$675M
more borrowed to build schools
Thursday, November 10, 2005 •
BY DUNSTAN McNICHOL • Star-Ledger
Staff
Aiming to keep cash flowing to the
state's school construction program, the New Jersey Economic
Development Authority yesterday approved the sale of $675
million in bonds to bankroll another six months of school
building.
The deal, approved by a unanimous vote,
will leave the state $5.5 billion in debt for the school
program, which has been authorized to borrow and spend up to
$8.6 billion.
Repaying the funds already spent on the
program is scheduled to cost taxpayers $288 million next
year and about $350 million per year through 2021. This move
will add about $50 million a year to that.
The reasons for the new borrowing are
two-fold:
- The state is committed to borrowing
at least $500 million by next March, under terms of a
2003 deal that locked in a 4.29 percent interest
rate.
- The school program, which has been
undergoing a management overhaul since a series of
reports earlier this year found it crippled by waste and
weak oversight, continues to spend about $100 million a
month on 122 current construction projects, and will be
out of cash early next year.
"We cannot issue bonds at the beginning
of the year as the incoming governor is preparing his
budget," said Caren Franzini, the EDA's chief executive
officer.
The new loans will provide enough cash to
keep the schools program running through the first half of
2006, a memorandum on the transaction shows.
The EDA bond issues are permitted under a
2000 law that authorized up to $8.6 billion in borrowing for
the schools program. Officials of the program say they have
already earmarked that full amount for the 122 projects
already started.
Advocates for students in the 31
communities where the state is scheduled to build and repair
hundreds more school buildings have petitioned the
Legislature and state Supreme Court for the authorization to
borrow billions more beyond the original $8.6 billion
allocation.
© 2005 The Star-Ledger. Used by NJ.com with
permission.
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