How much money has Keystone Oaks borrowed?
Between 1992 and 2002, Keystone Oaks borrowed more than $103 million primarily to construct Keystone Oaks Middle School and Dormont Elementary School and for renovations at Keystone Oaks High School, Aiken Elementary School and Myrtle Avenue Elementary School. The district refinanced nearly $23 million of that debt in 2009.
The district borrowed an additional $5.4 million in 2010 to renovate Dormont Memorial Stadium and the track at the High School/Middle School complex.
Between 2013 and 2015, Keystone Oaks refinanced a portion of the debt to take advantage of lower interest rates and to lower the annual payments. The district borrowed an additional $3.5 million in 2014 to pay for HVAC and lighting projects, which was necessary considering that nearly all of the equipment was installed during the construction and renovations that took place in the mid-1990s.
Currently, the district has about $25 million total in outstanding debt, which is scheduled to be paid off during the 2022-2023 school year. Of that amount, about $2.75 million is interest owed on the existing debt.
Why do school districts borrow money?
Keystone Oaks School District owns more than 500,000 square feet of building space, in addition to Dormont Memorial Stadium and the grounds at all four campuses.
These buildings and equipment need maintained, renovated and, occasionally, replaced, and those projects are expensive. Borrowing money allows districts to responsibly maintain and upgrade facilities and equipment while not impacting educational programs or staffing.
The Board of School Directors has a five-year plan in place to maintain and renovate the facilities and does not intend to replace or construct any new facilities.
School districts are also permitted to borrow money to pay for day-to-day operating expenses. However, the Board of School Directors is committed to not incurring additional debt for such expenses and has maintained a healthy fund balance to minimize tax increases and limit the amount of borrowing.
Is there any limit on how much money school districts can borrow?
The Local Government Unit Debt Act of 1996 places limits on the amount of money a school district can borrow without voter approval. There are some exceptions, but essentially a district cannot borrow more than 225% of its average revenue for the past three fiscal years, minus any outstanding debt, without voter approval. For Keystone Oaks, this threshold would be about $73 million before taking into account existing debt. When you factor in the district’s $25 million in existing debt, the district could not borrow more than $48 million without voter approval.
By implementing preventative maintenance programs and other long-term planning, while also committing to maintain a healthy fund balance, the Board of School Directors does not anticipate needing to borrow anywhere near that amount of money in the near future.
What is Keystone Oaks’ credit rating?
In August 2016, Keystone Oaks School District’s credit rating was upgraded to A3 by Moody’s, which means that the district has a “relatively high level of creditworthiness” and that investments are “among the safest obligations in the market.”