Two sentences in Governor Lincoln Chafee’s proposed 2013 budget throw a little rain onto what had become a sunny story for East Greenwich: state reimbursement of school construction spending. Chafee's budget would hold reimbursement for projects such as the new Cole Middle School to 35 percent, instead of increasing to 40 percent in 2013 .
So, under Chafee’s new budget plan, instead of getting a check from the state for $40,000 for every $100,000 paid for the new Cole, East Greenwich would get $35,000. While $5,000 may not seem like a lot, when multiplied by the actual cost of the school — $32 million — that figure grows to $1.6 million.
East Greenwich voters approved spending up to $52 million for a new middle school and other school construction projects in November 2008. The original reimbursement calculation had been that the state would return 30 percent of Dept. of Education-approved construction costs. That figure increased to 35 percent and then 40 percent between 2008 and 2011.
The economic downturn , which prompted school and town officials to . Part of the calculation in passing those additional projects had been the 40 percent reimbursement. As Town Councilman Mark Gee said last fall : “I love a good discount. Forty percent is a good deal.”
Ultimately, under this latest plan, the state would still pick up more than a third of the cost of the new Cole and several substantial improvements at East Greenwich High School (including the science labs, roof, entrance, and library).
But it increases the town’s anticipated debt burden just when it looked as if a positive perfect storm of events was conspiring to ease it. Last month, the town got a very low interest rate on school construction bonds it sold as well as a $3.6 million premium (i.e. give back) on the sale.
The state reimbursement only takes place after the town makes a bond payment, so the low interest rate will continue to aid the town. Depending on what happens to Chafee’s budget, EG just may not see as much money returned to its coffers over the life of the bonds.
“From my perspective, I feel very strongly,” said Supt. Victor Mercurio about Chafee’s proposed change. “We went before elected officials who made decisions on behalf of the community based on that percentage and to have [the state] go back and to say, ‘Oh, by the way, it’s five percent less than you anticipated,’ I don’t think it’s fair, based on the due diligence that we did.”