Because the Seneca Valley school board Monday rejected a financing proposal for an $11 million building project at Butler County Area Vocational-Technical School, the school will have to find another way to borrow the money, said Tom Breath, the school's solicitor.

"This significantly changes the way they'll have to [get] approval" Mr. Breath said.

In addition to unanimously rejecting the vo-tech's proposed $4.2 million budget for 2010-11, the Seneca Valley board in a 5-4 vote also rejected two resolutions tied to a proposed 30-year bond issue the vo-tech school hoped to use to pay for an expansion and renovation.

Joseph Cunningham, the vo-tech school's administrative director, has been traveling to the seven school districts that send students to the school to ask the boards to approve two resolutions: one to extend the life of the vo-tech authority and one to use the state-guaranteed borrowing power of the districts as backing for the bond issue.

Mars Area, Slippery Rock Area, Butler Area, Karns City Area and Moniteau school boards approved the resolutions. South Butler's board was scheduled to vote on them last night.

During Monday's vote, Seneca Valley board members Dr. Sally Hanley, Eric Gordon, Jeanette Lahm and board President Bill Hill voted to approve the resolutions. Vice President Anthony Storti and members James Welsh, Eric DiTullio, Joseph Scalamogna and Jason Wherle voted against the resolutions.

Some Seneca board members have voiced concern over the way the district's contributions to the school are calculated. They have said it doesn't seem fair that the district pays the most money when it sends fewer students to the vo-tech than other participating members.

The contribution formula takes into account student attendance and assessed property values in the member districts.

All seven participating boards had to approve the resolutions for the funding plan to move forward, Mr. Breath said.

The resolutions were necessary because state law prohibits the vo-tech itself from owning property, Dr. Cunningham said. The vo-tech authority, made up of representatives from the seven districts, is a separate entity that can own property and handle certain financial deals, such as the bond issue.

The authority, however, was created in 1980 to last 50 years and will cease to exist after 2030. The 30-year bond would have had to be repaid in 2040, requiring the life of the authority to be extended by at least 10 years.

The second resolution involved a lease-type arrangement in which the districts were asked to agree to use their good credit to back the bond issue.

The vo-tech school is funded with annual contributions from each of the seven districts. That is the school's only revenue, which means the school and its authority have nothing more to offer as a guarantee that a bond issue will be paid.

To solve that problem, Dr. Cunningham asked all the districts to agree to "lease" the vo-tech property from the school's authority. Each district's lease payment would have been equal to its share of bond issue debt, Mr. Breath said.

The state guarantees it will step in and make certain bond and lease payments for districts that default on those obligations, Mr. Breath said. The state Department of Education then would withhold that amount from any subsidies owed to the district.

This intercept law would have guaranteed repayment of the bond.

Until now, the vo-tech hasn't needed to issue a bond, Dr. Cunningham said. The school's authority took out a conventional loan for heating system improvements 10 years ago.

The building project includes adding 31,000 square feet of new space and renovating 85,000 square feet of existing space. In addition, the school will add a welding program.

The projected start date for the project is July 1, if financing is in place.

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