School Construction Financial Model

Funding Model - Click here

The City of Stamford intends to fund the local share of the school construction projects described here with a combination of tax-exempt bonds issued by the City and funds from a special cash reserve established by the Board of Finance and Board of Representatives in 2022. This reserve serves two important purposes. First, it ensures that the City has cash on hand to pay construction bills while we await our state reimbursements. Second, it will reduce the amount of debt we must ultimately take on, which will reduce future budgets and debt levels.

So far, the City has set aside $50 million over the last three budgets for School

Construction. The City proposes that we continue to set aside more, up to $120 million by 2029. This will reduce the amount we need to borrow between now and 2032 to $188 million for the projects in the plan, down from $263 million if we stop setting money aside now. The State contribution is expected to be $555 million.

The bonds the City will issue will carry very low interest rates. Even with today's higher interest rates, municipal bonds require interest under 3.5% for Triple-A rated communities like Stamford. Stamford's bonds are typically repaid over 20 years.

Impact on Taxpayers

The impact of the school plan on taxes will be minimal. The increased debt service will be more than offset by declining debt service for all the City's older bonds, so the City's total debt service will remain stable through 2032, when it will resume its decline. Since 2022, the City has also been setting aside between $10 million and $20 million and under this funding model the City will continue that effort for four more years. After that, the City will see a tax reduction once funds are no longer set aside for our future capital program.

High-quality public school facilities are not only important for educational outcomes, but they also positively impact property values. If the new schools in the school building plan are not built, the City and Board of Education will need to invest more in operating costs, maintenance, and various renovation projects to maintain satisfactory school facilities.

Maintaining the special reserve for school construction at the recommended level or greater is necessary to reduce our debt needs and key to keeping long-term impacts on taxpayers low.