School Board Considers Position On Interest Swap Agreements

The State College school board may try to keep other Pennsylvania school districts from entering interest-rate swap agreements like the one now saddling State College.

At a meeting Monday night, board member Jim Pawelczyk suggested that the board ask the state School Boards Association to lobby for a statewide ban on such agreements — at least those involving public school systems.

His suggestion was brief and came late in the four-hour meeting. No board members offered any initial objections to the idea; they agreed to take up the matter at their next meeting, on June 28.

A former school board agreed to the interest-rate swap arrangement with the Royal Bank of Canada in April 2006, when the district was planning for a high school improvement project that would have cost more than $100 million — including at least $53.9 million in borrowed funds. The swap agreement was intended to limit interest costs.

But that high school project was halted over community objections, and the district now has no immediate need to borrow that much money. Terminating the swap agreement could cost as much as $8 million — or more — depending on fluctuations in interest rates.

In February, the school board agreed that it would automatically terminate the agreement if the cost to do so were to slip to $5.5 million or less, following interest-rate trends.

On Monday night, though, without much discussion and no dissent, the board agreed to rescind that automatic trigger. The district’s business director, Jeffrey Ammerman, said the move will allow the district to continue working with special legal counsel to resolve the matter.

The board voted May 24 to hire a South Jersey- and Philadelphia-based law firm to review potential litigation against the Royal Bank of Canada. That firm, Montgomery, McCracken, Walker and Rhoads, is to be paid no more than $12,500 for the review.

In other news Monday night:

• Board members heard an administration proposal to begin charging State High graduates a modest fee for copies of their student transcripts. The fee would be $5 for official transcripts and $3 for unofficial transcripts. That would cover most of the district’s mailing and processing costs, said Jeanne Knouse, director of student services. The district processed more than 730 student-transcript requests in 2009, according to the district.

• The board approved the creation of a new 11th-grade math class for students who struggle with the subject.

• Superintendent Richard Mextorf said a community committee reviewing the elementary-level math curriculum has extended its timetable. Originally, the group was to have met four times. It now will meet eight times, Mextorf said. It’s still expected to deliver curricular recommendations to the board this summer, but it’s taking a broader approach in developing proposals for implementation not only this fall but also in the 2011-2012 school year.