The Huntington School District’s long-term debt continues to sink. The current amount is believed to be among the lowest of any comparably sized district on Long Island.
The district has long favored a pay-as-you-go approach to financing capital improvements and pension costs and has steadfastly adhered to a conservative budgeting philosophy.
A review of the district’s latest financial statements dated June 30, 2016 reveals the district has a low level of long-term debt, which has declined dramatically in recent years.
Entering the current school year, Huntington owed just $1,885,000 in principal and $429,900 of interest for a total debt as of July 1, 2016 of $2,314,900.
“The district’s latest underlying, long-term credit rating from Moody’s Investors Service is Aa1,” according to an external audit that analyzed Huntington’s finances at the close of the 2015/16 school year. “The district’s outstanding serial bonds at June 30, 2016 are less than one percent of the district’s [legal] debt limit.”
The district retired more than $230,150 of long-term debt and interest during the 2015/16 school year. Another $230,500 will be paid off during the current fiscal year, $225,700 in 2017/18, $230,900 in 2018/19, $230,800 in 2019/20 and $228,800 in 2020/21.
The total debt will continue to plummet each year through the 2025/26 school year. By June 30, 2026 the district will have completely extinguished its current long-term debt. The district carried out a bond refunding in April 2015, which reduced the interest rate on its long-term bonded debt from between 4.125-4.25 percent to an average of 2.21 percent. The refunding resulted in interest savings of nearly $200,000 over the remaining years of the debt.
Huntington has dramatically reduced its debt in recent years. As of June 30, 2009 the district had a total bonded debt of $6,370,000. That figure declined to $5,465,000 in 2010 and $4,515,000 in 2011. As of June 30, 2012 the district’s bonded debt stood at $3,525,000 and then dropped by more than $1 million over the following year.
“We have managed debt very responsibly in recent years, which has contributed not only to reduced interest expenses but also to the district’s favorable Moody’s and state comptroller fiscal stress ratings,” Huntington Superintendent James W. Polansky said. “This will be particularly important as school districts, in general, face fiscal uncertainty in light of a tax cap that is likely to be well below two percent for 2017/18 and little guarantee from the state in terms of future aid allocations. Additionally, the district is also facing costly capital improvements, including roof replacements in the years to come for its buildings that are beyond 50 years old.”
While there has been regular turnover on the Huntington School Board over the past three decades, trustees have maintained a general dislike for increased debt levels and or budgetary gimmicks and wildly optimistic fiscal forecasts.
Trustees have allocated millions of dollars to finance renovation and reconstruction projects through voter approved capital reserve funds. By utilizing property taxes already paid, the district has saved taxpayers millions of dollars in debt service while still addressing Huntington’s capital project needs.
During the past year, the district was also able to prepay and retire $1,112,341 of installment debt related to a long-term energy performance contract. The prepayment cut the contract by many years and allowed the district to avoid future interest costs associated with the debt.