Understand School Finance > Bond Issue/Debt Service > Debt Limit and Remaining Borrowing Capacity

The statutory borrowing limit of the School district under the "Debt Act"* is computed as a percentage of the School District's "Borrowing Base". The "Borrowing Base" is defined as the annual arithmetic average of "Total Revenues" (as defined by the Act), for the three full fiscal years ended next preceding the date of incurring debt.  The School District calculates its present borrowing base and borrowing capacity as follows:

*Note: The Local Government Unit Debt Act (Act 52 of 1978, reenacting and amending Act 185 of 1972) describes debt limits for all local government units in Pennsylvania. The "Debt Act" is administered by the Pennsylvania Department of Community Affairs.

**Note: Excludes amount received as reimbursement from the state for a portion of the district's debt service, extra state grants (account 7500), and revenue from other financing sources.

Act 50 of 1998 amended the amount of indebtedness a school district may incur without the consent of voters. Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District’s Borrowing Base produces the following products:

Debt Service Requirements
The school district has never defaulted on the payment of debt service.