The Bethlehem Area School Board's $2 million operating surplus will help pay the initial construction costs of the new Nitschmann MS and a new roof for Miller Heights ES.

At the school board's regular meeting Dec. 15, the board approved moving the surplus to the capital reserve account. Superintendent Joseph Roy said $717,000 of the surplus will replace what was withdrawn from the capital reserve to cover the cost of the roof replacement on Miller Heights.

The Miller Heights roof replacement was identified this year as a high priority capital project. Roy said that in order to complete the design, bid and award the project, the design needed to begin this month so that the replacement can begin next summer. The board approved allowing the school district engineer to prepare and solicit bids for the Miller Heights project.

The rest of the $2 million operating surplus will go toward the Nitschmann construction. Roy said the surplus will help decrease the amount the school district will have to borrow later.

The school district is also pursuing funds through the state's Planning and Construction Workbook reimbursement program. The state set a moratorium on accepting new PlanCon applications in October 2012, due to a backlog of projects. That moratorium has since been lifted, but the backlog remains. In a 2013 report to the state's general assembly, the state needed about $1.2 billion just to cover the projects in the approval process. BASD is hoping to receive $7 million in reimbursement for the new middle school.

Roy said the district has been able to grow its capital reserve fund in the last four years from zero to $18 million. Through this accomplishment, the district's credit rating has been upgraded, he said. A good credit rating helps school districts get approval for loans at lower interest rates.

"We want to have the best credit rating possible," Roy said.

Roy credits Chief Financial Officer Stacy Gober with spearheading the efforts to reign in the district's complicated investment situation.

"We're tightening down every spending line (of the budget)," Roy said.

Gober and her staff's precise work has helped the district see surpluses amid increases in other budgetary expenses, he said. Some of these increases include higher charter school tuition payments and percentage increases to the Public School Employees' Retirement System.

The charter school tuition payments have increased due to more children enrolling in charted schools and the amount of tuition increasing, Roy said. As far as PSERS, school districts are required to contribute 21 percent of payroll toward the retirement fund. This is going to increase to 25 percent in the 2015-16 school year, Roy said. Toss in a tough winter with high snow removal and treatment costs, the budget becomes very tight.

Roy said the school district budgeted $3 million in the budgetary reserve to cover expenses such as snow removal. Despite last year's snowy winter, BASD managed to come in under what they budgeted and ended up spending $2,517,671. At the recent meeting, the board approved payment of this amount from the fund balance into the general reserve. The remainder in the budgetary reserve was then added to the surplus that totaled $2 million.