Middletown's State School Repayments Could Stretch Over Three Years

Middletown expects RIDE to reimburse 55% of eligible school building costs under an agreement whose ceiling, a council member said, tops $200 million, covering Forest Avenue work beyond the $190 million borrowed. A town official said a state-level change could spread reimbursement over three years rather than one, and that the town needs to raise it with the next governor. A consultant said the program is about $6 million under budget before contingency.

Middletown, R.I. — Middletown expects the state to repay 55% of eligible school construction costs, but town officials said at Monday night's Town Council meeting that the timing of at least part of that money could change. The discussion is drawn from the Middletown Town Council's published meeting recording.

The question came up during a budget update on the district-wide school building program, which includes the new Middletown Middle High School, Valley Elementary School and Forest Avenue Elementary School. Voters approved a $190 million construction bond for the program in November 2023, and the Rhode Island Department of Education, known as RIDE, signed an agreement to reimburse the town for 55% of eligible costs.

A reimbursement ceiling above what the town borrowed A council member asked what cost base RIDE is using for its 55% share. A speaker confirmed the rate is still 55%. One participant said they believed the state is basing reimbursement on $215 million, while a project consultant said they did not remember the agreement's value off the top of their head.

A council member said the town has a signed memorandum of agreement with RIDE under which the town is subject to be refunded for up to more than $200 million, "whether we use it or not." He said the town has more refundable room available than it is probably going to use. Another speaker later said a revised agreement recently shifted some money so more could go back into Valley and Forest Avenue.

A council member noted that when they served on the building committee, RIDE funded projects up to a set cost per square foot, and said they wanted to make sure the state is reimbursing based on the numbers presented to the council. Collins said, "We're in line with all that."

Forest Avenue as the example A town official explained that Forest Avenue is the clearest case of work above the $190 million borrowed. That work is being paid for with bond premium and interest, and includes added scope and a property purchase, the official said. The official said the town had its consultants make representations to the state early on so that, if the project expanded, the higher ceiling would still be reimbursed at 55%.

The official said the council is looking at roughly $7 million of investment to bring Forest Avenue up to code, and that this is money the town would get back "in that one- or three-year time period based on 55%, but it's over the 190 that we borrowed." The official called that planning that went into the project at the very beginning.

One year or three Asked whether the Forest Avenue reimbursement arrives within a few years rather than over the life of the debt, a speaker said the state used to reimburse such costs in the first year. That speaker said there is "some stuff happening at the state level" and that it might now be amortized over three years, describing it as a change the current governor was making.

The speaker said that is one of the things the town needs to raise with the new governor after the election. "But yes, we do receive the reimbursement from Forest Avenue. I'm just not sure if it's one year or three years," the speaker said.

Where the budget stands A project consultant said the program's total available funding includes $190 million in bonds, about $6 million in bond interest, roughly $5.7 million in bond premium, a $249,751 electric-vehicle charging grant and welding shop grants. The consultant said $86,244,800 has been spent to date, $174,123,700 is under contract, and anticipated costs excluding contingency are $197,215,400.

Asked how far under budget that leaves the town, the consultant said approximately $6 million, not counting contingency. Remaining large purchases include furniture for Valley Elementary School and moving services, the consultant said.

Asked whether there would be any further tax increase from the school project, a finance official answered, "As of right now, yes," meaning no added increase, adding that as an accountant they could only say it was true as of a certain date.

A town official said that once the library borrowing is completed, staff will reconcile the original borrowing forecast against actual results and bring that comparison back to the council. No date was given.

Middletown's State School Repayments Could Stretch Over Three Years

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