Rochester looks to use $7.5M in existing funds toward $34M new school. Here's why.
ROCHESTER — If the City Council approves, Rochester might used its unreserved fund balance to pay for about half of the $15 million still needed to fund a new elementary school on Salmon Falls Road.
When the finance committee met on Tuesday, it heard a proposal to fund about half of the $15 million still needed to fund the new elementary school through the city's unreserved fund balance, reducing the amount of money the school district would need to bond for the project.
The new school is estimated to cost $34 million, said city deputy finance director Mark Sullivan. "He said state building aid will be $15,769,580, the district capital reserve could add $1.29 million and another $1.4 million could be applied through the surplus state adequacy money.
To keep the school district bonding at about $2.5 million annually, Sullivan said, the goal would be to bond $8 million. If the full amount is bonded, it raises the bond threshold to $3 million annually.
Sullivan told the committee Rochester's unassigned fund balance was $38 million, about $18 million over the city's accepted threshold, so if the council approved, $7.54 million could be applied to reduce the amount needed to bond, saving the city about $3 million in interest over the life of the loan.
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A two-thirds vote of the 13-member City Council for the resolution would be required for $7.5 million to be allocated from the unreserved fund balance for the school. The Finance Committee voted to approve sending the resolution to the full council.
What councilors are saying about using unreserved funds for school
Councilors James Gray and Steve Beaudoin spoke against using unreserved funds. Gray noted the city has needs that might be better served by the money, particularly in the area of road paving.
"We have roads that need attention that we have been deferring for 10-years," said Gray. "We need to look long term at all the considerations."
Gray mentioned Adams Avenue, Winter Street and Wakefield Street.
Councilor Don Hamann said he was in favor of saving $3 million in interest.
"We are still 21% over our high-end policy," said Hamann. "So, we are still in good shape to do paving, etc.?"
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Sullivan replied in the affirmative so Hamann said he was leaning toward a yes vote.
Beaudoin said he did not support the school building plan as sidewalks are not included in the proposed plans, something he said is necessary for safety.
Mayor Paul Callaghan noted the cost of yearly maintenance for the two schools the district is closing, Nancy Loud and School Street School, is about $600,000. He added that not all the current schools have sidewalks now. Nancy Loud School already closed and School Street School is planed to close after the new school opens.
This article originally appeared on Fosters Daily Democrat: Rochester looks to use $7.5M in existing funds toward $34M new school
