Edison BOE Schedules Referendum on Borrowing $18.6 Million to Rebuild School Destroyed in Fire

EDISON, NJ—The Edison Township Board of Education is expected to vote tonight to hold a special election to be held on March 10,  for consideration of a bond proposal to fund the replacement of James Monroe Elementary School, which was destroyed by fire early last year.

The school board meeting is in South Edison at the Washington Elementary School at 7 pm (on January 28), and is sure to move this unique referendum forward.

Then, on March 10, Edison voters will decide  whether or not to approve borrowing $18,633,862 to fund the new elementary school, including furniture, equipment and site work.

The $18.6 million figure is the difference between the $28.1 million cost to rebuild the school and insurance proceeds of just under $9.5 million offered by the New Jersey School Insurance Group (NJSIG).

“For the average home [valued at] $176,000, the cost is $21 a year for 30 years,” said Dan Michaud school district business manager, according to a report on TAPinto Edison.

But officials hope they can bring that number down by negoitating for more insurance money from NJSIG, and pursuing claims against a former janitor who accidentally started the fire with a cigarette.

In a letter to parents and guardians sent home with students on December 15, Superintendent of Schools Richard O’Malley wrote, “The NJIG is $19 million short in their financial promise!”

He noted that most of their communications arguing that the new school can be built for $9 million has been “greatly lacking in detail and constructive dialogue.”

“The NJSIG has expressly indicated that the board in not required to put fire sprinklers in the new school… I want to illustrate to you how unreasonable the NJSIG’s position has been when it won’t even pay for sprinklers in a school that was burned to the ground,” says O’Malley, in the notice.

Last month the school district filed a lawsuit against the NJSIG in Middlesex County Superior Court, hoping to force it to pay for a larger portion of the cost to rebuild the school.

“We will continue to pursue the lawsuit, but in the meantime we have a school that has to be built,” added BOE President Veena Iyer, according to the TAPinto Edison report.

If NJSIG is ordered to pay the board of education more, any additional proceeds will “be used to pay direct costs of the project and to reduce the bond authorization or shall be transferred to the debt service fund to pay principal of obligations issued under [the] bond proposal,” according to the proposal.

“That suit will continue even if the borrowing is approved, but it could take months or even years to be resolved — as will efforts to make the custodian responsible for the fire, Jerome Higgins, pay restitution,” reads a report on NJ.com.

The proposal notes that the final eligible costs for the project approved by the NJ Commissioner of Education are just under $9.7 million, and that the “State debt service aid percentage will equal 40% of the annual debt service required to finance the final eligible costs of the project… aid is estimated to exceed $3.87 million.”

But, state funding will only be available if the referendum passes, according to the proposal.

However, the board is required to install the sprinklers (in a newly constructed school) because it is a State regulation, says the notice.

O’Malley feels the referendum is the right action, and thinks the district will win the lawsuit.

“I believe we have a very robust legal case against the NJSIG and we will prevail in a court of law,” O’Malley told NJ.com.

If voters do not approve the referendum, the district has an alternative strategy.

“The township of Edison can borrow money on its own, which the district cannot do. District officials have approached town leaders, asking to go out for a bond on their behalf if the taxpayers vote down the referendum.

The township council would need to approve the bond, but it wouldn't be subject to a town-wide vote,” reports nj.com.

However, there are downsides to the backup plan.  The district would lose out on the state aid, and construction could be delayed.

"If it's the town that borrows the money, and not the school district, the average homeowner in Edison is looking at a $25 annual increase in taxes,” reads the NJ.com report.

There will be 33 places to vote throughout Edison on March 10, assuming the board votes to schedule the special election.

Dave is an award-winning business reporter who has authored over 200 articles for New Brunswick Today.