I preface this post with the preceding paragraph because what I am posting today is one of those things that some just don't want to see. There will be those that think the information presented doesn't add to the discussion around the High School project and that it casts the District in a negative light. Others will say I am using scare tactics to get people to come around to my way of thinking. But let me make this clear- I intend to keep my promise to Mt Lebanon to increase the transparency of what is happening in this District and to keep the public informed about how I come to my decisions. There are no hidden agendas here. My agenda is to do what is best for Mt Lebanon and its students. There are occasions when I come across information that genuinely surprises me. When I posted earlier about PA School Construction Buzz and compared the State construction cost numbers from what I found in that research to what was presented by our architect, I was surprised. When I researched where Mt Lebanon fell with regards to Comparative Millage Rates and Taxation I was surprised to find out where we stood in relation to our neighbors. I think the information in those two posts surprised a number of other people as well as they are two of the most visited posts on my website. The research I found for today's post is another bit of data that surprised me. It adds to my argument that we have got to research ALL possible solutions to the high school project.
As most already know, the estimated numbers for the project were released recently. If you need a refresher on those costs, please see this previous post. I have been concerned for some time about how much we pay in debt service payments each year. This year we passed a budget that includes about 7% of our budget going to retire existing debt. But really, having that number without any kind of context makes no sense. I set out to find some kind of data to measure us against. I found it on the Pennsylvania Department of Education website. Here they link to all kinds of budget data for Districts across the State. In particular I was looking for the outstanding debt of all the school districts in Pennsylvania. I found the information here. The latest year they have brought all the debt information together was for the 2005-2006 budget year so keep that in mind as you see the information below. Some Districts have floated more bonds to increase their debt and others, like ours, have been able to pay some of that debt down. However, I feel the data gives the reader a good idea of how we compared to Districts throughout the County and State at a specific point in time.
The below chart shows how Mt Lebanon School District compared to other Districts in Allegheny County with regards to total dollars of debt outstanding for the 2005-2006 budget year:
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The above data lists the 20 School Districts in Allegheny County that had the most debt and shows that Mt Lebanon had the 8th most total outstanding debt in Allegheny County for that budget year. There area total of 43 school districts in Allegheny County.
If we then take a look at high school project costs and estimate the District will float $100 million in bonds for the project then the data changes to look like this:
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You can see that a float of $100 million, which is at the lower end of our project cost scale, would catapult Mt Lebanon to being the second most indebted school district in the County behind the City of Pittsburgh. However, the City of Pittsburgh has more than a half a billion dollars a year in revenues. Mt Lebanon has just over $70 million. Additionally, MTLSD's debt to income ratio becomes the worst in the County. The compounding factor for this is that Mt Lebanon gets a far less percentage of its funding from the State than do most other districts. This forces the debt to be paid by more localized funding sources than in districts like the City of Pittsburgh.
I went ahead and took the next step and compared our debt to all Districts in Pennsylvania. Much like the data for Allegheny County, we look decent prior to floating additional debt. Of the 501 school districts in PA, Mt Lebanon had the 64th most total debt for the 2005-2006 budget year. However, when we float $100 million of additional debt, we jump up to having the 12th most debt in the Pennsylvania:
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On the far right of the picture you can see that our debt to income ratio becomes the 4th worst in the State after a $100 million bond float. Note that this ratio will change as the increase in taxes to support such a float will increase District revenues. There is no way to tell what those revenues would be at this time which is why I look at both the total debt outstanding and the debt to income ratio. A $130 million float would put us in the top 10 of most indebted districts in the State.
While I personally find this data a cause for concern, I put this information together not because I want to convince you of any one idea in particular- I'll try to do that in future posts when I have more information on which to base my final opinion. I want readers to digest this information and decide if it impacts how they view the high school project and its effect on the District and the Mt Lebanon community. This is but one piece of a large, complicated puzzle.
Thanks for reading.
James
