Salisbury Township School District officials are weighing how to finance a projected $14 million replacement of the high school’s HVAC system, with options ranging from using reserve funds to borrowing millions of dollars for the project.

The discussion took place during the Nov. 4 finance committee meeting, where administrators presented updated financing scenarios but emphasized that no decisions have been made.

Chief Financial Officer/Board Secretary Dawn Nickischer said the HVAC replacement, initially estimated at $11 million to $12 million, is now expected to cost about $14 million based on updated figures from the district’s facilities planning process.

To help guide future discussions, the district’s financial adviser prepared scenarios that would involve borrowing approximately $5 million, $7 million or $10 million while using reserve funds to cover the remaining cost. Nickischer said the district has already earmarked $4 million in fund balance for the HVAC project and may consider allocating additional reserves.

The financing review was prompted by rising borrowing costs.

“I asked our financial advisers, PFM, if they would revise and recalculate the ask that we had in April,” Nickischer said, noting changes in interest rates have increased the cost of borrowing since earlier projections were prepared.

The discussion turned into a broader debate over whether the district should rely more heavily on reserves or debt to pay for the project.

Director Tom Spinner questioned whether borrowing was necessary if the district has spent years building reserves for major capital improvements.

“I have a hard time borrowing millions and millions of dollars for projects that we can pay for,” Spinner said.

Spinner argued that the district has repeatedly told taxpayers it was reserving funds for future capital projects and suggested using more of those funds may be preferable to taking on additional debt and paying interest.

Nickischer and other board members cautioned against spending down reserves too quickly. “We have to plan for the worst,” Nickischer said, noting the district will face additional facility needs beyond the HVAC replacement, including a future roof project at the high school.

Nickischer said maintaining a healthy fund balance also helps the district secure favorable borrowing rates and demonstrates financial stability to lenders and credit-rating agencies.

“If you spend your fund balance, you will be in that position,” Nickischer said during the discussion of the district’s past borrowing challenges. “We will also have to borrow at a substantially higher interest rate if we don’t have fund balance because we will be considered a risk to the investors.”

Officials noted that additional facility costs may emerge as the district’s master facilities plan continues to be refined. While some board members pointed to available reserve funds, others argued those dollars must also be considered in light of future capital projects and unforeseen expenses.

The district is also awaiting a decision on a grant application that could offset a portion of the HVAC project’s cost. Officials said a determination may come later this month and could influence future financing discussions.

No recommendation was made during the meeting, and administrators stressed that the presentation was intended to begin a conversation rather than advance a specific financing plan.

“We have to start looking at various options and possibilities and what we want to do,” Nickischer said. “There’s nothing out there saying that we have to do one set thing right now.”

A financing decision will likely be needed next year if the HVAC replacement remains on schedule for construction during the summer of 2028.