Manassas officials are considering a plan that could accelerate the construction of a new Jennie Dean Elementary School ahead of the timeline laid out in the city’s most recent capital improvement plan.
The capital plan currently calls for issuing the estimated $63 million in debt in 2026.
Although the City Council and School Board have not agreed to move the new school building up, both groups say they are committed to replacing what is the oldest of the city’s nine public schools.
The city’s proposed budget for fiscal year 2022 includes $6 million for the school division’s debt service, $500,000 more than will be needed for payments on previously issued debt. That surplus, according to City Manager Pat Pate’s plan, would go into a reserve and be increased by 2% annually. Then in 2026 – the year by which the division’s facilities management staff has said the school will need to either be replaced or begin expensive improvements – enough money should be set aside for the city to issue the necessary bonds without raising taxes or hurting its credit rating.
But at a joint budget discussion between council and school board members earlier this month, another idea was floated. School Board member Tim Demeria suggested that the bodies could save money if the timeline is accelerated and the debt’s term is extended beyond the city’s typical 20-year cycle.
The plan would depend on the division being able to use some of the $10.1 million it will receive from the American Rescue Plan for the new school. It’s unclear whether that will be possible, but Demeria said it would be a way for the division to save money between annual debt service and lower construction costs (the projected $63 million cost assumes inflation in construction costs between now and 2026) that could be put back into school operations.
“My biggest fear in all this … is our operating [budget],” Demeria told InsideNoVa. “Staff can do a decent job in an indecent building. A poor staff can’t do anything in a pretty building. So I know we desperately need Dean, but not as desperately as we need staff.”
A presentation at the budget meeting from Davenport & Co., the city’s financial advisor, included information about the city’s strong credit rating and best practices that can be applied to keep the ratings agencies happy. The advisors said the typical 20-year capital debt term – in which 50% of the debt is paid off in the first 10 years and the other half paid over the next 10 – was valued by the ratings agencies, but that it wasn’t likely that moving to a 25- or 30-year term, as used elsewhere, would result in a downgrade from the city’s AA1 and AAA ratings from Moody’s and Standard & Poor’s, respectively.
But Councilmember Mark Wolfe said that the 20-year cycle worked well for the city and its schools, allowing for the city school system to take on a major capital project about every 10 years. The last school to be built, the $38 million Baldwin Elementary, opened in 2016.
“Every 10 years, the debt falls off. And because of what’s being contributed to debt service, we can absorb another big chunk,” Wolfe said. “Maintaining that 20-year debt, I think, is really critical. Because once you get behind … it’s really hard to get out from under that. The only way you get out from under that is A, defer [new construction], or B, raise taxes.”
Members of both governing bodies expressed appreciation for what they described as an open and productive relationship between the two, which hasn’t always existed. School Board Chair Sanford Williams said that he’s been a personal friend of new Mayor Michelle Davis-Younger for some time now, making working together easy. But regardless of the exact timeline for the new Dean construction, the two boards disagree on exactly who should control the $500,000 surplus for capital spending.
In the past, former Mayor Hal Parrish and members of the council have accused the school board of not keeping excess debt service money for future capital projects, instead moving the money to school operations. City allocations to schools have typically come in one lump sum, but the council is pushing for a memorandum of understanding that would stipulate that the money be used for the future Dean replacement.
School board members signaled openness to such an agreement, but Demeria said the board only cut into its debt service to keep teacher salaries competitive when city and state allocations were kept flat. And future city councils, he said, could see this as precedent for more closely dictating how the division uses its allocation.
“This could be a snowball that’s on top of the hill right now,” he said. “Some people will say we robbed debt service for our operating [budget]; we did not. We’ve always gotten a lump sum and we pay our bills.”
The question will be settled before the city finalizes and adopts its budget in May, but both sides agreed that their discussions had so far been collaborative and productive.
“We want to get this school built and we want to keep doing what’s best for our kids,” Williams said.