To the Editor,
Why is a tax override or debt exclusion needed to fund the renovation and upgrade of the 5 Watertown Public Schools?
During this recent election season, tax increases were discussed with a lot of passion both for and against the proposed surcharge to fund the Conservation Preservation Act (CPA). Another discussion conflated the CPA tax and a tax override or debt exclusion to pay for proposed renovations to Watertown’s aging schools. The message presented was that if the CPA passed, residents would be facing a second tax increase to pay for the schools.
I disagreed with the premise that an override/exclusion was necessary and the only option to fund the school upgrades (http://www.mass.gov/dor/docs/dls/publ/misc/levylimits.pdf). I also disagreed with the argument that the town would have to borrow between $200 and $400 million. My disagreement with the amount was twofold: first, the argument implied that the full sum would need to be borrowed all at once so that all five schools could be done at the same time, which is both inaccurate and not feasible. Second, the $400 million number represents brand new construction of five new schools – something which is extremely unlikely in Watertown due to a number of factors, lack of viable building sites being a very big one.
Just for reference, a $200 million bond offering for 20 years at 2.5% translates into a monthly payment of a little more than $1 million, or $12.7 million annually.
So the basic question remains: How will Watertown pay for the significant investment in our schools and the future of education here?
My idea is this:
Borrow the funds for each project as the project is about to start – roughly every two years – until all five schools are addressed, a 10 year span.
To pay for the debt service, the town could make use of a portion of the free cash currently allocated to OPEB (Other Post Employment Benefits) expenditures, projected to be $15.6 million per year starting in FY2020.
Why do this now? There are several reasons to consider doing this very soon:
• Delaying this work any further will not address the space needs of our students and teachers.
• Keeping the buildings as they are will not help us provide the 21st century education and best practices that all of our students deserve.
• Interest rates are very low, so the town should make use of their AAA bond rating to borrow at low rates.
• The town is in very good fiscal condition, so given all of the anticipated growth, we can afford this investment in the future of education, without a debt exclusion or tax override.
• Utilizing a portion of the OPEB free cash, we can service the debt, still pay into the OPEB fund and have no negative impact on the town’s operating budget, as currently projected.
• Every other town department has received significant infrastructure improvements over the past decade and now the schools need that same type of investment.
Most importantly, the sequence of the projects has not been decided, design ideas have not been discussed in detail, drafted or agreed upon yet, and finally, no detailed cost estimates have been created. We, as a community, need to agree on the sequence of the school projects, in order to begin the discussions about the details and get this work scheduled.
Being a cost conscious taxpayer, parent of a Middle School student and citizen concerned about the future of education in Watertown, I started doing some research, sketching out some ideas and analyzing recent town budgets for ideas.
In the FY2017 Town Budget (http://www.ci.watertown.ma.us/DocumentCenter/View/19143), on page 14, expenditures for the town are discussed, including this:
The Watertown Contributory Retirement Board Funding Schedule approved by the Public Employee Retirement Administration Commission has the Retirement System fully funded in FY2019. Pension costs are projected to increase $1.54 million in FY2018; $750,000 in FY2019; and decrease $15.62 million in FY2020. A long-range financial plan for addressing the Unfunded Other Post-Employment Benefits (OPEB) Liabilities will be created and commence in FY2020 with $15.62 million available for pay down of the Town’s OPEB Liability.
Line item expenditures and the forecast are shown on page 15 of the budget.
As a member of the School Building Steering Committee and former Chair of the Buildings and Grounds Subcommittee, we discussed many ideas and options for the future of the schools, with an emphasis on creating spaces that were flexible and could be utilized in various configurations to meet the needs of a 21st century education. Teachers, administrators, School Committee members, parents and community members all gave input into the process, either in the meetings or at the three public forums. SMMA, the firm hired by the District for this process, took all of that input and generated some ideas for each of the schools, ranging from basic renovation to renovation + upgrades, and finally new construction. Each of these options was given an estimated cost based on square footage and current construction costs.
For the sake of this write up, I have used the second option, for each school – renovation + upgrades. New construction is not feasible and basic renovation is less than needed to build for the future. For the Hosmer School, there were two renovation + upgrade ideas presented, so I have taken the average of the two cost estimates.
The sequence of the projects has not been decided, but for this write up, I have tried to order them in such a way as to avoid having any one cohort of students impacted by construction every year of their education.
Here is a list of the schools, the project cost (in round numbers) and construction time, based on the SMMA Master Plan document.
The Town could borrow the necessary funds via 20 year bond offerings as each project is preparing to start – approximately every 2 years. Then, by using some of the available $15.6 million to service the debt, the net impact to town expenditures could be significantly reduced. For this exercise, I’ve used 2/3 = $10.4M for debt service and 1/3 = $5.2M for OPEB service.
In conclusion, I would urge the School Committee to begin the discussion to prioritize each school renovation project in order to determine the first project in the sequence. Once that is decided, I would urge the Town Council to work with the School Committee to determine the next steps in the process, including public discussions regarding timing and the financing of the project. I would also strongly urge the Town Council to review this idea in order to fulfill two very important goals: avoiding a tax increase for the citizens, and investing in the future of education and of Watertown.