In July, Gorham Fayette Board of Education members discussed purchasing bonds to pay off the cost of the newer gymnasium, using money from the contamination settlement with DH Holdings.
At the Sept. 17 meeting, board members heard a second proposal for the settlement money.
District treasurer Angel Adamski said she spoke with a bond counsel who suggested the best approach might be to place the money in a reserve account dedicated specifically for repayment of the construction loan.
The 30-year levy is due to expire in 2028 and board members have stated their intent in the past to use settlement money to help pay off the loan and give taxpayers a break.
Interest earned from cash in the reserve fund would stay in the fund and interest rates are not limited by IRS regulations. With the plan discussed in July—known as bond defeasance—the rate is limited to 4.389 percent. Any amount greater than that is automatically taken by the IRS.
The reserve fund would be set up for semi-annual bond payments instead of collecting money from taxpayers.
One consideration with the reserve fund is the capability of using the fund for general operating expenses, Adamski said. Although the money is earmarked for the gymnasium payments, it could be used for other purposes.
Trustee Fred Stockburger expressed concern about the ability of the school board to borrow from the reserve fund.
“It’s not fair to the taxpayers to place it in a fund that could be borrowed from,” Stockburger said. “If you can touch it, someone will.”
David Brinegar shared his concern.
“If somebody [a future school board] did take the money,” he said, “the county auditor would have to start levying the tax again. I don’t like that.”
The two trustees suggested obtaining a second opinion on the issue.
“She gave us a reason not to do it—you can touch it,” board member Terry Kovar said about the bond counsel.
The board tabled motions to create a reserve fund and transfer $1.5 million to the new fund.