Skip to main content

High School Bond Decision Postponed; Financials Scrutinized

School Committee Member & Building Committee Chair Nate Cahoon

Parents, teachers and community members packed the City Council Chamber Tuesday night eager to learn what the City Council would decide on a potential new high school. They were immediately disappointed to hear that the decision would not be made and instead pushed to a special meeting on Thursday night (April 5th). The meeting was not well advertised as many parents and even a school committee member did not know of the change.

Still the council heard a presentation from the school department and held a vigorous discussion in the hopes of informing their vote on Thursday night. The School Committee presentation was led by School Committee Member Nate Cahoon, who also serves as the Chair of the Building Committee that has been working on this project. Cahoon, a former Air Force officer, started his remarks by saying that the work he has done on the high school is "the most important thing I've ever done, the most important task the city has taken on for decades and the most important thing we'll do for decades hence."

The project will be reimbursed by the state 54.5% of the cost with potential further incentive reimbursements with a possible total of 74.5%, however that rate will only apply to a portion of the cost which the Rhode Island Department of Education (RIDE) had deemed reimbursable, which is $135.5 million dollars.

The total cost of the project will be $189.8 million dollars. The city would be responsible in the worst case scenario (59.5% reimbursement) for $116 million of that cost, but would have to bond the whole 189.5 million amount initially. If the 20% extra reimbursement based on RIDE incentives is approved, the amount that the city would pay drops to 89 million. Mr. Cahoon and Superintendent Crowley are confident the school department will receive the incentive reimbursement. "We would be able to purchase a $189 million dollar school for $90 million dollars, I don't know how that opportunity is ever going to come our way again" Cahoon stated.

Cahoon also noted East Providence's prime position having already planned out the project ahead of other districts. "You are going to see districts like Warwick, Providence and Cranston muscle to the table with a whole bunch of need and a whole bunch of reimbursement rate and the amount of money that's left for us will dwindle."

Council President James A. Briden

Council President James Briden noted that the Council is excited about the new high school but that the city is working within a five-year plan that already projects a 3% tax increase per year and stated "what we really need is a fiscal impact analysis." Briden also cited the potential of redirecting the 2.3 million dollars contributed to the synchronization fund (for synchronizing the city's fiscal year with the state and with 37 other Rhode Island municipalities) and using that money instead to the school bond. "How much more, above and beyond 3%, would this trigger" Briden questioned.

Superintendent Kathryn Crowley

Superintendent Crowley followed Cahoon and characterized the plan as a "once in a lifetime opportunity" and reiterated confidence in the $189 million figure presented, citing that it is based on construction costs estimated for two years from now, including inflation rates and the CTE program construction costs which are more expensive than traditional classrooms. The new school would provide a "21st century learning environment." The high school currently has one science lab for 1,500 students, the new design calls for 12. Crowley emphasized that the $189 million dollars "is not what the East Providence voters in the end are going to actually pay." Crowley clarified what some of the non-reimbursable costs are, they include athletic fields (which would have to be re-worked due to the placement of the new high school), the expanded auditorium and double gymnasium. Crowley stated however that it is a good reimbursement number.

Crowley also noted that the Governor's $250 million dollar school construction bond, if approved by voters, may also further offset some of the costs as well as provide up front money rather than just a yearly reimbursement. Money up front would defray the interest over years for the bond, making the project less of a tax burden over time. Crowley cited conversations with the State Treasurer as the basis for those claims. "There are eleven projects going forward, next year you're going to have three times that, so the chance of getting the most money is actually this year."

Crowley made a point to address the timing of the Council's decision since April 10th, RIDE has to go before the Governor's construction board, City Council approval is required prior to that meeting. The construction board then submits its recommendations to the Board of Education which meets in early May followed lastly by General Assembly approval.

Councilman Brian Faria

Councilman Faria questioned the Superintendent on whether the construction costs would drift upward as time progressed, Councilman Botelho similarly questioned that we "need to know what the truth is." Such a notion was refuted by Crowley but somewhat supported by School Committee Member Anthony Ferreira, who works in construction. Ferreira based his analysis in part on similar school construction in Massachusetts which has been around 230 million. Mr. Monteiro, another School Commmittee member however stated that schools in Massachusetts are not apples to apples comparisons due to differing regulations, reimbursement structures, etc. Former Superintendent Manny Vinhateiro a member of the Building Committee and also a former Principal of East Providence High School noted that the School Department would be hiring a 'Project Manager at Risk' essentially contracted to produce a school per specifications and for the budgeted amount, any further costs would become the responsibility of the Project Manager.

Bill Fazioli - PFM Financial Advisors

Bill Fazioli of PFM Financial Advisors, representing the Rhode Island Health and Education Building Corporation (RIHEBC), the state agency that officially issues school bonds also spoke and clarified that any bond would still, after voter approval, still need to be issued by the city, which allows the city to not issue the bonds if certain factors occur. Faria questioned Fazioli on the impact to taxpayers. The tax impact, without using the synchronization allocation, would be $1.73 to $2.26 per thousand. If the syncronization money is reallocated, that would lower the impact to around $1.07 to $1.33. Faria pointed out that the figure, not using the synchronization money, would be an increase of 7 to 10 percent over the current rate, which Fazioli confirmed, put another way, it would be approximately $400 to $500 more a year for the average taxpayer, according to Faria. Fazioli mentioned as Crowley did that receiving up-front reimbursement would lessen that impact substantially.

Two concerns that were raised include that some years the city may exceed the tax cap of 4% and the city would likely exceed the city's bonding capacity. Exceeding the tax cap usually requires approval from the state Auditor-General and the state Office of Municipal Affairs, exceeding the bonding capacity requires General Assembly approval. Counselor Britto asked how such a bond would effect the city's credit rating. Fazioli explained that while a high debt to levy ratio is a "yellow flag" to agencies, but that ratings agencies would measure the net debt subtracting the state reimbursed portion. Fazioli said it wouldn't lower the bond rating but may stall future increases.

Briden asked for Paul Luba, the city's fiscal advisor to the city to prepare an analysis of the impacts of the different scenarios on the tax rate and the five year plan for the Thursday meeting when the matter would be decided. Some parents expressed frustration expecting to speak Tuesday night and have a final decision, some citing that they had arranged babysitters and would have difficulty coming back Thursday. One parent asked if there would be comment on Thursday night and it was agreed by the Council that there would be, under a unanimous consent motion.