AYER/SHIRLEY -- The Ayer-Shirley Regional School Committee made an important funding decision on the high school building project Wednesday night.
The committee voted to forego its initial plan of short-term borrowing for the project to borrow all the funds at the current low interest rates. The move, said ASRSD Superintendent Carl Mock, has the potential of saving the towns' taxpayers between $2 and $4 million over the 20 years of the loan.
According to Mock, the district's financial planning company, Southwest, had been looking at an initial plan of short-term, 20-year borrowing, but with interest rates so low, a decision was made to look at immediate long-term borrowing.
Three weeks ago, he said, representatives of the school building committee who serve on the financial working group met with Southwest and town officials, including the chairs of the Ayer and Shirley Finance Committees.
The working group, which had already presented three financial plans to the school committee, added plans four and five.
One of the new plans, for Fiscal 14 immediate borrowing, would have the greatest immediate tax impact.
"The working group decided on a reworking of plan two with a bit more of a transition, and came up with plans four and five," said Mock. "We discussed these with the Finance Committee chairs and the financial working group, plus the select board chairs and treasurers or accountants from each town.
The parties decided that option five made the most sense, he said. "Last evening (May 21) the Ayer FinCom and Board of Selectmen met to talk about the plan. Both parties endorsed it. Today I received an email from (Shirley Town Treasurer) Kevin Johnston, who had raised the issue here in Shirley, also endorsing that concept."
The differences between (options) four and five are very minor," said ASRSD Finance Director Evan Katz. "One of the criterion that the town of Shirley was trying to incorporate was minimizing the payments in Fiscal 14 and ramping up Shirley's payments to the stabilization fund."
Financing plan five allows Shirley to set aside nearly $175,000 for its stabilization fund, which it could apply against its share of debt service, he said.
Katz said Shirley is still trying to decide how to apply that amount. "They may want to apply it over a couple of years to control the ramping up," he said. He referred to the gradual five-year increase in Shirley's contribution toward net school spending over the required local contribution to equalize its share of per pupil costs with Ayer's.
Shirley could decide, he said, to pay one-third this year and two-thirds the next. "The debt schedule will be determined by the amount of money we borrow and the minimum payback in fiscal year '14 and '15."
The committee voted unanimously to adopt financing plan five, with level debt service. The estimated local share of the total building project costs is $19,589,710. The projected interest rate on January 15, 2015, notes is 2.5 percent. With payments beginning in Fiscal 2015, the total payment plus interest through June 30 in Fiscal 2034 is projected to be $27,919,565.
"If we had filed the original (long-term) plan with a temporary bond we would know exactly how much it costs," Katz said. "But because we are borrowing now it may be possible to get to the end with nonreimbursables and reimbursables with perhaps just a small amount of money we have to borrow to clean it up."
Committee Vice Chairman Pat Kelly noted that the overwhelming consensus from all parties was that the committee was taking the right approach, since it has the potential of saving the towns over $2 million over the 20 years of the loan.
The committee will meet on Tuesday, June 25, to sign the paperwork.