| Frequently Asked Questions |
$ Project Finances $
Click on the questions below regarding the scope of the Facility Improvement Project to see the answer.
If you have any further questions please contact Mr. Moses, School Superintendent, at 882-1291 or click here for the We’re Listening link on our website.
Obtaining Funds
How will this impact my property taxes?
How can there be no tax increase?
Does this mean my taxes will not increase if I vote for Proposition 1 or Plan A?
Does this mean my taxes will decrease if I vote ‘No’?
How will this impact my state taxes?
What is EXCEL aid?
What percentage of the project is being funded by state aid?
What is debt retirement?
What has been the recent history of property tax increases in the school budget?
How much will Proposition two or Plan B increase my property taxes?
Expenditures
How is the money being spent?
What percentage of the project is being funded by state aid?
What is the DASNY fee?
Why do we have to spend $5.7Million to get $5.0 Million of building work completed?
Are you being conservative in your cost estimates?
How is the cost of the project estimated?
What are some things you are doing to save us money now?
Obtaining Funds
How will this impact my property taxes?
There are two propositions on the ballot. The first is for $5.7million to renovate various portions of each school. This is designed not to increase property taxes. The money will be obtained by EXCEL aid, state aid, and reallocating monies from the current budget. The reallocated monies are currently paying off debt from a past capital project, but this will be paid in full in 2012. The board of education is asking that this money be reinvested in the infrastructure of the school facility.
Proposition 2 – Plan B – can be passed only if Proposition 1 passes. This will increase taxes. The tax levy (the money that the school raises through property taxes) will increase about 0.75% (less than one percent). Any individual's property taxes depend on the assessed value of their home and the equalization rate of the town they live in. For example, this year the tax levy decreased by 3.27% but the tax rate in the town of Galway increased by 0.4% while the taxes in the town of Providence remained the same and the tax rate in the town of Charlton decreased by 2.4%.
How can there be no property tax increase?
EXCEL aid will be used as part of our local share. Although we only get $380,000 in EXCEL aid, if we use that as our local share in a project that is aided fully by the state we can have about $2.2 million from the state without influencing our local property taxes.
The remaining money is currently in the annual operating budget as debt. In 2012, we will pay off some of our existing debt and the annual budget will decrease by approximately $125,000 per year. The Board of Education is asking you to allow this money to be reinvested in the infrastructure of the school for the proposed renovations.
Does this mean my taxes will not increase if I vote for proposition one or Plan A?
This means your property taxes will not increase due to the facilities project. The Board of Education may ask to increase the taxes due to: decreases in state aid, increases in the cost of operating the school, contractual obligations the school has, etc.
Does this mean my taxes will decrease if I vote ‘No’?
If you vote no, your taxes may decrease. Since a portion of the project is funded by reallocating money from retired debt in 2012, if the project does not pass that money could be used to lower taxes (not collected) or it could be used on another expenditure.
How will this impact my state taxes?
The funding of Proposition 1 is from the State of New York. The state budget is approximately $131 billion. Our project is $5.7 milion (Proposition 1). This is approximately 0.004% of the state budget. The state has many revenue sources and the effects on state taxes can not be calculated exactly, but it is estimated to be less than the 0.004%.
EXCEL stands for Expanding our Children’s Education and Learning. This program is fully funded by New York State for new capital projects to improve public school facilities. Every school district received an allocation from the state based on student enrollment. It is a one-time source of funds.
Galway Central School District’s EXCEL aid is approximately $381,988.
This money can only be used for the following expenditures if approved by the voters:
• Education Technology
• Health and Safety
• Accessibility
• Physical capacity expansion
• Energy
This money, by law, can not be used for other uses in the normal operating budget.
What percentage of the project is being funded by state aid?
The State Education Department has stated that due to the fact that the entire project is a renovation, both Proposition 1 and 2, the entire project will be aided at 79%.
Debt retirement is analogous to paying off a mortgage. The school has various debts from previous projects (like the bus garage, the auditorium, and the middle school wing). In 2012, one of these debts (mortgages) will be paid off. The money used to pay debts (make mortgage payments) is added in the annual budget.
Click here to see a graph that depicts the amount of money that the school district will be required to pay in debt service for the upcoming years. Note: the spike in the year 2020 is due to the fact that in that year one of the past projects will not be aided by the state. It is expected that this additional cost will be paid out of reserves so the jump in cost for that one year will be spread over time.
Click here to see a graph that depicts the amount of money that the school district will be required to pay if proposition one passes (dark blue) and if both proposition one and two pass (dark blue and light blue).
What has been the recent history of property tax increases in the school budget?
In the 2009-2010 school year, the tax levy (the money the school collected for property taxes) decreased by 3.3%. The tax rate in the 2009-2010 school year varied depending on what town you live in. The percent change of the tax rate for each town from 2008-2009 school year to 2009-2010 school year is as follows:
Amsterdam -11.4%
Broadalbin -2.2%
Charlton -2.4%
Galway 0.4%
Glenville -3.3%
Milton -5.4%
Perth -8.7%
Providence 0.0%
How much will Proposition 2 or Plan B increase my property taxes?
Proposition 2 is to enlarge the high school gymnasium by moving the front wall (east wall) out approximately 10 feet. This adds an additional cost of $1.6 million to the project. This part of the project will be aided by the state at 79%.
This will increase the tax levy by 0.75% or approximately $70,000 per year.
How this will affect your local property taxes depends on the equalization rate of your town. As you can see above a 3.3% decrease last year caused taxes to decrease from 2.2% to 11.4% and even increase by 0.4% depending on what town you live in.
Expenditures
How is the money being spent?
In a project there are several associated fees. The tables below give the breakdown of where the money goes. (All costs are rounded to the nearest $100,000.)
| Proposition 1: This includes all work EXCEPT the high school gymnasium renovation | ||
| Expense | Cost | Notes |
| Renovation and Incidental Costs | $5.1 Million | This is the cost to due the renovation |
| DASNY | $400,000 | Additional issuance costs for selling bonds via the Dormitory Authority of the State of NY (DASNY) – Rationale: Matching Interest Rate for State Aid reimbursement Purposes |
| Capitalized Interest Expense | $300,000 | |
| Total Estimated Costs: | $5,705,000 | |
Click here to see the information depicted in a pie chart.
| Proposition 2: This includes all work in Proposition one PLUS the high school gymnasium renovation | ||
| Expense | Cost | Notes |
| Renovation and Incidental Costs | $9.0 Million | This is the cost to do the renovation |
| DASNY | $500,000 | Additional issuance costs for selling bonds via the Dormitory Authority of the State of NY (DASNY) – Rationale: Matching Interest Rate for State Aid reimbursement Purposes |
| Capitalized Interest Expense | $400,000 | |
| Total Estimated Costs: | $9,435,505 | |
Click here to see the information depicted in a pie chart.
What percentage of the project is being funded by state aid?
The State Education Department has stated that due to the fact that the entire project is a renovation, both Proposition 1 and 2, the entire project will be aided at 79%.
The Dormitory Authority of the State of New York (DASNY) will bond projects at an interest rate of 4.5%. This allows schools to bond projects at a known interest rate, but they charge a fee for this service (see above tables for associated fees). This fee is the DASNY fee.
If schools can bond their projects on the open market they are able to do so. Currently, interest rates are lower than 4.5% on the open market, but this can change.
Why do we have to spend $5.7 million to get $5.0 million of building work completed?
Associated with the projects are costs to bond the project. The DASNY fee is a fee charged by the Dormitory Authority of the State of NY, if we choose to bond the project through them. This fee is dependent on the bonding amount.
For Proposition 1, the fee would be $370,000, but if Proposition 2 passes, the total fee would be $480,000.
Also associated with the project is the first year’s interest. State aid is not received until the following year so the school district must pay the first year’s debt on their own. To avoid a spike in taxes for one year, schools add this first year cost to the project. This cost for our project is $256,725 (Proposition 1) or $447,458 (Propositions 1 & 2 combined).
The school district may choose to avoid this by using reserves to pay part of this interest expense.
Are you being conservative in your cost estimates?
We believe that our cost estimates are conservative. The estimates prepared by the office of Bernard P. Donegan, Inc (Our bonding agent) make some assumptions.
It was assumed that only 95% of the money spent would receive the 79% state aid. We have had verbal discussions with the state education department (the people who determine our state aid) and they have confirmed that our entire project (Proposition 1 and Proposition 2) is a renovation which is 100% aidable. It was assumed that if both Propositions pass, only 92.4% of the project would receive the 79% state aid.
We assumed that we would use the Dormitory Authority of the State of NY (DASNY) for our bonds at a rate of 4.5%. This adds a DASNY fee ($370,000 for Proposition 1 and $480,000 for Propositions 1 & 2 combined) to our estimates. Recent bond rates are about 4% without going through DASNY. If this is the case when we bond the project then we will not have to pay the DASNY fee and we will have lower interest rate reducing costs. The 4.5% is the maximum interest rate we will have to pay.
How is the cost of the project estimated?
The architecture/engineering firm CS Arch estimated the renovation costs initially. Bovis, a construction engineering firm, made a second independent estimate. Once independent cost estimates were obtained representative from both firms walked through the building with the preliminary plans and finalized the cost estimate.
The cost to bond the project using the renovation cost estimates was done by Bernard P. Donegan, Inc. This includes the estimates of state aid, any associated fees, and the interest expenses.
What are some things you are doing to save us money now?
Several things have been done to save money using the current operating budget. This includes changing the light fixtures in all three gyms, the band room and the chorus room. The new light fixtures provide better lighting, reduces electrical costs due to the fact that are more efficient, quick on and off (don’t need 15 min. to come on as the old fixtures did) and can be put on motion sensors in some cases. It is expected they will pay for themselves in two to three years due to energy savings.
The boilers for the heating system failed in the school and new parts could not be obtained due to the age of the boilers. These were replaced with more energy efficient boilers resulting in savings in fuel costs.
All the equipment in the district has been put on a preventative maintenance schedule developed by the building and grounds director. It is expected that this will increase the life of our equipment and reduce down time.
School bus runs have been reduced to save on bus fuel and wear and tear on the buses. Bus runs are developed using computer software and then tweaked by personnel to ensure safety is maximized.
Elementary school informational papers being sent home are now only sent home with the youngest child only in a family to reduce paper costs.
The district wide mailing list has been verified to reduce the number of district wide mailings and to ensure all households in the district receive the mailings.
Proposition #1 Pie Chart
(pdf file - 20 KB)
Propositions 1 & 2 Pie Chart
(pdf file - 39 KB)
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