BOARD OF FINANCE MINUTES
September 27, 2006
The Board of Finance held a special meeting on Wednesday, September 27, 2006 at the Senior Center at 14 Riverside Road Sandy Hook, Connecticut. Chairman John Kortze called the meeting to order at 7:37PM.
Present: John Kortze, James Gaston, Harrison Waterbury, Michael Portney, Joseph Kearney, John Torek
Also Present: Ben Sprague, Evan Pitkoff, Alice Jackson, Elaine McClure, Lisa Schwartz, David Nanavety, Thomas Gissen, Paul Magniafico, Andrew Buzzi, Ron Bienkowski, approximately 25 members of the public.
Public Participation:
Po Murray stated that the Board of Finance should be looking to long range planning and that Newtown was the fastest growing town in Fairfield County. Although she would favor a new high school, she believes that the high school expansion is an important part of Newtown’s future and we shouldn’t sacrifice recreational services and aesthetics. Other towns are able to afford high school expansions and such expansions contribute to the value of the town both economically and scholastically.
George Pake - Overlook Drive - stated that the high school dollar figures check out and the process checks out. Everything is expensive and it is only going to get more expensive if we have to do it again in the future. He questions the philosophy of minimizing costs versus selecting priorities. Instead, the board should make education a priority as competitiveness in the world and our society requires the promotion of education.
Chairman’s Report – John Kortze
Mr. Kortze provided highlights as to where the Board of Finance is in the CIP process and wished to answer certain questions raised by the public.
Mr. Kortze, speaking on behalf of the Board of Finance thanked the Board of Education for its assistance in bringing the architect and Dr. Bothswell to the last informational meeting. It was quite helpful. Mr. Kortze also thanked Dr. Pitkoff for inviting the Board of Finance members to lunch at the high school and anticipated that such a tour and communications would be helpful.
Mr. Kortze responded to certain questions raised at earlier meetings by the public, particularly, those raised by Mrs. Murray. The questions and answers were as follows:
Q: Has a cost analysis been done that weighs additional interest cost savings on debt against the escalating costs of materials and labor on jobs that are continually pushed out in the timeline?
A: To the extent that the Board of Finance and the Town could do it, there has always been an effort to fund all projects at the level requested in the timeline stipulated by the requesting agency
Q: Has Moody’s indicated that if the 10% cap were exceeded the Town’s bond rating would be downgraded?
A: All of the Moody’s reports articulate the reasons for our financial well being, so one could infer that lack of those practices would contribute to the Town’s instability. Mr. Kortze indicated that at least one report articulated a declining growth in the town.
Mr. Kortze further articulated that a rating downgrade would affect not only the present bonding but future bonding as well. As a result the mill rate is impacted for debt service. Furthermore, it was explained that as to delays and reprioritizing of projects to fall within the 10% cap, the Board of Finance tries to work within the respective Boards’ prioritizations.
Q: Would Moody’s look negatively on the town’s financial status if the High School was put on probation?
A: Yes, there are many working parts to the puzzle, but at the end of the day Moody's is going to make a business decision from the enterprise that we run versus how much money we borrow, and they are always going to look at total indebtedness as a function of our ability to pay.
Q: Since there are benefits to a town when additional bonding is taken on for a high school, how is it that towns such as Fairfield and Ridgefield can bond for expansion and still maintain there high bond rating?
A: Newtown is not Ridgefield or Fairfield. Larger commercial resources like a Post Road permit those towns a greater ability to fund the increased bonding costs. We're not a Fairfield or a Ridgefield. We don't have an I-95 or Route 1, or a Route 7. We don't have the industry in those towns or their ability to fund what they do. Their resources are much greater that what we saddle on the backs of homeowners in the form of taxes.
Q: Is the 10% cap a self imposed guideline and why is the process not mandated in the charter.
A: Yes, the cap is self-imposed and the process falls within the long term planning charges contained with the charter powers.
Q: Will the voter’s get to vote on the high school?
A: Yes. The voters will vote on the bonding by referendum after the recommendation of the Board of Finance and approval and/or the decision of the Legislative Council. Mr. Kortze explained that there were many interests that compete and must be addressed, including those of Seniors, Open Space, Ball Fields and Recreation, Dickenson Park, Fire and Fairfield Hills. The bond rating affects all potential projects as a whole. The taxpayer always has the final say.
Mr. Kortze stated that the points raised were appreciated.
CIP Report from the Board of Education
Elaine McClure represented the prioritizations passed by the Board of Education:
2007/2008 High School 1st; Hawley School 2nd
2008/2009 High School 1st
2009/2010 High School 1st
2010/2011 Sandy Hook 1st; Middle School Pitched Roof Replacement 2nd (moved back 1 year due to urgency)
2011/2012 Sandy Hook 1st, Middle Gate 2nd ; Middle School Roof Replacement – Flat 3rd ; Middle School Engineering 4th ; Middle School auditorium, cafeteria, media improvements 5th.
Overall Order of Projects:
High School 1st; Hawley School 2nd; Sandy Hook 3rd; Middle School 4th ; Middle Gate 5th; Middle School – flat roof 6th; Middle School HVAC 7th.
Tom Gissen presented answers to questions the Board of Finance had previously directed specifically to the Board of Education regarding the proposed High School Expansion.
Q: What does the project look like at the cost of $37.2M ($25M cost to town) and $25M ($16.8M) cost to the Town?
A: At $25M the sq. footage of new space would be 30,000 and insufficient to address the anticipated growth levels, even at the lowest projection. This amount would not be sufficient to address the probation issues raised regarding the size of the high school and number of students.
At $37.5M the amount of new space would be 66,000 square feet. Again, this does not appear to satisfy the number of projected students, even at the lowest numbers. The proposed project Option F proposes 91, 522 square feet.
Q: Why did the High School Space Needs Committee propose $29.754M expansion costs with $6M in renovations and assumes a maximum population of 1900 students?
A: The difference of costs is in the fact that Space Needs Committee assumed 25 students per class. The Board of Education used 22.5 students per class as 25 is the maximum and 22.5 would be the average. One does not want to plan for 25 students when some classes may have a greater number of students and other classes less. 25 would not be the maximum in such a case but only the average. The Board of Education feels strongly that the 2137 projected population is the proper build number and is concerned that even that number will be exceeded. Mr Gissen explained that the primary changes resulted in the increase from $36M to $43M. The effect of an average of 25 students to 22.5 would be a difference of 7
classrooms. It doesn’t change much more, for example the halls, cafeteria, fixtures, etc.
Q: Why is the proposal to build to the high projected student population and not the mid or low range?
A: The Board of Education based its decision on several factors. First, Newtown has historically made low range predictions that have resulted in shortages. Second, the high projection of student population allows the Town to secure financial advantages and leverage its ability to receive state aid to the project. Third, building to the upper range permits the town and school to receive financial advantages as to economies of scale. Finally, Bothwell informed Elaine McClure that although he might feel some comfort in building to the mid range, one should never build such a project to the low projection.
Paul Magniafico provided that we shouldn’t have a Leggo type expansion project as happened in the past. He strongly believes that the 1989 population figure is too low and to build to such a level would be a repeat of the last high school expansion. Mr. Magniafico indicated he had an extensive telephone discussion with Mr. Prowda from the State of Connecticut who works the State student population projections. Historically, it was noted that the State numbers have been inaccurate for Newtown, the bias in underestimations. Mr. Magniafico studied the error rate and if accounted for historically he found the high Bothwell number consistent. Mr Magniafico noted the high projection of
Bothwell were the most accurate ones for Newtown. After studied review Mr. Magniafico believes strongly that the population increase in high school students will be at least the high 2137. Mr Magniafico researched the number of potential buildable lots and open-space and estimated an eventual build out population increase of 10,000 people in the next ten years, approximately. If 5000 of those persons were students and 1/3 of the students were in the high school the high school would see an increase of 1666 high school students. Adding the 1666 to the present 1688 number equals an estimated 3354 students in the high school. Mr. Magniafico recognizes the tremendous cost of building a new high school and believes building to the Bothwell high is the best ten year option here.
Q: What about the option of separating the ninth grade from the high school and sending it to the Middle School?
A: Tom Gissen answered that the 7-8-9 junior high school grouping has long been discouraged and presently there are only two such schools in the State of Connecticut. Difficulties include the lumping of 9th graders with 7th graders where there is a significant difference in maturity levels, colleges frown on such groupings as 9th graders need to be able to secure necessary planning of class options from 9 through 12 for college entry. Student would be deprived of certain high school classes due to cost and/or unavailability, including those in science, math and English, especially at advanced levels. Athletic activities would be interfered with as well.
Q: Construction and Breakout improvements where inquired of.
A: Tom Gissen indicated that information would be provided.
Q: What is the yearly operational cost impact of the expansion?
A: Tom Gissen explained that operational impact would be negligible because whether there is the expansion or portables one still has the same number of kids, heat, electricity, teachers, etc.
There seemed to be a disconnect here as the inquiry was not of a comparison but as to the anticipated increase cost in total. The Board of Education will get the Board of Finance those numbers. Dr. Pitkoff handed out a very rough draft of anticipated increased operational costs expected. Mr. Magniafico wondered why the operational costs would be of importance in approving the high school expansion as it would be the same with the expansion or with portables. Mr. Kortze indicated he was uncertain whether it would make a difference. Mr. Torek felt it important that the information be secured whether it made a difference in the ultimate decision or not. He felt that it was necessary to see such information to more fully get an
understanding of the entire costs of the project. Mr. Gaston indicated he agreed with Mr. Magniafico except there might be some difference between the size of the expansions, even if minimal, and said varying costs would be helpful to know in the selection of population size the project will be build to. The Board of Education will get the Board of Finance estimates of the operational costs at the mid and low range of population projections.
Q: I]~ If the project were $40M~meaning bonding would be approx. $27M what particular imporvements could be provided on a yearly basis in the annual School budget.~ In other words, why couldn't $1M per year be added each year to the school budget over the next 7 years to complete the improvements?~~
~ II]~ Please itemize, prioritize and include the itemized estimated cost of the improvements that can be added on and are not structurally required to be completed with the initial project expansion?
~ III]~ What improvements~must be~included initially with the completion of the expansion or they will be lost, and how much does each add to the expansion cost?
A: The Board of Education will provide the information requested. Due to the limited time, the Board will need some additional time to secure same.
The Board of Education also represented that they will provide the Bothwell projections from origination date forward such that the Board of Finance can evaluate the actual 5 and 10 year accuracies of the projections.
Mr. Kortze noted that the recent yearly number of building permits trended down and the house for sale turnover is likewise down. Mr. Kortze requested that the Board of Education provide build outs to the mid-level and expandable/scalable level. The Board of Education will provide incremental increase costs, including two step cost analysis compared to one step.
Ben Sprague noted that the new CT General Statute provides that if a town needs to return to the State for more money because of underestimation the percentage of State funding participation (32%) in half. Mr. Sprague also indicated that the savings for future energy rebates as to the high school would go back to the general fund.
John Kortze upon inquiry was informed that in accordance to the NEASC report, the expanded high school as proposed would address all the issues that warn of probation and relieve the school system of such a dilemma.
David Nanavaty indicated that in 1970 the high school was built. In 1975 the high school was overcrowded. In 1994 the high school populated 1334. The town had to go to the legislature to expand the high school to 1600. Presently the school is now exceedingly overcrowded with 1637 students. We must learn from the past. We should build to the Bothwell high so as to not relive the past and this time effectively plan for the future.
No further business.
Motion to Adjourn
Moved: Mr. Portnoy; Seconded -Harry Waterbury. Unanimously Passed. 10:15PM
James O. Gaston
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