Financial

We are ONE RUTHERFORD, coming together to support our school system for the students who are educated there, the residents who live in the borough, and the taxpayers who continually invest in the future. The bond-funded plan approved by voters on Sept. 24, 2019 focused on necessary improvements to keep Rutherford’s strength as an outstanding school district, desirable community and competitive housing market.

The Sept. 24 referendum asked voter permission to borrow up to $45,330,478 million, but state aid will reduce the local impact to about $36.3 million. That’s right: Rutherford taxes will contribute about $36.3 million, but the community will get about $45.3 million in school improvements. State funding will be collected and distributed among all school districts where voters approve bond borrowing; this is the only way for Rutherford to get a slice of that pie.

Through its Debt Service Aid program, state funding pays for up to 40% of project costs when they are approved by voters, funded by bond borrowing, and related to educational needs. That state aid makes it financially attractive to pay for certain projects through a bond instead of through the annual operating budget: Instead of paying 100%, local taxes pay as little as 60% of qualified costs.

Additionally, bond borrowing spreads out costs over many years, which can make improvements more affordable the same way a homeowner would borrow for home renovations. The spread-out system means everyone pays at some point, though not necessarily when their own children are enrolled.

For property owners, what is the estimated cost of this voter-approved improvement plan? School district administration relies on professional consultants to calculate the variety of factors that make up an estimate of property tax impact. After state aid is accounted for, the annual cost on a home with an assessed value of $430,270 (the average in Rutherford) was initially estimated to be $326.

BETTER INTEREST Rate Trims $2.2 million from Original Cost Estimate

December 2019

A competitive market led to borrowing terms that are favorable for Rutherford taxpayers, resulting in lower interest costs on a long-term plan to improve and expand the borough’s schools. The bond sale is the second major milestone in this plan, coming after voter approval on Sept. 24.

The Board of Education has accepted the bid with the lowest cost, and it is slightly better than the estimates made before the bond referendum. Estimates hoped for an interest rate of 3.1%, and the most competitive bid was for 2.79% -- a savings of about $2.2 million.

“We know the residents and voters trusted us to be fiscally responsible with this school improvement plan, and we want to communicate key steps as we make progress,” Superintendent Jack Hurley said. “The favorable bond rate is a great starting point.”

Plans include renovating Rutherford High School’s Mortimer wing and modernizing its science labs; creating science labs at Union Middle School; adding critical classroom space at Pierrepont School; and building properly sized gyms at Union and Pierrepont. The complete package of improvements is expected to take more than two years, and the Board of Education is committed to minimizing the disruption on students and staff.

The school district is working with Rockaway-based Parette Somjen Architects and Piscataway-based Epic Management Inc. to fine-tune construction plans and schedules. The wide range of projects will likely be organized into several bid packages, each with its own timeline. Bond financing is the first step, but each project also requires state approval, competitive construction bids, and ordering of supplies before work can start. The earliest project is expected to start in July at Lincoln School, where two second-story classrooms will be built to provide academic and co-curricular program space. In addition to aging facilities that weren’t meeting academic needs, the Rutherford Public Schools district has struggled to serve an increasing number of students.

To make these improvements, the district has voter permission to borrow up to $45,330,478 and pay it back over 25 years. State aid will reduce that local cost by about $9 million. Between initial estimates and the actual cost, the lower interest rate makes a $2,200,256 difference for taxpayers.