FARMINGTON – Two MSAD 9 school construction projects may be put on hold after the state announced today it is delaying the issue of construction bonds as a cost saving measure due to expected state budget shortfalls.
The Department of Education is pushing back the date local school systems will be issued bonds for 12 major school construction projects in 11 school districts, by six to 12 months.
In MSAD 9, the bond date was moved back six months from spring 2010 to fall 2010 for the new pre-kindergarten through third-grade Mallett School construction. The Mt. Blue High School and Foster Regional Applied Technology Center renovation and addition construction project’s bond date was moved from spring 2010 to spring 2011.
Just how this will affect the projected construction timelines remains uncertain. Messages were left with MSAD 9 Assistant Superintendent Susan Pratt and Superintendent Michael Cormier, both of whom were out of the office.
The Mallett School project had just successfully completed a second straw poll, held on Sept. 18, at which architects discussed their plans for the school’s layout. It is due for review by a DOE subcommittee. Approval there will lead to a referendum vote, by the residents of Farmington, tentitively scheduled for Nov. 20. Whether that timeline will change with the bonding delay is unknown at this time.
The Mt. Blue High School project had quietly been proceeding to its first straw poll, a housekeeping measure asking residents if they thought the current campus should continue to be utilized. Cormier had noted at MSAD 9 board meetings that negotiations between the district and the DOE over how many square feet should be allotted to different school functions continued to be ongoing.
At a meeting today, Jim Rier, director of finance and operations for the department, told members of the State Board of Education’s construction committee that the move could delay the opening date for some of the schools by several months. All of the projects will continue to move forward.
“At a time when we are facing the real prospect of flat-funding or even reductions to state subsidies for education, we’re working to reduce expenditures while still preserving programming for local school districts,” said Jim Rier, director of finances for the Department. “Delaying the bond dates allows us to preserve the projects while freeing up money for educational programming.”
The change will result in moving about $9 million of bond payments from the 2010-11 two-year state budget to the following biennial budget. The nearly $5 million expected to be freed up from delayed construction bonding will go for general educational programming.
“We are in a very tough revenue environment,” Rier said. “We are looking at the potential for severe cutbacks across state government. We have a situation here where we can still honor our commitment to these projects while freeing up some funding to deal with the short-term situation.”
The move comes at a time when municipalities and states nationwide are having difficulty selling bonds at all because of the national financial crisis.
Issuing construction bonds typically occurs at about the halfway point in construction of a project. Before then, school systems pay money up front for some costs and may issue short-term bond anticipation notes until the construction bond is issued. Issuing the bonds too early requires the state and local units to pay significant interest costs. Issuing them too late requires additional short-term bonds and the added interest incurred. Bond dates are routinely moved to respond to construction project timelines which are adjusted frequently as a result of unexpected delays, changing conditions in the market and other factors.
Rier said he and Commissioner Susan A. Gendron began to re-examine the upcoming bond dates over a month ago in response to the changing national and state financial situation, and again more carefully in the last two weeks as the extent of the impact on the state budget became more apparent. The department is in the process of preparing a significantly-trimmed two-year budget. State agencies have been directed to prepare budgets that will close the projected $508 million gap in the next budget between projected increases in existing programs and available resources.
The Department’s budget, the overwhelming majority of which goes to school districts, accounts for nearly 40 percent of the state’s general fund budget. All state agencies have been directed to present reduced budgets.
“It is important to understand that these construction projects are moving forward,” Rier said. “Some won’t see any difference at all. Some will likely have to slow down some aspects. We will work with the schools to move all students into the new buildings as quickly as possible, as we always do. That will include exploring all the ways we can work creatively and responsibly to secure funding for construction projects.”
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In addition to MSAD 9’s two projects, the other school projects affected by the changes are:
Bond date moved from spring 2009 to fall 2009
Portland, new K-5
Brewer, new pre-K-8
Gorham, new pre-K-5
Durham, new K-8
Brunswick, new 3-5
Bond date moved from spring 2010 to spring 2011
Jefferson, new K-8
Chelsea, new K-8
Woolwich, renovation/addition, K-8
SAD 22 (Hampden), new high school
Falmouth, new preK-5
