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Montessori students present ‘Peggy the Pint Sized Pirate’

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Wilkes-Barre waiting for paperwork before reactivating K9 Chase for duty

<p>HANOVER TWP. &#8212; In a continuing effort to fix financial problems the current administration blames on the previous one, Hanover Area School District filed a petition in Luzerne County Court seeking permission to shift about $6.5 million in short-term debt to long-term debt.</p><p>Solicitor Jack Dean said the move centers on two Tax Anticipation Notes, or short-term loans, taken by the district. The board discovered in May that about $2.5 million from a TAN was taken out for 2016-17. The board took out a TAN for 2017-18 totaling about $6.5 million, using part of it to pay off the old TAN debt.</p><p>But the district has no fund balance and lacks the money to pay off the TAN, now due June 30. Dean said the district petitioned the court for permission to ask the state Department of Community and Economic Development &#8212; which oversees school district debt &#8212; to allow changing the short-term TAN debt to long-term debt paid over 10 years.</p><p>Specifically, the paperwork argues:</p><p>&#8226; The district has struggled with growing budget deficits since the 2012-13 fiscal year, when the deficit was $659,326. Since then it has climbed to $3.6 million in 2016-17.</p><p>&#8226; The school board &#8220;did not discover the true extent&#8221; of the deficit until May 2017. In fact, during the 2016-17 school year, the board was led to believe the district had a surplus of $325,000 when it had a deficit of $3.6 million.</p><p>&#8226; The board changed district management, curbed spending and identified new revenue, but still cannot meet the June 30 due date for the latest TAN, secured in June 2017.</p><p>&#8226; Hanover Area already has the highest property tax rate among Luzerne County&#8217;s 11 school districts.</p><p>&#8226; The school board cannot raise taxes this year to pay the TAN obligation, will not collect enough in taxes to pay it by June 30, and would have to make &#8220;draconian cuts&#8221; to pay it.</p><p>All of which makes the the $6.5 million &#8220;unfunded debt.&#8221; That gives the district the legal right to seek permission to issue bonds to cover the debt and extend the payments. Under state law, a county judge must OK the move. The district must then get a green light from DCED.</p><p>While the court papers seek to issue bonds &#8220;not to exceed $7.25 million,&#8221; Dean said the board expects to issue bonds for no more than $6.5 million. The paperwork cites the higher amount as a cushion in case any problems arise before the bonds are issued.</p><p>Dean pointed out that the board recently refinanced two older bonds to free up about $1.2 million in this year&#8217;s budget. Prior to that change, the district had been paying up to $2.5 million toward debt annually. The refinancing knocked this year&#8217;s debt payment down by about $1.9 million, though it will climb back up to about $1.5 million next year.</p><p>&#8220;Debt service will be about $1 million more next year than this year, but it will still be about $1 million less than we were paying.&#8221; Dean said.</p><p>Converting the $6.5 million owed on the TAN to 10-year debt will increase the debt service more, but it should still be less than debt payments prior to the new administration&#8217;s actions.</p><style>
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<div class="metaInfo"><bylineMeta><p>By Mark Guydish</p><p>mguydish@www.timesleader.com</p></bylineMeta></div><div class="metaInfo"><shirttailMeta><p>Reach Mark Guydish at 570-991-6112 or on Twitter @TLMarkGuydish</p></shirttailMeta></div>

Hanover Area asks court permission to shift $6.5 million debt