The state-initiated construction of a new $225 million Norwalk High School, projected to cost the city at least $50 million over a yet-to-be-determined number of years, may not delay the Board of Education’s major building projects. But paying off the debt for the high school will probably have an adverse impact on other capital expenditures. In fact, there is already evidence the proposed high school has begun to delay certain capital initiatives.
A few years back, when the BOE first recommended its five-year facilities upgrade, replete with new schools, renovated-as-new schools, and systemwide facility upgrades, the city pushed back, arguing the plan would take Norwalk’s debt service beyond the limits recommended by the rating agencies and thus jeopardize the city’s AAA credit rating. The plan was modified and ultimately adopted, even though the projected debt would remain beyond acceptable thresholds for several years.
After discussions with consultants, the city agreed to finance the five-year plan, even with the excessive debt, because we had an extended-year plan to bring our debt ratios – such as per capita debt or debt service as a percentage of operating expenses – back to acceptable levels. Which means our debt service might still be above standard benchmarks. Which further means construction of the high school might require another debt-reduction plan to pass muster with the rating agencies.
Predictably, the Finance Director’s 2020-21 capital budget recommendation addresses the importance of controlling the overall amount of debt the city is carrying, which determines what we can afford to bond. It’s fair to assume that, without the $50 million expenditure for the new high school, his 2020-21 recommendations would have been considerably different.
Why else would the Finance Director not recommend funding the desperately needed Silvermine driveway project, cafeteria renovations at Naramake and Nathan Hale, a substantial portion of funds for curriculum material, critically needed security enhancements, the entire capital repairs account, and the entire instructional technology request. And it makes little sense to delay purchasing furniture for the new school at Ponus.
There are other issues besides debt service to consider:
First and foremost is the actual cost of the new high school. In December, when the initiative was first announced, the price tag was said to be $200 million. But two months later, the Finance Director’s capital budget recommendation pegged the cost at $225 million. And right now, the BOE is working with a consultant to come up with a real price tag, one based on the educational specifications of the school. We should keep our fingers crossed.
Secondly, a variety of questions have been raised about the new school’s impact on future operating budgets. The addition of 200 out-of-district students to Norwalk High will require teachers (with salary, insurance and pension costs), increased expenditures on technology, curriculum material, custodial services, as well as basic maintenance and utilities. This could (and I stress “could” because it is not clear how, or even if, the two-way “student seat exchange” program will work) add a significant amount to the city’s operating budget.
Norwalk’s student population is increasing rapidly, which accounts for much of the increase in the BOE’s most recent operating budget request. In this context, there needs to be absolute clarity on the operational impact of 200 out-of-district students. (In Norwalk, schools receive direct per pupil allocations; the allocation for high schools is about $8,500 per student. It is about one-third higher for English Language Learners and Special Education students.)
Many residents are aware of the long-term operating expenses associated with the much-needed construction of the four new/renovated-as-new schools in the board’s five-year facilities plan. The same goes for the proposed construction of a new Cranbury School. However, unlike the Norwalk High School project, these facility plans were predicated on the long-overdue need to address overcrowding and future increases in student enrollment.
As city agencies discuss the Norwalk High School project, it would be worthwhile to carefully examine its impact on the city’s long-term debt service, which should not exceed 10 percent of overall expenses for a sustained period. It would also be beneficial to nail down the additional operating costs taxpayers would have to bear should the new high school be built.
Bruce Kimmel is a former Common Council member who led the Finance Committee and a former Board of Education member.