ECS considering short term financing for aid backup

By DAVID HULSE

ELDRED — Eldred Central School (ECS) is now looking at short-term financing alternatives to fill a budget gap created by a proposed change in the state’s amortization, payback rates for aid on school construction.

ECS Business Manager Lorelei Case said because of prohibitive costs, school attorneys have recommended against refinancing district bonds.

That decision seemed even wiser, she said, when state officials again dropped the interest rate they planned to pay on aid payouts from a proposed 5.3 percent to 4.5 percent. “That’s just since we first heard about the changes. If we had refinanced, we’d really be stuck, because we could not refinance again,” she said.

The reduced rate cost the district another $6,400, on the $5.4 million bond that funded construction of the MacKenzie Elementary School in 1995, she said.

MacKenzie was bonded to amortize over 15 years and there are seven years left. ECS planned to make annual principal and interest payments of some $520,000 through 2010 and under past procedure, $197,000 would come from state aid annually.

But now the state has stretched out its aid payment from seven years to 22 years, which drops the state’s annual aid share to $84,000 through 2025. ECS was already short $113,000, Case reported last month.

To cover construction litigation costs, ECS bonded $364,000 three years after MacKenzie opened. That bond calls for repayment of $76,000 annually, of which aid has, in the past, covered $29,000. Under the new formula, ECS would get payments for another 28 years, but only $2,000 annually. Case says she is optimistic that the district will get a waiver from the new amortization scheme on the second bond.

The state Senate reportedly plans to challenge the Governor’s education funding scheme and Case said that if they are successful, “it would make a world of difference.”