DURHAM — As residents prepare for voting day next month, Superintendent James Morse wishes to provide information on the proposed payment schedule for the middle school building project.
Residents from the district’s three towns, Durham, Lee and Madbury, will vote on warrant articles for Oyster River Cooperative School District at their local town polling stations on Tuesday, March 10. To view the 2020 School Warrant, click here.
Article 3 of the warrant asks voters whether they will approve a $49.8 million budget to construct a new middle school facility, including athletic fields, and the demolition of the current middle school building. The article seeks to break up the project’s cost into two separate bonds and to pay interest only on the project for the first five years. As a result, the district would be able to gradually increase payments toward an annual $3.1 million payment for the project and alleviate the burden on taxpayers. Bond payments for the middle school project would be fully incorporated into the district’s operating budget by the 2025-2026 school year, should the article pass.
“We want to ensure voters are well informed about this project and the proposed payment schedule, which will have long-term implications for Oyster River Cooperative School District students for decades to come, as well as taxpayers,” Superintendent Morse said.
The first year of the proposed borrowing will add approximately $625,000 to the district’s 2020-21 budget, which is also up for approval by voters on March 10. The district’s operating budget, along with the bond payment and a proposed teacher contract, would increase school district spending by 2.8 percent next year, below the district’s goal to cap increases at 3.5 percent a year.
The district has calculated that the average residential property value in Durham, Lee and Madbury is approximately $400,000, based on property values provided by the state. As a result, the district estimates that the average $400,000 home in Durham would see a property tax increase of $230 for the first year of the payment schedule. It is estimated that owners of homes of the same value would see a $29 property tax increase in Lee and a $175 increase in Madbury.
The above projected property tax increases reflect the district’s operating budget and the proposed teacher contract increase as well.
“The School Board has developed a plan for the cost of the bond to be taken on in stages—so that there is not a sharp one-time spike,” School Board Chair Tom Newkirk said. “We wouldn’t reach the full annual cost of the bond, about $3 million, until 2024-25, and each year we would build more into the budget.”
The bond payment would increase to $1.725 million for the 2021-22 school year, and in 2022-23 it would be $2.2 million. In 2023-24 it would be $2.6 million and in 2024-25, the final year of the increasing payment schedule, the payment is projected to be $3 million.
The above calculations are based on a conservative estimate of a 3 percent interest rate, which may be closer to 2 percent.
If the district were to take out a single bond and pursue a more traditional spending schedule, the operating budget could increase between 6 and 7 percent next year as a result of the cost of the bond alone. In order for Article 3 to pass, however, 60% of voters will need to vote in favor of the payment schedule.
The district has multiple tools at its disposal to address the rising bond payment for the middle school project over the next five years, as well as annual increases in utilities, healthcare and other costs. These tools include offering a round of retirement incentives to reduce labor and benefit costs and, if necessary, tapping reserve accounts to minimize the effect on taxpayers. The district additionally could make a one-time reduction in capital reserve savings.
The retirement of the Oyster River High School building project debt during the 2023-24 school year will further offset rising costs from the middle school bond. Paying off the high school will free up approximately $750,000 in operational budget funding toward the middle school, offsetting the increases slated for the 2023-24 and 2024-25 school year budgets.
If Article 3 is not approved, further delays on the middle school building project could result in significant additional costs due to inflation and rising construction prices.
For more information about Article 3 and the district’s budget, click here.
About the Oyster River Middle School Project
The original Oyster River Middle School facility was built approximately 85 years ago, and since then has undergone several additions and renovations. However, the facility today faces numerous, costly concerns which make it more cost efficient to build a new facility rather than renovate the existing structure further.
The current Oyster River Middle School building has a costly heating system, and does not meet the needs of a 21st Century classroom. Many of the classrooms were additionally designed for an elementary school and are too small.
In particular, more space is needed for special education, the growing music program and world language classes. Additionally, there are several significant safety updates that school leadership seek for the facility.
To learn more about the proposed middle school project, click here.