SHARON SCHOOLS Board votes to borrow extra funds

The board also approved a new budget calling for a 3-mill property tax increase.
By HAROLD GWIN
VINDICATOR SHARON BUREAU
SHARON, Pa. -- Sharon City School Board voted unanimously Monday to borrow an additional $3,125,000 to complete some building renovation work, but the total cost of the loan isn't exactly known.
That's because the board is borrowing the money through a variable interest rate bond issue rather than a fixed-rate plan.
Business Manager James Wolf said the interest for a variable-rate bond issue stands at 1.85 percent per year, while a fixed-rate bond has interest rates that vary, but they're specified upfront.
Right now, they would start at 2 percent but rise to 5.1 percent over the life of a 20-year loan.
Sharon can save about $136,000 over the first two years by borrowing at the variable interest rate, he said.
Variable rate bonds have been averaging about 4 percent annual interest costs and, at that rate, Sharon would pay $2 million in interest charges over the life of the loan.
Could switch plans
The loan document says the variable rate could rise as high as 25 percent but Atty. Mark Longietti, school board solicitor, said Sharon has the right to switch the bond issue to a fixed-rate plan should the bond market rise too high.
That switch can be made in just a 30-day time period, Wolf said.
Sharon has already borrowed $28 million in previous bond issues to renovate and expand the West Hill and Musser elementary schools and start the same type of improvements at its middle-high school.
However, an additional $1.9 million is needed to complete the high school work, and that money will come from the new bond issue, which will also provide $400,000 for various change orders at the high school, $525,000 for improvements to the Bennett Educational Service Center and $155,000 for a 50-camera security system for the middle-high school.
That won't be all Sharon is likely to borrow.
The district is also looking at $7.5 million in improvements to Case Avenue Elementary School, but hasn't made a commitment on that project yet.
Budget's final reading
In other business, the board unanimously passed final reading of a $21,203,180 budget for fiscal 2002-03 that calls for a 3-mill property tax increase that will cost the average residential taxpayer about $45 more a year.
The tax increase is in "new" mills, the equivalent of a 9-mill increase under the old budget.
Mercer County changed its tax assessment ratio from 33.3 percent to 100 percent of a property's assessed value this year, tripling the value of each mill.
Sharon's new millage rate stands at 44 mills.
Wolf said 1.89 mills of the tax increase will go to help pay off the debt service. That's the equivalent of nearly 6 old mills.
Sharon has already enacted tax increases totaling 13 old mills for debt service to help pay for the building improvements.
Wolf said a further tax increase will be required to pay for the $3,125,000 borrowed Monday, but a final figure hasn't been determined.