At its May 12th meeting, the Berwick Area School Board approved a plan to finance 50% of the upcoming $7.8 million capital improvement project at East Berwick Elementary School and the District Office, despite having sufficient funds available in the district’s capital improvement account. The decision reflects a proactive financial strategy designed to preserve district cash reserves, protect its fiscal health, and leverage current low interest borrowing opportunities.
"While we have the funds to pay the full cost upfront, financing part of the project allows us to maintain a healthy general fund balance and be prepared for future needs,” said School Board Director Jeff Taylor. “This is about being smart with taxpayer dollars- not just for today, but for the future as well. Taylor explained that having cash on hand is critical for Berwick Area’s financial stability and can help protect the district against unforeseen costs from emergencies like roof failures, facility repairs, or state funding delays. “Healthy reserves ensure that the district can respond without disrupting education,” added Taylor.
Ryan P. Hottenstein, Senior Vice-President of FSL Public Finance, and a financial advisor to the district, concurred with Taylor’s assessment that maintaining strong reserves is a key strategy to support a school district’s long-term financial stability. “These reserves not only provide a crucial buffer for emergencies but will also help the district manage potential future operating deficits as they arise,” stated Hottenstein. “This flexibility will allow the district to avoid large, immediate tax increases by using reserves to gradually phase in smaller, more manageable increases over time.” He added that it also provides “critical breathing room” to navigate within the tax increase limitations imposed by Pennsylvania’s Act 1 Index, giving the district time to implement “thoughtful, long-term budget solutions without exceeding state-mandated caps.”
Hottenstein also pointed out that financing promotes “taxpayer fairness and intergenerational equity.” He explained that even when cash reserves are available, financing a capital project, ensures that the cost of long-term assets is spread over their useful life, “so the taxpayers who benefit from the asset- such as new school buildings or facility upgrades- are the ones contributing to its cost, rather than relying solely on past taxpayers to fund future benefits.”
In addition to those already cited, District officials outlined two additional benefits for the financing initiative:
• Support Bond Ratings and Fiscal Rankings: A higher general fund balance can improve the district’s credit rating, reducing interest rates on future borrowing and improving financial confidence with the state and community stakeholders.
• Ensure Long-Term Investment Capability: Financing allows the district to spread costs over time, while potentially earning interest on existing reserves. In today’s interest rate environment, it's possible for districts to earn more by investing surplus funds than they would pay in interest on low-rate municipal financing.
The Board’s decision enables the district to move forward with essential infrastructure upgrades- including new HVAC systems, electrical enhancements, lighting improvements, fire alarms, and more- without fully depleting its capital improvement fund. With construction scheduled for Summer 2025 and long-term energy savings guaranteed through the GESA program, the investment is both timely and fiscally responsible. Brent Crispell, Director of Buildings and Grounds, added: “This isn’t just a facilities project-it’s a strategic investment. Financing a portion ensures that we can keep moving forward on other priorities, including technology upgrades, curriculum investments, and future facility needs.”