $19M over the coming year. Now, I haven't looked at this in awhile, but I think this is part of the approximate $24M that we still have to borrow to pay off the remainder of the 7-8 building project along with the connecting road.
Given the well publicized fluctuations in short term interest rates and the overall tight(ening) credit market, I wonder what rate we'll get for the last bit of money and whether the budget will need to be adjusted accordingly.
Follow up Article in the Morning Call regarding BASD.
Interesting item is that BASD has an assistant superintendent for FINANCE. When I looked at the NASD page, we have assistants, but no one with that title. Looking at the administrators list, no one carries the title of FINANCE. Guess they figured we didn't need one of those.
I think that until this is sorted out, any construction project that is not under way or under contract should immediately be put on hold until further notice. My guess is we are in major trouble with this bond swap and Lesky is just to scared to tell us how bad.
Ross
When the Board and Lesky opted for the swaps they were entering into an extremely risky manner of financing debt.
Do we know who is up for re-election? We must elect a fiscally responsible group to replace the robots on the the current Board.
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