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School bond issue approved
archived from: 2007-06-11

Oakland Catholic is first high school in the diocese to obtain alternate financing as non-profit corporation

The Allegheny County Industrial Development Authority approved May 30 the issuance of up to $9 million in variable-rate demand revenue bonds on behalf of Oakland Catholic High School to finance the expansion and renovation of its facilities.

Oakland Catholic thus became the first Catholic high school in the diocese to avail itself of tax-exempt bond financing as a result of the recent restructuring of the eight high schools under diocesan fiscal and administrative control.

A story in the May 11 issue of the Pittsburgh Catholic described how eight Catholic high schools were restructured as individual Pennsylvania non-profit corporations. As the article noted, the changes were part of a long-term effort in the diocese to review legal structures of numerous church-related entities and create proper legal structures.

Father Lawrence DiNardo, vicar for canonical services, said in the article, “The biggest changes will be the implementation of new bylaws and the establishment of a board of directors for each school.”

Even with this new structure as a non-profit corporation, certain important authority is reserved to the members of the corporation, made up of the diocesan bishop, the vicars general and the diocesan secretary for education.

As Father Kris Stubna, secretary for education, said in the earlier story, “Most important to parents, each school will be held accountable through the Secretariat for Education for curriculum and religious education, adherence to church and diocesan policies, and in their general practices.” All current student aid, financial assistance and scholarship programs provided through the diocese will remain in place.

In essence, all that is important to Catholic education remains unchanged, while a key element that had been inhibiting the growth of schools has been eliminated, according to diocesan officials.

The new legal structure gives each high school its own financial oversight separate from other schools in the diocese. This provides three primary advantages over the way the schools had been structured.

First, the schools will be responsible for their own finances and will be protected against the possible fiscal instability of another school or fiscal claims against other schools. Under the old structure, schools were owned and operated by the diocese as a unit, and financial difficulties at one school could affect others.

Second, the schools will be protected against possible legal actions taken against another school. School property cannot be seized to pay the financial or legal liability of another school.

Third, each school will have the ability to explore funding means that were previously not available to each school when they operated directly under the fiscal control of the diocese, including commercial borrowing and tax-exempt bonds.

“Financial flexibility is an important advantage of the new structure,” said Christopher Ponticello, legal counsel. “The fact that these non-profit corporations can avail themselves to alternate means of financing relieves the diocese of having to loan additional funding necessary for all physical plant improvements at schools.

“As most of the high schools in the diocese are forced to deal with aging buildings, many will have to plan for capital repair and renovation programs in the near future. Given increasing construction costs, it becomes all the more difficult to finance construction projects with school savings or diocesan funds. The new legal structure for each school meets all the criteria under the Internal Revenue Code as a tax-exempt entity, and, therefore, the schools are better positioned to seek alternate means of construction financing that were previously unavailable,” he said.

“As non-profit corporations, the schools for many years have served both Catholics and non-Catholics and students of all ethnic backgrounds. Of course, the existence of our Catholic schools has also relieved the public education system of the costs of educating vast numbers of students for more than 100 years,” Ponticello said.

“Reaction to our implementation of new legal structures for the high schools has been very positive because it truly is a win-win,” he said. “The schools maintain their Catholic identity, they are now in the most appropriate legal structure to best ensure their future viability and they are free to pursue alternate means of funding when appropriate.”

The bonds to be issued for Oakland Catholic will assist in the financing of a facilities development plan that includes the renovation of the school’s original 64,000-square-foot building in Pittsburgh’s Oakland neighborhood and the completion of a 17,500-square-foot addition, which will make room for new classrooms, lecture halls and conference rooms.

Oakland Catholic President Katherine Freyvogel said, “I want to thank Chief Executive Dan Onorato and the Allegheny Industrial Development Authority for their support in helping to make our expansion plan a reality. We are proud to offer young women and their families a quality Catholic education, and continue to strive to build and enhance our school. We are seeing growth in our region, and this plan will ensure that our students, teachers, parents and alumnae will always be filled with pride in what we have accomplished.”

In his announcement, Onorato said, “We’re pleased to assist in the future development of this renowned educational institution. ... It has been at the forefront of parochial education, repeatedly recognized by the Catholic High School Honor Roll as one of the 50 best in the United States.”

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