The Fox Chapel Area School District has become aware of information being circulated in the community that misrepresents the school district’s debt. As a district that has long prided itself on its fiscal sensibility, we feel that it’s imperative to correct this mischaracterization. In fact, the district continues to have an AA+ rating from Standard & Poor’s.
The information states that Fox Chapel Area’s debt has risen from about $55 million in 2015 to nearly $264 million in 2017, citing figures from the total debt report from the state auditor general. That is, frankly, an oversimplification of the district’s financial picture and is unfair and misleading without the appropriate context.
Until the 2015-2016 fiscal year, the state did not require school districts to include pension liability in a district’s annual financial report. Therefore, all districts then had to include their allocation of the Public School Employees’ Retirement System (PSERS) pension liability. Fox Chapel Area’s pension liability in 2016-2017 was $179 million, which accounted for the appearance of a large jump in debt. All school districts’ Statements of Indebtedness would show a corresponding jump.
It’s important to note that pension liability is NOT the same thing as borrowing debt. Simply put, you can pay off debt. You cannot pay off state-allocated pension liability.
It’s accurate to say that the district’s borrowing debt rose from approximately $50 million in 2015 to $74 million in 2017 due to the construction of the new Kerr Elementary, as well as other capital improvement projects.
We hope this gives you a clearer understanding of the district’s debt, the way it is reported, and how the state’s reporting requirements changed between 2015 and 2017.