Pennsbury, for its part, did push to get the work finished albeit softly, but the report still landed in November — just in time for Thanksgiving, when most taxpayers are more focused on stuffing turkeys than digesting balance sheets. Because nothing says “timely financial oversight” like serving up last year’s numbers as leftovers at the holiday table. Transparency delivered, but only after a marathon delay that makes even cold cranberry sauce look fresh.

The Good

Despite the tardiness, the audit does contain some bright spots.

First, the District’s General Fund balance increased by $1.17M, ending at $20.43M. That’s a healthy cushion, representing 7.93% of the 2024–25 expenditure budget — just under the state’s 8% cap. Importantly, the District didn’t need to dip into reserves to balance the budget, meaning revenues covered expenditures. In the world of school finance, that’s a win.

Second, the District’s overall net position improved by $13M. Governmental activities gained $12.96M, while business-type activities (like food services) added $52K. Even though the District remains in deficit, this marks progress. Pension liabilities also ticked down slightly, easing long-term obligations.

Finally, the auditors issued an unmodified opinion — the gold standard in audit language. No material weaknesses, no compliance violations. For taxpayers, that means the numbers are reliable, even if they’re not pretty.

The Bad

The bad news is that Pennsbury’s balance sheet still looks like a cautionary tale.

The District’s net position remains deeply negative at $(297M). Liabilities and deferred inflows outweigh assets and deferred outflows by a staggering margin. While the $13M improvement is welcome, it’s like patching a pothole on a collapsing bridge.

Liquidity is another sore spot. Current assets fell by 32%, dropping from $111.5M in 2023 to $75.8M in 2024. Much of this decline reflects capital spending, but it leaves the District cash-light and vulnerable to unexpected shocks.

The Capital Projects Fund also took a beating, dropping by $37M due to planned construction. That left only $605K restricted for future projects. In other words, the District spent heavily on facilities but now has little left in reserve for the next round of capital needs.

The Ugly

The truly ugly part of the audit is the structural burden of debt and pensions.

General obligation debt stands at $177.6M, while the actuarially determined net pension liability is $305.8M. Together, they account for over 86% of total liabilities. These obligations aren’t going away — they will continue to weigh down the District for decades.

The unrestricted net position deficit is $268M. That’s the portion of the balance sheet not tied to capital assets or restricted funds. In plain English: the District owes far more than it owns, and the gap is widening.

Even with operational surpluses, the District is structurally underwater. The audit confirms what many already suspected: Pennsbury is managing the short term reasonably well, but the long-term picture is grim.

The New Pennsbury HS Impact

Now let’s layer in the school district’s Taj Mahal project for which an Act 34 Hearing was recently held: a brand-new high school, financed with $270M in new debt. What will this new luxurious building mean for taxpayers?

Debt Service

At 4% interest over 30 years, annual payments would be about $15.6M. Over the life of the bonds, total payments would reach $468M, including nearly $198M in interest. But let’s be honest — 4% is an unlikely rate in the current lending environment but the foundation metric the district and its financial advisors have utilized in estimates. With municipal borrowing costs elevated, Pennsbury will almost certainly face rates closer to 5% which could be refinance downward at a later date.

At 5%, the math gets uglier: annual payments climb to roughly $18.2M, and total payments balloon to about $546M. That’s nearly $266M in interest alone, meaning taxpayers would spend almost as much on financing costs as on the high school itself. The difference between 4% and 5% is not just a rounding error — it’s an extra $78M burden over 30 years, spread across the community.

Taxpayer Impact

Pennsbury has roughly 25,000 taxable parcels to our best knowledge. Divide the $15.6M annual debt service by 25,000 parcels, and each parcel would need to contribute about $624 per year. That’s on top of existing taxes and increases being placed upon resident for actual daily school operational costs.

Expressed as a percentage, $15.6M equals 6.1% of the General Fund budget. So taxpayers would face an effective 6% annual tax increase to sustain the new debt while maintaining the 7.93% reserve ratio. Over three decades, the cumulative burden per parcel would be about $18,720. For the community as a whole, the total tax contribution would be $468M.

The Bottom Line

A new high school would certainly be a landmark investment, but it comes with a heavy price tag. The average homeowner would pay an extra $624 annually for 30 years, nearly $19,000 in total. For a District already carrying massive pension and debt obligations, this project risks pushing Pennsbury from “structurally challenged” to “financially precarious.”

The challenge isn’t just the annual tax bill — it’s the way the balance sheet would tilt. Adding roughly $270M in new debt would nearly double Pennsbury’s general obligation liabilities, pushing total long‑term debt well past $450M. When combined with the existing $305M pension liability, the District’s obligations would exceed $750M. Even though the new high school would appear as a capital asset on the books, the asset‑to‑liability ratio would deteriorate sharply: liabilities would balloon far faster than assets, leaving the District even deeper in negative net position.

In practical terms, Pennsbury’s already weak asset coverage — just $214M in assets against $559M in liabilities — would worsen. With the new debt, assets might rise to around $494M (reflecting the new building), but liabilities would surge to nearly $839M. That means for every dollar of assets, the District would carry about $1.70 in liabilities, compared to $1.30 today. It’s a structural imbalance that no amount of short‑term operating surplus can mask, and it underscores how the high school project would shift Pennsbury’s financial posture from strained to outright leveraged.

Closing Thoughts

The audit may have arrived late, but its message is clear: Pennsbury is balancing today’s books while mortgaging tomorrow’s future. Adding $270M in new debt for a high school would shift the burden squarely onto taxpayers, who would be paying for decades. The question isn’t whether the District can build it — it’s whether the community can afford to live with the bill. This become especially concerning as township and county tax rate increase are also expected to rise significantly. As previously reported here at PSD411, over 4% of Falls Township residents were delinquent in their school tax payment, which equates to 1 in 25 families at risk of losing their homes for failure to pay taxes.

While the audit confirms Pennsbury’s short-term operational stability, it also reinforces the long-term structural challenges that credit agencies like Moody’s monitor closely. The District’s persistent net position deficit, heavy pension obligations, and declining liquidity are all red flags in the eyes of bond analysts. Although the unmodified audit opinion and reserve compliance are positives, the overall financial posture remains fragile. If Pennsbury proceeds with a $270M high school project without a clear revenue offset, Moody’s could interpret the move as a credit-negative event — potentially triggering a rating downgrade or outlook revision. That would raise future borrowing costs and signal to investors that the District’s fiscal flexibility is narrowing. In short, the audit doesn’t just reflect the past — it sets the tone for how Pennsbury will be judged going forward.

The post Pennsbury’s Audit: Better Late Than Never? first appeared on Pennsbury411.

RTKs Confirm Falls Residents Are Hurting

On August 18, 2025, Pennsbury resident Robert Abrams filed a Right-to-Know request seeking information on school tax delinquencies, citing concerns raised during committee sessions and prior School Board Action Meetings. Community frustration has been mounting, with residents voicing alarm during public comment periods and across social media—particularly in response to news about the new Pennsbury High School building. Many argue that tax hikes are spiraling out of control and far outpacing local wage growth. Nevertheless, at its June 2025 meeting, the District approved the maximum tax increase permitted under Act 1.

Abrams RTK Request asked for the following data:

1. Listing and all available information (parcel number, owner, address, amount in arrears etc.) for all Pennsbury School District resident properties moved to Sheriff’s Sale due to non-payment of School Taxes between the dates of July 1, 2023 and inclusive to August 17, 2025.

2. Listing and all available information (parcel number, owner, address, amount in arrears etc.) for all Pennsbury School District resident properties currently in arrears for non-payment of school taxes not as yet foreclosed on or sent for Sheriff’s Sale as of August 17, 2025.

As reflected in the request, Abrams sought the information before additional delinquencies would have been recorded due to non-payment in September 2025. The metadata from the exported file indicates that the data was generated on September 21, 2025. Full details of Abrams’ submission are publicly accessible via the Pennsbury transparency portal: https://pennsburyschooldistrictpa.nextrequest.com/requests/25-99

What Does Pennsbury’s Response Reveal?

Documents released by the Pennsbury School District reveal that 480 properties are currently delinquent in their school tax payments. Of those, 12 are in active proceedings for seizure or sale by the Bucks County Sheriff’s Department. Notably, 413 of the delinquent properties—representing a staggering 84%—are located in Falls Township. By contrast, Falls Township accounts for roughly 45% of Pennsbury’s total taxable parcels, according to prior Right To Know records..

PSD411 reached out to Falls Township Tax Collector Kim Scarpiello, who recently spoke at Pennsbury’s Act 34 Hearing. In her remarks, Scarpiello urged the District to reconsider its approach to the new high school project, citing firsthand experience with residents struggling to meet their tax obligations. She confirmed that Falls Township has 10,033 taxable parcels contributing to school taxes. Based on the data, approximately 4.12% of property owners in Falls are behind on payments—placing them at risk of losing their homes if they cannot catch up. Put plainly: one in every 25 property owners in Falls Township is delinquent. That means someone on your street may be facing the threat of foreclosure due to unpaid school taxes..

Below is a copy of the records obtained by PSD411. To show respect for the privacy of affected homeowners, all personally identifiable information has been redacted. The data shown reflects only the amounts of outstanding taxes owed to Pennsbury.

A Tipping Point for Pennsbury: When Tax Policy Threatens Community Stability

The data is no longer abstract—it’s personal. With one in every 25 Falls Township property owners now delinquent on school tax payments, the consequences of unchecked tax increases are playing out in real time. These aren’t speculative fears or partisan talking points; they’re lived realities for families facing foreclosure, retirees on fixed incomes, and working-class residents whose wages haven’t kept pace with Pennsbury’s fiscal demands.

The compounding effect of annual maximum tax hikes—layered atop a looming 100%+ township tax increase for Falls Township residents to offset the landfill’s closure—creates a financial squeeze that many households simply cannot absorb. When tax policy outpaces wage growth, it ceases to be a tool for public investment and becomes a mechanism of displacement. If current trends continue, Pennsbury risks hollowing out its own tax base, destabilizing neighborhoods and eroding the very community it seeks to serve.

This is no longer a debate about school buildings or budget line items—it’s a reckoning with the human cost of fiscal decisions. The question now is whether leadership will acknowledge the warning signs and recalibrate, or whether residents will be left to bear the burden alone.

The post Over 4% of Falls Residents Behind On School Tax Payments first appeared on Pennsbury411.

How Does Pennsbury Compare To Bucks County School Districts?

To grasp the impact of Pennsbury’s tax increases on the community, it’s essential to compare its millage rate trends with neighboring school districts. The millage rate determines property taxes, with one mill equaling $1 per $1,000 of assessed property value. The chart below illustrates the historical millage rates across Bucks County school districts over the past 15 years, providing insight into how Pennsbury’s tax burdens have evolved in relation to others.

As of the 2024-25 academic year, Pennsbury had the third highest millage rate among Bucks County school districts, trailing only Morrisville and Bristol Township. Compared to similar-sized districts, Central Bucks’ millage rate is 29.5% lower, Council Rock’s is 28.2% lower, and Neshaminy’s is 7.4% lower. Notably, Lower Makefield residents, who contribute approximately 58% of Pennsbury’s total tax revenue, face the highest effective tax burden in Bucks County.

When Did Tax Increases Begin Exploding?

Millage rate increases can stem from various factors. Generally, staff salaries remain relatively consistent, with annual adjustments aligning with cost-of-living increases rather than dramatic fluctuations. As a result, significant millage rate hikes are often driven by overstaffing and capital project expenses, both of which have been notable financial challenges for Pennsbury.

The chart above details that Pennsbury’s 15-year tax millage rate increase ranks as the 4th highest in Bucks County. This ranking was moderated by a period of no millage rate increases from 2010-11 to 2013-14, which coincided with the last academic school years when Republicans held influence on the Pennsbury School Board.

Over the past 10 years, Pennsbury’s tax millage rate increase also ranks 4th highest in the county. However, in the 5 years since COVID, Pennsbury has risen to 1st place, recording the highest tax rate increases among all Bucks County school districts.

According to Kimmy Steffy, Pennsbury’s former lead accountant, during the June 2024 Board Action, maximum Act 1 tax increases are anticipated annually for the foreseeable future. As a result, Pennsbury is likely to maintain its position as the district with the highest tax increases for years to come.

What Is Driving The Highest Tax Increases In Bucks County

Over the past five years, Pennsbury has shown little interest in cost-cutting measures, despite ongoing public concerns raised at monthly school board meetings. The reasons for this lack of financial restraint remain unclear, as the Board and Administration have provided minimal feedback or transparency on why other districts have managed to control costs while Pennsbury continues to struggle.

Two years ago, Josh Waldorf, chair of the Finance Committee, cited the number of school buildings as a contributing factor to rising expenses. However, despite occupancy rates falling below 80% in several buildings, Pennsbury has not pursued additional school closures since shutting down Village Park Elementary in August 2021 to reduce costs.

Since 2010, Pennsbury has seen one of the largest enrollment declines in Bucks County. Over that period:

• Elementary school enrollment has dropped 8.8%.
• Middle school enrollment has decreased 16.2%.
• High school enrollment has fallen 12.4%.
• Overall enrollment is down 11.8%.

It’s important to note that 2020-21 figures were impacted by COVID-related shifts, including increased private school enrollment due to public school closures during the pandemic.

School district revenues come from three primary sources: Local Tax Revenues, State Tax Revenues and Federal Tax Revenues. Due to state and federal funding structures, suburban school districts like Pennsbury rely heavily on local taxes to fund operations. For the 2024-25 school year, 74.3% of Pennsbury’s revenue is generated from local taxes, which are tied to home value appraisals and the school district’s millage rate. Without a change in state and federal funding distribution, this reliance on local tax revenue is unlikely to shift anytime soon.

The primary driver behind rising tax rates is the fixed costs that school districts have limited control over. Among these, pension obligations are a significant financial burden—they cannot be reduced and continue to impact budgets across all districts.

Beyond these non-negotiable expenses, a district’s ability to manage costs largely depends on decisions related to:

• Preventative facility maintenance, aimed at minimizing future repair and replacement costs.
• Staffing levels that are overly focused on the student-teacher ratio.
• Administrative staff expansion or reduction, which affects overhead expenses.

Since the 2010-11 school year, Pennsbury’s student enrollment has declined by 11.8%, yet staff salaries have increased by 46.1%, closely mirroring the 46.7% rise in cost of living over the same period.

These salary figures are based on state-required budget submissions, with:

• Teacher salaries reflected in the Instructional (1000) line item.
• Support staff salaries tallied from line items 2100, 2200, and 2400.
• Administrative salaries drawn from line items 2300 and 2500.

While Finance Committee Chair Josh Waldorf has attributed budget challenges to the number of school buildings, Pennsbury has made little to no effort to reduce staff through layoffs or attrition, despite declining enrollment. As a result, salary costs per student have soared from $12,463 in 2010-11 to $20,650 in 2024-25, marking a 65.7% increase in per-student salary expenditures which significantly outpaces cost of living increases for the timeframe.

What Can Be Done To Stop The Frivolous Spending

Pennsbury’s financial management continues to raise concerns, with uncontrolled spending and a lack of cost-cutting measures putting increasing strain on taxpayers. As of this posting, the Pennsbury School District has yet to release its Audit Report for the 2023-24 school year, leaving critical financial details undisclosed. Additionally, at the April 10, 2025, Finance Committee meeting, the district confirmed it will not seek a Moody’s Report this year—a decision that carries significant financial implications.

The absence of these key financial documents poses serious risks for any new bond issuances, as reduced transparency may deter investors, lower demand, and ultimately lead to higher interest rates—a burden taxpayers will have to shoulder until the reports are finalized.

If the aforementioned issues related to the Audit Report and Moody’s Report concern you, there is an opportunity to attend an upcoming Board Action meeting to let your voice be heard at Public Comment. Budget conversations will be on the Agenda for the April 24th, May 15th and June 19th meetings. All meetings begin at 7:30pm at Fallsington Elementary.

The post Pennsbury Proposing Maximum Tax Rate Increase first appeared on Pennsbury411.

Community Members Confront Facilities Committee

The Pennsbury School Board utilizes sub-committees to assist in overseeing district administration. Members of the Facilities committee include long-standing board members Linda Palsky and Chip Taylor, as well as unelected appointee Donna Petrecco, who is stepping down to pursue a county office position. Pennsbury resident Robert Abrams has raised concerns about the structural integrity of the planned building, citing geological testing results that indicate the soil is predominantly sand, silt, and water. Abrams emphasized that these conditions necessitate a comprehensive reevaluation of the foundation, which is currently designed as a floating slab for the 495,000 square-foot structure. Moreover, he highlighted that the required remediation to prepare the land for construction will incur millions in additional costs, which are not reflected in the current budget forecast.

Abrams shifted his focus to what he views as underestimated cost projections. In previous meetings, he highlighted that high school construction projects at North Penn School District and Perth Amboy School District, designed for similar student populations, had cost estimates more than 30% higher than those presented by Pennsbury. Additionally, Abrams pointed out that the Council Rock School District is considering a new high school to replace its North High School at the same estimated cost as Pennsbury’s project, despite the Council Rock build being 30% smaller in occupancy. Comparatively, Council Rock’s project is estimated at 380,000 square feet for 1,900 students, with an all-in construction cost of approximately $704 per square foot. In contrast, Pennsbury’s all-in cost per square foot is currently projected at around $544. The video below from Council Rock outlines discussions regarding the cost estimates for their new high school.

Pennsbury High School Budgeting Updates Challenged

Pennsbury resident Jennifer Metzger, a professional tax accountant, spoke up to scrutinize the latest projected budget estimates. Metzger highlighted significant discrepancies between earlier budget submissions and the most recent documents, emphasizing the absence of supporting details for the notable changes. She specifically focused on the $6 million reduction in the Natatorium budget line, pointing out that this adjustment was made without any accompanying justification or documentation.

Following Metzger’s public comment, SiteLogiQ representatives presented their revised budget estimates. During the presentation, they frequently referred to the fact that the original budget was inherited from another organization. However, they offered limited details regarding the reasoning behind their budget modifications. Additionally, they acknowledged that Abrams’ concerns about the foundation would likely necessitate a future adjustment to the costing. The SiteLogiQ presentation can be viewed below.

PHS East Building Needs New Roof

As Pennsbury moves forward with plans for the new high school building, critical repairs remain necessary for the existing facilities, particularly at PHS East. D’Huy Engineering presented its findings regarding the roof inspection at PHS East during the recent meeting. The firm outlined several repair options for the Board’s consideration, ranging from a complete roof replacement costing ~$5.4 million—which includes warranty coverage—to a less expensive patching plan estimated at ~$1.1 million, which lacks warranty protection. Online research suggest that the lifespan of a leak path repair can range from 1 year to 5 years, which is why roofers do not offer warranties for such work.

Under the proposed construction timeline, these expensive repairs would be applied to PHS East to ensure its usability for an additional five years. The discussion stretched for nearly 25 minutes, with School Board members struggling to grasp the severity of the issue and raising ineffective questions to both vendors and district administrators.

The newly identified costs are unexpected and were not included in prior budget estimates. During the meeting, there was no discussion regarding the funding source for these repairs—whether they will be drawn from the Capital Projects Fund or necessitate additional borrowing. Regardless of the approach, these repairs at PHS East represent a temporary solution that will ultimately impose a substantial financial burden on taxpayers.

The post New Pennsbury High School Cost Comes Under Fire first appeared on Pennsbury411.

Since 2019, public record documents reveal that the Pennsbury School District Administrators and the School Board have been actively reviewing ways to upgrade the facilities at PHS East and PHS West. Momentum increased in 2023 when a Request For Proposal (RFP) was issued to gather design plans and bid proposals from various architectural firms. The decision to move forward with the RFP was made by a lame-duck Board in November 2023, just before the reorganization meeting scheduled for December 2023.

Background On Pennsbury High School Building Planning Efforts

Public records from Pennsbury show discussions about high school building projects intensifying during a Facilities meeting on September 2, 2021. Audio from the meeting is available in the Pennsbury Meeting Archives. In the meeting, D’Huy Engineering presented three options for consideration: a standalone 9th grade building, a PHS East renovation, and a renovation/expansion plan for PHS West. The projected costs for these proposals ranged from $90M to $110M. Details of the building scenarios can be found on slide 17 of the presentation below.

New Cost Forecasts Double The Previous Estimates

At the November 16th, 2023 Action Board Meeting, D’Huy Engineering presented a comprehensive overview of Pennsbury’s journey towards deciding on a new building. The presentation included the earliest cost projections from 2019 and outlined subsequent iterations. D’Huy provided updated cost estimates for the PHS West renovation/expansion option, initially projected at $99M in 2021. The new estimates indicated a cost range between $185M and $240M, with limited explanation for the significant increase. A brand-new standalone building for grades 9 through 12 was estimated to cost between $235M and $275M.

Remarkably, the cost of the 2021 plan had nearly doubled within three years, and Pennsbury could now potentially construct a new building for a similar price. D’Huy’s only explanation for the cost parity was that it “depends on the intensity of the project.”

Financing Options Keep Wildly Changing

Pennsbury enlisted the services of PFM to provide estimates on financing the building costs. PFM, a long-standing vendor for Pennsbury’s bonds and refinancing efforts, was the sole bidder for the failed Morrisville Merger project, which faced public scrutiny over questionable metrics and incorrect formulas in their forecasts. The Morrisville Merger was ultimately shut down by the Pennsylvania Department of Education, as evidenced by Right To Know requests submitted to the organization.

According to the public record document below, PFM submitted three financing forecasts to Pennsbury throughout 2023, reducing the borrowing needs from $367M to $256M, with limited explanations for these reductions. Considering current annual revenues, Pennsbury’s borrowing capacity is currently limited to $321M based on the debt capacity formula.

What Is Act 34 And How Does It Protect The Community?

Act 34 of 1973, also known as the “Taj Mahal Act,” mandates that public hearings be held for significant construction projects involving new school buildings or substantial additions to existing buildings. This applies when floor space increases by 20% or more. The act requires school districts to justify the need for these projects, provide descriptions, disclose maximum costs, and outline financing plans and tax impacts.

Act 34 prioritizes transparency and public input by ensuring that communities are informed and involved in the decision-making process. Public hearings allow citizens to review and discuss proposed projects, with documentation like floor plans made available for at least 30 days. This ensures that the community can voice concerns, suggest alternatives, and hold school boards accountable for their decisions.

By requiring thorough public scrutiny and a potential referendum if project costs exceed certain limits, Act 34 aims to protect the financial interests of residents. It helps prevent exorbitant spending on school construction without adequate justification and citizen approval. This process ensures that taxpayer money is spent wisely and that new construction projects genuinely meet the community’s needs.

If Your Concerned, What Can You Do?

The answer is simple: attend your monthly School Board meetings to express your concerns about the project. Ask your School Board representative to clarify these questionable forecasts and why the renovation plan was abandoned despite being considered legitimate. Most importantly, when the Act 34 Hearing is scheduled, attend the meeting to ensure the Department of Education hears your concerns. This will help ensure they thoroughly review the cost forecast and prevent the Pennsbury community from being burdened with a partially completed building and the need for another massive tax increase.

The post Will Pennsbury High School Project Get Past The Act 34 Hearing and Referendum? first appeared on Pennsbury411.

Why Does The Price Point Keep Changing?

For those who have been following along, the initial cost estimates for a new PHS building were presented in the Fall of 2021 by D’Huy Engineering (now known as CHA) and KCBA Architects, who were selected to work on the Charles Boehm renovation project. During this period, these organizations provided cost projections, estimating the renovation of PHS West at $100 million. Simultaneously, they estimated the cost of the football stadium at $6 million and the Charles Boehm renovation project at $34 million. Cost overruns on those projects currently stand at 140% and 20% respectively and still climbing. The following is a screenshot of the presentation slide that was entered into public record with the original cost estimates for the PHS Building Project as they considered the Boehm and Stadium projects:

For those who haven’t been following, the change orders for the Stadium and Charles Boehm projects have spiraled out of control. Linda Palsky, Chip Taylor, and newly appointed, unelected Board Member Donna Petrecco have been unable to rein in their reckless spending. At the April 2024 facilities meeting, Taylor suggested putting a canopy at the bus drop-off area out to bid to ensure not a single raindrop falls on our children’s heads. At the most recent January 2025 meeting, the cost for a new centrally located server bank skyrocketed from $680,000 to over $1 million. This decision was made despite the district’s awareness that Charles Boehm’s flat roofs are prone to leaks and were not included in the renovation plans to add peaks, leading to previous flooding issues due to drainage problems. While placing the server bank in the brand-new facility would seem to make sense, it appears that this decision could have triggered the referendum they are trying to avoid. More shocking was the new forecast for the PHS building project that D’Huy bolstered to between $180M to $240M, with no supporting backup on why those cost estimates more than doubled in just 30 months, far exceeding inflationary rates.

So What Is Behind The Constant Reforecasting?

Under PA School Code, our legislators did place into effect legalese protections for PA citizens from the duly-elected, and in the case of Pennsylvania, hand-picked cronies of State Senator Steve Santarsiero whom runs the Democratic Party with an iron first despite deeming Pennsbury unsuitable to send his own children. In the PA School Code there is a math formula that limits how much debt can be accumulate to avoid a School District from heading into outright bankruptcy. The following is the formula:

Three Year Average of Recent Total Revenues * 225% = Total Debt Capacity

The Local Government Unit Debt Act (Act 52 of 1978, reenacting and amending Act 185 of 1972) sets debt limits for all local government units in Pennsylvania. Administered by the Pennsylvania Department of Community Affairs, this Act excludes amounts received as reimbursement from the state for a portion of the district’s debt service, extra state grants (account 7500), and revenue from other financing sources. Act 50 of 1998 amended the limits on indebtedness that a school district may incur without voter consent. Under the current Act, no school district may incur any non-electoral or lease rental debt if the total net principal amount of this new debt, combined with other outstanding net non-electoral and lease rental debt, would cause the net non-electoral debt plus net lease rental debt to exceed 225% of the Borrowing Base.

Additionally, there is Act 34, known as the “Taj Mahal Act,” which aims to curb misconduct by school districts that treat taxpayer dollars as Monopoly money. This will be discussed in detail in a future post, which will also address multiple laws that Pennsbury allegedly violated and the open investigation currently underway at the PA Department of Education.

So here are what the current numbers looks like based on the most current public filings by Pennsbury:

As Pennsbury began the process, they hired a firm called PFM, their go-to vendor for estimating lending needs and initiating bonds. PFM recommended the continued use of “wrapped around bonds,” a financial instrument that allows Pennsbury to structure a payment plan that only pays down interest initially while delaying principal payments. This effectively causes the true cost of any building project to soar because the principal is never being paid down. If you’ve ever heard of a “balloon payment” at the end of a loan cycle, that’s what a “wrapped around bond” is. This leads the lender to constantly refinance the loans because funds don’t exist to make the “balloon payment.” With each refinancing, PFM makes millions.

In the above chart, nearly $34M was financed this year. This was primarily the result of the 30-year bonds taken out for Afton Elementary and William Penn Middle School, on which little to no principal has been paid down. Next up is the Pennsbury West High School renovation, led by Linda Palsky, which cost around $45M. She is spearheading this despite the fact that not a single nickel of that $45M principal has been paid back.

This following is the original forecast for lending presented by PFM in the process:

According to the PFM forecast, Pennsbury was advised to construct a brand new building, which would require an additional $367M in lending, far exceeding the current state limits on debt capacity. Subsequent forecasts from PFM attempted to lower this amount without providing any clear backup on how the revised metrics were determined, as illustrated below:

Miraculously, after months of citizen complaints and reminders of state law, the financing required for the exact same building plummeted by nearly $120M, just ahead of the anticipated Federal Reserve interest rate cuts. Many attribute these changes to the leadership strategy commonly referred to as “Mushroom Management” by our School Administration and the School Board. For those unfamiliar with this term, it humorously means “Keep them in the dark and feed them bull.”

What’s most concerning is if PFM’s original forecast holds true, our School District might only end up building three-quarters of a structure. Similar-sized projects at North Penn and Perth Amboy suggest this estimate is accurate. Without additional financing, our Moody’s Rating could descend to Junk Bond status by 2029. This would likely lead to a referendum, asking taxpayers for more money and potentially imposing double-digit tax hikes, all to avoid leaving the building incomplete.

The post Is The Real Cost Of The New Pennsbury HS Building Really $266M? first appeared on Pennsbury411.

What Is A Moody’s Rating?

A Moody’s Rating Report assesses the creditworthiness of borrowers by assigning ratings to their debts, such as bonds, loans, and other financial obligations. It provides insights into the likelihood of default and the overall financial health of entities like corporations, governments, and institutions. In many ways, it’s similar to a consumer credit report used when you take out an automobile loan or home mortgage. These reports play a crucial role in guiding investors to assess the risks associated with their investments. Ratings can range from high-grade (Aaa) to speculative (C), with various subcategories in between. Moody’s comprehensive analysis includes economic factors, financial statements, market conditions, and qualitative assessments.

The following is a guide to the various ratings by different companies and their generalized classification:

What Happens When Your Moody’s Rating Declines?

A decline in Moody’s Rating can have significant consequences for a government entity. Some of the most influential factors include:

• Higher Borrowing Costs: Lenders may begin to charge higher interest rates on any new debt taken out, reflecting the increased risk of lending more money.
• Reduced Investor Confidence: Investors may see the decline as a sign of financial instability, leading to reduced investment or divestment in a municipality’s or a school’s bonds.
• Restricted Access to Capital Markets: It may become more challenging to issue new bonds or obtain to loans and/or refinancing.
• Impact on Existing Debt: The cost of servicing existing debt could increase if it’s tied to variable interest rates when there is a need for re-financing, especially in cases where wrapped around bonds are utilized.

gnoring these consequences can lead to a severe ripple effect, making financial recovery for the entity more difficult and significantly impacting the community and its taxpayers. For those of us in the Pennsbury community, we need only look to the financial hardships and community decline in neighboring Morrisville Borough. Once a bustling area, Morrisville’s troubles began when its Moody’s Rating dropped to Junk Bond Status.

Is Pennsbury’s Moody Rating At Risk Of Declining?

The short answer is yes. In 2021, after years of significant spending by the Democratic-led School Board, Moody’s issued a warning and downgraded our rating from AA2 to AA3. This downgrade dropped our financial stability below that of the City of Philadelphia. In their report, Moody’s noted that our reserves “are somewhat weaker than those of similarly rated peers” and highlighted that “the district has seen a moderately declining enrollment trend due to demographic shifts that is expected to persist over the long term.” Moody’s also mentioned that the rating could have been downgraded even further if not for “the board’s willingness to raise property taxes, which somewhat offsets a more narrow financial position.” In layman’s terms, Moody’s commended our elected officials for taxing our community at the highest Act 1 level. They advised that due to excessive spending, maximum tax increases would be needed indefinitely to prevent further rating declines, especially considering planned capital expenditures (e.g., the new PHS building).

The following is a copy of this latest Moody’s Report from 2024 for everyone to read:

In addition to the stark warnings about the need to keep raising taxes if spending isn’t curbed, Moody’s also compared Pennsbury’s financial standing to that of similarly sized school districts. In its 2024 report, Moody’s noted that “while Pennsbury’s finances are solid and stable, with a fund balance consistently around 10% of revenue and liquidity at about 19%, these metrics still lag behind those of comparable districts nationwide”. This financial stability is largely due to overtaxing the Pennsbury community by an average of $4 million annually since 2020, except for the COVID-19 year. This “cooking of the books” will be explored in a future blog post, detailing the official Auditor General’s complaint filed by Robert Abrams against Pennsbury School District in September 2023. Similar financial misconduct has recently led to sanctions against the Neshaminy School District. For more details on the allegations against Pennsbury, you can read the news story at Levittown Now, which includes an interesting twist on how they plan to finance the new PHS building without a referendum.

What Does It Mean To My Home Value?

A decline in Moody’s Rating can significantly impact the demand and value of your home. While we’ve seen home values soar in our area since the pandemic, Morrisville Borough did not experience the same increase. If Pennsbury continues its reckless spending and debt expansion, we could face similar consequences. Here’s what could happen:

• Higher interest rates: Lenders may increase mortgage rates to compensate for the higher perceived risk, making borrowing more expensive for homebuyers
• Reduced demand: Higher borrowing costs can reduce the number of potential homebuyers, leading to decreased demand for homes.
• Lower home prices: With fewer buyers and higher costs, home prices may decline as sellers adjust to the market conditions.

Although a Moody’s decision to downgrade a municipality’s rating doesn’t directly affect home values, it creates an indirect ripple effect that impacts the local housing market. Morrisville Borough exemplifies these ripple effects, which Falls Township, Lower Makefield Township, Yardley Borough, and Tullytown Borough are likely to experience starting in 2029 due to ongoing financial mismanagement and a politicized School Board.

Additional Reference Details

For those interested in reading the previous Moody’s Reports which repeatedly advised our School Board to keep massively raising taxes if you continue to refuse to focus on cutting costs, click on the links below to review each report:

Moody’s Rating Report – 2023
Moody’s Rating Report – 2022
Moody’s Rating Report – 2021
Moody’s Rating Report – 2020

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