RSU 19 considers $3.6M loan to address funding crisis

Posted Oct. 03, 2012, at 7:39 p.m.

NEWPORT, Maine — Voters from the eight towns that make up Regional School Unit 19 will have the opportunity to consider putting a $3.6 million loan on the November ballot to address the school district’s funding crisis.

The district’s new superintendent, Greg Potter, discovered this summer that due to serious errors in previous budgets, RSU 19 may run out of money before the end of the year.

RSU 19 will hold a public meeting in the Sebasticook Valley Middle School gym in Newport at 10 a.m. Saturday, Oct. 13. At the meeting, registered voters in Corinna, Dixmont, Etna, Hartland, Newport, Palmyra, Plymouth and St. Albans can consider adopting a proposal to allow the loan to be considered by voters in November.

Potter said a “Plan B” strategy also will be discussed in case the loan is not approved.

The $3.6 million loan, which was approved by the school board on Sept. 25, would be a 10-year general obligation note . The figure also includes the $1.5 million revenue anticipation note, which would be converted as part of the general obligation loan. Typically, revenue anticipation notes must be paid back in full at the end of the school year.

Potter explained how the 10-year loan would affect each town’s mill rate.

St. Albans would see the biggest change at a 0.789 mill rate increase for the first year of the loan. Corinna would see an increase of 0.519, with Dixmont at 0.288, Etna 0.293, Hartland 0.63, Newport 0.545, Palmyra 0.581 and Plymouth 0.483.

A mill would cost a homeowner with a $100,000 house $100 on his tax bill.

Etna and Dixmont are carrying less of the loan because SAD 48 had no debt when it merged with SAD 38 to form RSU 19. SAD 38 did have debt when it merged.

The total interest rate of the 10-year loan would be $567,000.

About $1 million has already been shed from the school district’s budget, said Potter. However, a loan is still needed in order to avoid drastic cuts and further spending freezes.

“If [the loan] fails, we will go forward and make cuts. Some of those cuts are going to be very unpopular and very difficult, but the reality is it will have to happen,” said Potter.

Even if the loan is shot down by voters next month, Potter said another budget will be brought to voters.

“We’re kind of structuring it in such a way to allow the community to make decisions on smaller cuts rather than going nuclear on cutting,” he said. “Cutting over $3 million in one year just isn’t going to work. It will be very destructive.”

Potter said the school district will see drastic consequences if voters don’t approve a loan.

“I just don’t see how that’s going to be a positive in terms of our programming for our students, graduation rates, attractiveness to attend our schools and willingness for faculty and employees to be here,” Potter said. “Some are concerned about the overall circumstance and reputation of the district as the place to be. We have to think about all those things in terms of a solution.”

The first part of the meeting on Oct. 13 will be to present the loan proposal and to vote on moving it to the Nov. 6 ballot. The second half will be to discuss possible cuts in the event the budget doesn’t pass. Potter asked residents to bring ideas and discuss them.

“We have some suggestions [on possible cuts],” said Potter. “We also want some public input on that.”

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