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Spending $3.5MM to save $307k per year does NOT make financial sense.A Net Present Value (NPV) analysis of the project is negative, which indicates that the project should not be pursued.Financially, investing $3.5MM into a school that has only $1.3MM of deferred maintenance doesn't make sense. Especially when the "return" on that investment is only $307k per year. With a school district hurting for $$, we need to make smarter decisions about how we allocate our funds.
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Operational Savings
Closing Cedar Secondary saves $470,000 per year (minus busing costs)Source: Cedar – Responses to Trustees’ Questions | Jan 14, 2015
Busing Costs = $163,000 (All displaced Cedar students to Ladysmith)
$256,000 per year operational cost minus $93,000 (original cost to bus to Cedar Secondary)
PLUS a one-time capital cost of $980,000
NET Savings of closing Cedar = $470k - $163k
$307,000 per year
Source: Cedar – Responses to Trustees’ Questions | Jan 14, 2015
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Capital Expense
Re-tooling Cedar into an Elementary School:
Original Estimate = $1.5 million
As promised (open concept 21st-Century) = $5-8 million (est)
“Scaled-back” (current estimate, including field work) = $2.5 million
(a) Approx. $2 of $2.5 million is taken from maintenance of other schools (AFG funding)
(b) Add $980,000 for 1-time purchase of new buses
Total Capital Outlay = $2.5 million + $0.98 million
$3.48 million9
A 13-Year Pay-OutSpending $3.48 million to save $307k per year. It will
take a minimum** of 13 years to see any net savings.
-3,500
-3,000
-2,500
-2,000
-1,500
-1,000
-500
0
500
1 2 3 4 5 6 7 8 9 10 11 12 13Th
ou
san
ds
10
Does not make.
financial sense** Pay-out time will likely
be longer, as gas,
maintenance & wages
increase … and if number
of students increases. Or
if project costs go up.
