T/E School District News: 3.91% Tax Increase, District to Correct $1.2M Accounting Error & School Board Member Resigns

The five-hour marathon school board meeting last night lasted until 12:30 AM, albeit the audience was kept waiting with a 30-minute late start.  For those community members who stayed the course until the end of the school board meeting, thank you!

Although I was unable to attend the meeting, I received multiple updates throughout the evening followed up with several phone calls today. The significant takeaways from the evening included the (1) 2019-20 tax increase decision of 3.91%, (2) the Board vote for the District to take responsibility for the accounting error and to correct the Annual Financial Reports (AFR) with PA Department of Education (although sadly all Board members were not in favor of “doing what’s right”) and (3) the announcement of the resignation of a school board member.

Luckily, we have Ray Clarke providing comments on the school board meeting until he left at 11 PM (following the 3.91% tax increase vote). At that point, Mike Heaberg picks up the commentary until the meeting finally ended at 12:35 AM.  See their remarks below — thank you both!

From Ray Clarke:

– Dramatically larger attendance than a typical meeting, which multiplied the persistent disregard for the community’s time when the meeting started half an hour late

– A long plea from the rugby club for Varsity status, but notably none stayed for the Budget discussion which might have suggested funding limitations

– The Board based its discussion around just the 3.91% tax increase, not all the other options (2.8% or 4.33%)

– The Board agreed to amend the 3.91% budget motion with an investment in the new elementary reading program as a $300,000 one-time “below-the-line” expense, contingent on a number of conditions. This did not satisfy parents who are advocating for parent involvement in selection of any new program

– The amended motion passed 7-2, with Kate Murphy and Ed Sweeney allied for a lower number. Todd Kantorczyk and Roberta Hotinski reluctantly went along with a lower number than they would prefer, the former (correctly) noting that budget and actual deficits cannot continue, while the latter continues (inexplicably) to want to move the following year’s – potential – exception forward into the coming Budget year.

All Board members seemed to agree that the Budget process is broken.  Board President Scott Dorsey wants to separate the budget from the routine Finance process. He spoke forcefully about his outrage at this and the $700,000 expense surprise revealed at the last meeting.  He warned of “someone paying the price” for any similar issues in the future.

– The District’s Solicitor (reportedly with financial experience, not Ken Roos but from the same law firm, Wisler Pearlstine) advised the Board that Annual Financial Reports to the state CAN be corrected, provided that there are new audited statements and if certified by a new auditing firm or individual.  The Business Manager reported logistical, cost, PDE and outcome risk issues with this, although to the audience it seemed that those were grossly over-stated.

– A wide cross-section of community members spoke compellingly in favor of the District basing its decisions on the correct financials, about the pattern of behavior that has got us to this point, and about the need for process and personnel changes

– Unfortunately many had to leave at 11pm after the budget vote, but the AFR revision discussion continued.

Mike Heaberg picks up the commentary on the school board meeting at this point, including the Board’s acknowledgement of the administration’s accounting error and subsequent vote to correct the District audits, the Annual Financial Reports (AFR) and resubmit.  Thanks so much Mike!

From Mike Heaberg:

– After the Board acted on the consent agenda, other action items, and “final” public comments, Ed Sweeney made a motion to begin the process of correcting the District audits and Annual Financial Reports for 2016-17 and 2017-18.  Kate Murphy seconded it.

A long Board discussion ensued including input from the District’s Solicitor, Business Manager, Superintendent and the public. At one point, Todd Kantorczyk made a motion to table action until a future meeting – the next scheduled is August 26. On a roll call vote, his motion failed 5-4.  After more discussion, the vote was held via roll call. It won 6-3.  Voting in favor of correcting the audits and AFRs were Ed Sweeney, Kate Murphy, Scott Dorsey, Michele Burger, Heather Ward, and Tina Whitlow.   Todd Kantorczyk, Roberta Hotinski, and Kyle Boyer voted against correcting the audits and AFRs.

– At the very end, about 12:15 AM, Heather Ward announced she is moving out of the District and resigning from the Board effective 6/16/19.  The Board has not sorted out the replacement process. Heather made gracious comments and her colleagues offered thanks and praise for her service to the District.

The 2019-20 budget process was one for the books with final changes and decisions coming in at the eleventh hour (or in this case 12:30 AM!).  I am appreciative that in the end, school board member Ed Sweeney had the resolve and courage to push forward for correction of the District audits and Annual Financial Reports.  I thank him and the other five Board members (Kate Murphy, Scott Dorsey, Michele Burger, Heather Ward and Tina Whitlow) for “doing what’s right” and voting to correct the District audits and AFRs but simply do not understand why the other three Board members opposed the action.

Over many months, much time and energy was expended by the public in urging the Board to do “what’s right” — I’m left wondering why it took months of meetings, emails and phone calls (many by resident financial experts) plus an official letter of complaint to the PA Dept. of Education to finally achieve this goal.

In my opinion, there is an imbalance in power and control in the school district administration. All roads lead back to (or through) Art McDonnell, the Business Manager and the 2019-20 budget process debacle was a direct  result of his actions.  The Board (and the District’s taxpayers!) are ill-served by this business manager and we deserve better!  When is enough, enough?

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Clock is Ticking Down for T/E School District Final Budget — Vote on Tax Increase Monday Night!

The clock is ticking down for the school board and 2019-20 budget decisions. The school board will vote on the final budget on Monday, June 10, 7:30 PM at Conestoga High School. (Click here for the agenda).

In mid-December, the District first presented the 2019/20 budget with its proposed 6.1% tax increase — much has happened in the intervening six months.

Ongoing questions from the public about the $1.2 million accounting error have remained unanswered or denied, even in the face of legal action.

The individual Board members continue to be at odds about the proposed tax increase although the “whisper down the lane” message for months was that the tax increase would not be 6.1%.

The public is now told that the District tax increase “under consideration” is one in a pick list of 2.8%, 3.91% or 4.33%. The exact tax increase number becomes dependent on which school board member that you ask, with some keen on the lowest increase – some the highest and the others in the middle! Although the specific proposed tax increase should have been firmed up months ago, the public will have to wait for the final vote from the Board tomorrow night.

In case you are interested, below is the updated T/E School District tax increase chart for the last 15 years. Although I have no say (or sway!) my vote is for a 2.8% tax increase for the 2019-20 budget year versus one of the suggested higher increases. But to be clear, I’d like to roll back to the 2004-05 school year, the last time we saw no tax increase!

2019-20: 4.33%, 3.91% or 2.8%?
2018-19: 2.42%
2017-18: 3.2%
2016-17: 3.6%
2015-16: 3.81%
2014-15: 3.4%
2013-14: 1.7%
2012-13: 3.3%
2011-12: 3.77%
2010-11: 2.9%
2009-10: 2.95%
2008-09: 4.37%
2007-08: 3.37%
2006-07: 3.90%
2005-06: 1.40%
2004-05: Zero Tax Increase

In advance of the meeting tomorrow night, I want to thank school board members Roberta Hotinski and Ed Sweeney for weighing in with comments on Community Matters regarding the budget.  (Their fellow Board members are always welcomed to do likewise).  And thank you to those in the community who have presented their thoughtful comments on the proposed budget, both here and privately in emails and phone calls — much appreciated!

And a special thank you to my friend Ray Clarke – faced with a 338-page agenda for the Board meeting tomorrow, I am grateful for his review and commentary on the agenda and final budget (see below).

TESD has published the Agenda for Monday’s meeting.  The Final Budget is to be approved, but three possible tax increases are still on the table, as are a number of “Budget Impact Strategies”, both quantified previously and also – alarmingly –  “Other items to Consider”, that includes “2019/20 Budget Assumptions”.  What a way to run a railroad – or a school district.

The main issue has been beaten to death here, of course, and remains: How can any tax increase greater than 3.91% be approved?  What are the implications of accepting that number?

A couple of other things caught my eye:

– The average of both Administration and Supervisor salary increases are more than the 2.3% Act 1 Index, and more than the contractual 1.7%.  Where is that extra money to come from – the Special Education Exception?

– On the other hand, the compensation for aides and paras (the few not outsourced) increases just 1.7%.  These folks earn less than a quarter of the average Admin.

– There is the proposed appointment of a School Safety Coordinator at a salary that with benefits would imply the originally budgeted $180K expense, yet the budget materials include a $50,000 saving.  Has that been explained or is it just another Consent Agenda item?

– Once more this year, the materials include a listing of service provider rates, with no context – such as: comparison with last year, total spend, total $ and % increase, issues if any

– 21 retirements celebrated and an unknown number of resignations during the year; what’s the budget impact of lower compensated replacements (“breakage”)?  No idea!

– More Special Education Agreements that boggle the mind: $452,000 for seven students for a year; $209,000 for one student for two years.  The accounting cover up has stolen two years from any possible effort to understand and manage this expense category.

So, as the Board considers next year’s Budget, do they have any idea at all of what’s going on?  Any frame of reference with current best estimate numbers: this year vs last year (and last three years), revenues and expenses by actionable category, backed by their underlying assumptions?  Any confidence?  Any trust?

Seems like it’s the proverbial rainy day for which that $30 million Fund Balance is needed.  As someone who has paid into it for 20 years. I’m happy to see it dwindle.  That’s only good for so long, though.

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T/E School District Tax Increase — Will it be 2.8%, 3.91% or 4.33%? “To Be Continued”

On the eve of June 1st and days away from the end of school year, the school board still does not have an agreed up tax increase number for the budget! How is that possible? What we do know is that the tax increase will be less than the 6% that we have heard since the middle of December and the increase was approved in the draft final budget.  However, we are left with three numbers — 2.8%, 3.91% and 4.33%.  Exactly how did the Board come up with these various numbers? What are the numbers based on? And how does the incorrect accounting of the Special Ed expenses factor into the tax increase?

Although I was unable to attend the school board meeting this week because it was the same night as the digital billboard appeal, Doug Anestad attended and offer his remarks below. Plus the video of the May 29 school board meeting is now available on the District’s website, click here to view.

After reading Doug’s comments, my first takeaway is that maybe the TESD 2019-20 budget process should be renamed, “To Be Continued …”!  

The school board met Wednesday night. The agenda was very light.

What was interesting was that no new budget discussions happened. It is very late in the game not to come to a final tax rate increase. Therefore, the 2.8%, 3.91%, and 4.33% tax increases are all still on the table.

The board proposed changes to Regulation 2110: Job Responsibilities for Superintendent of School. The proposed change says that if one or more invoices from the same vendor above $200k is accounted for in the wrong fiscal year, the Superintendent must be notified and the Superintendent must inform the school board.

Of course, this proposed change in regulation came about because the administration didn’t tell the the school board about $1.2M in special education expenditures from 2016-2017 that were wrongly recorded against 2017-2018. I spoke about the regulation and said that if you have to tell the administration when $1.2M is misstated they should notify the board, it is not a policy issue, it is a personnel issue and they should treat it as such. Kyle Boyer also had concerns about it being a personnel and not a policy issue. The vote was 8-1 on the regulation change.

When the administration started discussing the launch of updating the Strategic Plan at a cost of $50k, some of the board members raised concerns. This is highly unusual as this item is not even normally voted on as a separate item. Multiple board members said that they thought that the district was not in a position to deal with a Strategic Plan. The final vote was 5-4 with Michele Burger, Kate Murphy, Ed Sweeney, and Heather Ward all voting against the motion. I believe that this close vote demonstrates that multiple board members are not happy with the current situation and the administration.

Major kudos to Ed Sweeney for bringing up the issue of revising the finance numbers for the prior years to be the actual numbers. He asked, and the board agreed, to look into the financial and legal ramifications of fixing the numbers to be the real numbers.  They seem to be most concerned about double dipping next year since they already got a higher taxing authorization from the state based on the wrong numbers.

I am not sure why so many on the school board continue to be so hesitant to figure out the truth. Why have they still not asked the auditors when Art McDonnell informed the auditors about the $1.2M account error? Why haven’t they already figured out what the process is to correct the numbers? Why haven’t they asked the state how revising the financial statements to be the real numbers will impact their taxing authority?

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Digital Billboard Appeal to be continued … until July 9

Thank you to those residents who joined me on Wednesday night for the Zoning Hearing Board meeting. With the tornado warnings and loss of power for many, it was a challenge to attend!

There was bad and good news from the meeting. The bad news is that we sat through three hours of testimony and only heard from the Catalyst attorney John Snyder from Saul Ewing and his two witnesses.  The good news is that the Zoning Hearing Board meeting continues on Tuesday, July 9 and we will hear from the township attorney Tony Verwey from Gawthrop Greenwood and all township residents who wish to comment.

Unfortunately Snyder set a bad tone early in the proceedings by objecting to all but one resident who asked for party standing in the case (including myself), claiming that we would not be personally impacted by the proposed digital sign.

My argument to receive standing was that ‘ALL’ the township residents (and beyond) would be impacted (due to safety concerns in that intersection) and therefore should have standing. Needless to say that argument went nowhere with Snyder.  To the credit of Zoning Hearing Board chair Dan McLaughlin (and much to the chagrin of Snyder) we were told that a determination of “standing” would be decided at the meeting on July 9.   All residents who wish to comment may do so at the next meeting (and you do not need standing to do so!).

Linda Stein from Main Line Media News attended the meeting and gave a review of the proposed billboard and update.  (Thank you Linda for braving the tornado warnings to attend!) To read the full article, click here.  Below are excerpts from the article:

Snyder called on Jesse White, an engineer for Watchfire Signs, a Danville, Ill. company that sells digital billboards to Catalyst, to testify. White explained how the proposed LED billboard would work. Questioned by Snyder, White said LED billboards are “almost like a TV.”

Residents who requested to be a party to the case were permitted to ask questions. Paul Drucker asked White if he thought that 10 images a minute would be a distraction for drivers. Snyder objected to the question and Daniel McLaughlin, the zoning board chairman, asked if Snyder planned to call a witness regarding drivers being distracted.

“No, I don’t think it’s relevant,” said Snyder. His response drew laughter and gasps from the audience, many of whom object to the billboard on the basis that it would distract drivers and make the busy intersection less safe.

Yes, remarkably there will be no safety expert called by Catalyst because they don’t think there is a safety issue for a digital billboard at the intersection Rt. 252 and Lancaster Ave!  In my opinion (and in the opinion of many others)  much of the widespread opposition to the digital sign is focused on safety! Also, it also did not escape many in the audience that the ‘expert’ witness Jesse White is a vendor employee of Catalyst!  Certainly does not make that expert unbiased – he even admitted that his company Watchfire Signs would probably have the contract for this digital billboard, if approved!

The other crazy remarks came from Catalyst witness and employee Tim Earle who compared the proposed digital billboard with its constantly changing face to the gas price sign across the street at the 7-Eleven and to the sign at Conestoga High School!  We can only hope that the so-called expert testimony of Earle will be thoroughly examined by the township attorney at the next meeting!

Although I was hoping that the Zoning Hearing Board meeting would resolve itself in one night – the good news is that the public will have a chance to be heard on July 9 and hopefully without the threat of a tornado keeping some home!

Susan Stein closed her article with a quote from me – it accurately sums up my feelings on this proposed digital billboard. Onward and upward to Tuesday, July 9!

After the hearing, Benson said, “The intersection of Routes 252 and 30 in Paoli is no place for a digital billboard. The bright, constantly-changing digital billboard is designed expressly to attract and hold the attention of drivers. I do not support a digital billboard at this location as it will promote distracted driving and affect public safety, especially given the extremely congested intersection.”

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T/E Finance Committee Meeting w/no decision on tax increase – School Board Meeting Tonight at 7:30 PM, Conestoga High School … A School Board Divided

Unfortunately for T/E taxpayers, the District’s Finance Committee meetings are not videotaped. With the open budget issues, looming June 10th deadline, in addition to unresolved $1.2 million accounting errors related to Special Ed expenses, the public really needs to know what’s going on in the process – especially in advance of the important School Board meeting tonight!

I was unable to attend the Finance Committee meeting and will miss the School Board meeting tonight as it conflicts with the special Tredyffrin Township Zoning Hearing Board.  At 7 PM at the township building, Catalyst Outdoor Advertising will present its appeal on the township’s denial of their application for the digital billboard in Paoli.  My BAN the Digital Billboard campaign has been 9 months in the making so need to attend the ZHB meeting.  However, also important is the School Board meeting tonight (7:30 PM, Conestoga High School) – the proposed tax increase, the accounting errors and how the business manager (Art McDonnell) factors into the situation.

After speaking with several residents in attendance at the Finance Committee meeting, an update would be useful. (Remember, the meetings are not videotaped and I was unable to attend). Resident Doug Anestad did attend the Finance Committee meeting and offers his personal commentary below.

Reading Doug’s remarks, it sure sounds like the Finance Committee and its Chair Todd Kantorcyzk are a ‘school board divided’. And just when you thought ALL the numbers are in for the proposed budget, the administration announces that “ … special education expenses were going to be an additional $700k this year with $500k of that as a recurring expense” as reported by Doug.  My question is WHY is this information coming in at the eleventh hour of the budget process!

Last night’s Finance Committee meeting was a late one ending after 10:30 pm.

At the beginning of the meeting, an undated letter from the auditor was distributed to the audience. The Business Manager, Art McDonnell, stated that he asked the auditor after the last finance meeting to make the letter after the community questioned the $1.2M in special education spending that was incorrectly applied to the wrong school year and in order to respond to the complaint directed to the Pennsylvania Department of Education.

Neal Colligan pointed out that the letter clearly stated “Management made all decisions regarding how and when these transactions were recorded.” I pointed out that the email chain for the document clearly stated that it was sent on May 10 – three days before the last finance meeting, not after it as stated by Art. The letter also mentions the question of the $1.2M being raised in April 2019. Was that when the auditors were first made aware of the misstated $1.2M? We still don’t know the answer to this or other questions because the auditor did not show up to yet another meeting even though school board members have requested that they show up repeatedly for quite some time. It seems that Art does not feel the board members are entitled to talk to their auditor.

The administration then did their presentation on the current status of the budget process. This is when the Director of Individualized Student Services, Chris Groppe, stated that special education expenses were going to be an additional $700k this year with $500k of that as a recurring expense. As this is a recurring expense, the administration then suggested that the $500k be added to next years budget.

This was followed by a long conversation on where the board members stood in regards to the budget. The school board members then went around and stated where they were in terms of tax increases. Even though the Finance Chair, Todd Kantorczyk, wanted to have the school board members express what they were comfortable with in regards to a projected deficit, most of the board members seemed to want to express where they were in regards to a percentage tax increase.

Here is a summary of where the board members were:

2.8% – Kate Murphy, Edward Sweeney

3.91% – Heather Ward, Michele Burger, Tina Whitlow, Scott Dorsey

4.33% – Roberta Hotinski, Kyle Boyer, Todd Kantorczyk

Kyle Boyer stated he was willing to go down to 3.91% and offered to do so in order to have five votes for the 3.91% to move the process along. Todd Kantorczyk did not take him up on his offer so all three options will be presented at the board meeting tonight.

Many of the school board members showed their displeasure with administration during their comments. Words like frustrated, distressed, pissed off, and trust were used by board members. They really did not like $700k in expenses being added to this year with $500k of that as recurring expenses for next year being dropped on top of them at the last minute.

It would appear that many of the school board members are starting to see the manipulation the administration uses with the school board and don’t like what they are seeing.

The committee then approved the following strategies for deficit reduction. Reducing the budgeted amount for the school safety coordinator position between $50k to $70k. Remove the elementary mental health specialist for $96,000. Delay new reading program $300,000.

The meeting ended with one last appeal for the school board by former Tredyffrin Township Supervisor Mike Heaberg. Mike made the case that by not fixing the incorrect financial numbers, the district might lose some of the trust of the community and that the school board should do so at the meeting tonight.

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Say NO to Digital Billboards in Tredyffrin Township – Your VOICE Matters! Zoning Hearing Board Meeting, Wednesday, May 29 at 7 PM!

Zoning Hearing Board Meeting TONIGHT!

It’s time to focus on the important Zoning Hearing Board meeting coming up tomorrow,  Wednesday, May 29, 7 PM at the Tredyffrin Township Building. Catalyst Outdoor appealed the denial of their application for the digital billboard at the intersection of Rt. 252 & Lancaster Ave in Paoli and now the case will be heard.

If you OPPOSE a digital billboard in Paoli, NOW is the time to stand up and be counted! Please plan to attend and share with neighbors and friends.

This is it folks — this meeting will determine the future of digital signs in Tredyffrin Township, your VOICE MATTERS and your attendance is critical!

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2 Weeks to Final Budget Vote & T/E Tax Increase Remains at 6% — Community needs to ‘Trust’ School Board Oversight!

With just two weeks until the final budget is approved for the school district, where is the school board in the process? We know that the 6% tax increase proposed in mid-December has not changed. Rumors continue that the school board will approve a lower tax increase yet the public remains in the dark.

For months, community members have requested school board action regarding the Special Ed $1.3 million accounting errors that impact the proposed (and future)budgets without resolution. Requests for the auditor to attend a public meeting are met with “not available” responses by the District’s business manager Art McDonnell. Then this past week we learned that the District posted a job opening for a new controller with a start date “ASAP” – apparently the District’s current controller is leaving for another job. Any secrets can remain safe if the controller is absent from public meetings and the controller leaves the District.

In my opinion, there is an imbalance in power and control in the school district administration. All roads lead back to (or through) Art McDonnell, the business manager. Many on the school board seemingly depend on (and support) the words of McDonnell, even when presented with evidence and opposing facts from financial experts in the community. Why is that?

We need to trust the school board as our oversight – to demonstrate leadership, courage and the will to govern on our behalf. At the core, the associated budget issues, including accounting errors, revolve around trust. As taxpayers, how are we supposed to trust the accuracy of this proposed budget (read “tax increase)?

We need a brave school board member to honor their responsibility to the community by making a motion requiring the administration to correct the $1.3 million Special Ed accounting error.

As a lead-up to the final budget vote on June 10th, there are two important meetings for school board members (and the public!) to speak out this week. There is a Finance Committee meeting Tuesday, May 28, 7 PM (click here for agenda) and regular school board meeting on Wednesday, May 29, 7:30 PM (click here for agenda).

Below Ray Clarke provides his personal commentary on the budget and related Special Ed accounting problem and his thoughts on the District’s business manager Art McDonnell.

Another month has gone by in the annual cycle of operas that is the TESD budget process.  On Tuesday the Finance Committee holds it last meeting before the June 10th vote on the Final budget.  It is increasing clear that the Board is ill-served by its Business Manager and that it is time for a fresh approach.

A few more facts are on the table.  In the last two weeks, the budget deficit for the current year has jumped by $700,000 of “Other” expenditures.  The Administration now presents a range of tax increases from the Index 2.3% to the erroneous Exceptions of 5.964%, and appears to be promoting 4.64%.  This is based solely on creating a budget deficit equal to the average of the last five years’ budgets without any further program changes. 

Also, the auditor’s Management Letter that accompanies the wrong financials for both years is quite clear that “our audit of the financial statements does not relieve you [the Board] or management of its respective responsibilities”.  The Letters for both years make no reference to the CCIU invoice mis-classification, even though dated in December of both following years, a month to a year after the issue came to light.

Some questions that arise:

  • Is the Administration proposing a $1.3 million budget deficit because they know that expenses are over- and revenues are under-budgeted?
  • What caused the last minute increase in projected expenses for the current year, and further, what impact does that have on next year’s budget?
  • How can the Board make informed budget decisions when the basic information about departmental level trends underlying that budget were presented so long ago (and in very broad strokes) and have been impacted by the disconnected list of programs under consideration? Most important, those financials are in one case just plain wrong.
  • Is the Board comfortable with basing a tax decision – impacting both this year and next – on authority granted by PDE based on erroneous information?
  • Has the Board received confirmation from its Auditor that, per its Management Letter, in December 2018 it either did not identify the CCIU error that was identified over 12 months earlier, or that it considered the matter “trivial”?
  • What is the Board going to do about Mr. Sweeney’s suggestion two weeks ago that the Budget process should be improved?

The mis-representations, cover up and associated taxing and budget debacle is the culmination of years of the TESD Board being treated by the Business Manager like a set of the proverbial mushrooms.  Other districts provide models for informed decision-making.  It’s time for the Board to exercise its contractual rights and make a change.

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T/E School District’s $1.3 Million Accounting Error/Act 1 Violation discussion continues – Taxpayers facing large tax increase with less than 30 days until School Board’s final vote!

In addition to other residents, I attended the T/E School Board Finance Committee meeting last night. The meeting lasted nearly three hours but we stayed; hopeful for resolution on the District’s $1.3 million Act 1 accounting error and its impact on the proposed 6% tax increase. Sadly, the evening ended no closer to a solution than when it began.

With less than 30 days before the Board must take a vote on the final budget, much of the meeting was spent discussing budget strategies to reduce the District’s spending and increase revenue. Possible budget strategies ranged from increasing student parking and activity fees to delaying the new reading program.  All the discussion about cost-cutting measures was a bit like getting the cart before the horse since the large “elephant in the room” was the $1.3 million accounting error and its impact on the current budget process and the proposed tax increase.

Residents who had attended the finance committee meeting in April (including myself) expected answers from the auditor. School board member Tina Whitlow had asked Art McDonnell, the District’s business manager to have the auditor attend last night’s meeting but (according to McDonnell) he was not available. Actually the absence of the auditor was no surprise; as his responses to taxpayer questions would probably not have bolstered the business manager’s position on the District’s serious accounting mistake.

The most disturbing part of the meeting was the response by Todd Kantorczyk, the finance committee chair, to residents Doug Anestad and Mike Heaberg regarding the District’s erroneous accounting of $1.3 million Special Ed invoices to the Pennsylvania State Board of Education.

Both Doug and Mike cited the “Manual of Accounting and Financial Reporting for Pennsylvania Local Educational Agencies (LEAs)”, Principle 9 – Measurement Focus and Basis of Accounting in the Basic Financial Statements (pg. 15), which states, in part that “Revenues should be recognized in the accounting period in which they become available and measurable. Expenditures should be recognized in the accounting period in which the fund liability is incurred …” (Clearly, this means that the $1.3 million Special Ed invoices need to be accurately reported in the year in which the expenses occurred.)

Kantorczyk dismissed the state’s accounting practices as referenced by Doug and Mike, as if to suggest that somehow the T/E School District was exempt from these regulations!  A remarkable moment – he remained unmoved by the follow-up comments questioning the Board’s actual taxing authority, possible Act 1 violation, the prospect of legal action and pleas to “just do the right thing”.

The evening ended with a discussion by Board members about the proposed tax increase which; to be clear, is still 6%.  Certain Board members stated that they needed counsel by the District solicitor Ken Roos, regarding the accounting error and possible legal ramifications, before finalizing their thoughts on the proposed budget. Finance committee member Kate Murphy was particularly thoughtful; sharing her concerns and need for further information. Likewise, Heather Ward, also a member of the finance committee, shared those concerns.

Resident Neal Colligan attended the meeting and offers his notes on the Board members ideas regarding the final tax increase:

  • Todd Kantorczyk indicated that he was comfortable with the District’s taxing authority at 6% but did not want to see the entire amount imposed in one year; he did not offer another number but seemed inclined to a tax increase short of 5%.

  • Michelle Burger wanted to sleep on the discussion points but was quick to point out that “she heard what the community said in their comments”.

  • Kate Murphy acknowledged that there’s “too much noise” surrounding the Special Education Exception. She can only, at this point support a 2.32% tax increase (Act 1 allowance and the Special Exception for PSERS cost increases).  In the sanest approach of the evening (my opinion); she related that if she can’t explain it to the constituents she meets at the Acme; she’s not voting for it.

  • Heather Ward echoed those thoughts and again asked for a meeting with the District’s auditor (that Tina Whitlow requested a month ago). She seemed willing to possibly accept a 3.91% tax increase…maybe (this would be the full taxing authority of the District IF they had submitted correct Special Education spending amounts to the Department of Education).

  • Tina Whitlow again raised questions of the District’s taxing authority particularly related to the Special Education Exception and again mentioned in her comments a 3.91% possible tax increase.

  • Roberta Hotinski is in favor of a 4.72% tax increase; this number would include the 3.91% mentioned above AND .81% increase derived from a calculation of what Last Year’s Special Education exception would have been if the numbers submitted to the State were correct.

  • Scott Dorsey, ever the Board Member balancing the fairness of a tax increase vs. the needs of the schools, favors an increase of 3.91%…his position has not changed in some time.

  • Ed Sweeney leans towards the 2.3-2.5% tax increase range. He did point out that the Budget process is in dire need of change as only now, with a month to go, are we “getting into the brass tacks”.  He also mentioned that a Board needs to trust the numbers it is given when considering a budget … it is clear he has doubts.

  • Kyle Boyer was the last to weigh in … his support level is around the 3.91% range but may be convinced to go a little higher. He mentioned that he keeps a District tax increase chart on his phone and that in 2008 the District raised taxes at the highest level in the last 15 years … and he’d like to stay below that 4.3% figure.

The Top Answer to tax increase percentage was 3.91%.  At this level; the potential Final Budget would have an imbalance of a $2.662 MM of deficit that will need to be filled by Fund Balance Commitment.  No Budget Strategies have been offered that could fill that imbalance.  Board Members left the “hard analysis” behind and expressed their “feel” for the correct tax increase. The normal Budget process which could have looked delved into the need for a 5.5% spending increase OR at why the District habitually under-states revenues and over-states expenses in the Budget process has been hijacked by the Accounting Timing Error fiasco.  On this point, Ed Sweeney is clearly correct.  With a month to go … it’s going to be a bumpy ride.

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T/E taxpayers Facing 6% Tax Increase, $1.2 million Accounting Error Remains Uncorrected & Concerned Citizens contact PA Department of Education

I attended the school board meeting on Monday night and waited until 9:30 PM for the budget discussion to begin.The majority of the meeting to that point was spent on the discussion and subsequent vote (7-2) for delayed school start times for 2019-20 school years. The approved plan moves the high school start time to 7:50 AM, middle school to 8:30 AM and elementary school to 9:10 AM. The financial cost to the District for the change in school start times is $610K (and not contained in the proposed final budget).

School start times is an important issue for many parents but with taxpayers facing the largest tax increase in decades, I was left wondering how does the District find the additional $610K in the 2019-20 budget which contains a projected operating deficit of almost $11 million.

The proposed final budget was approved (5-4) with a 6% tax increase; the public was told again that there is time to adjust that number. But the school board is running out of time – it’s the end of April and the 6% number has not moved since first announced in December.

The review and discussion of the budget was confusing to say the least. Remember folks, there is still the open issue about the $1.2 million accounting error caused by the delayed payment of a special ed invoice(s). This District’s accounting error has been discussed at two school board meetings, a finance committee meeting and a budget workshop over the course of 6 weeks yet the financial “can” continues to be kicked down the road with no resolution.

Residents and some school board members have repeatedly asked the business manager Art McDonnell for data on how correcting the accounting error impacts the budget … but he has yet to supply the corrected numbers.

The school district’s $1.2 million accounting error and lack of answers caused a group of concerned citizens (Ray Clarke, Neal Colligan, Mike Heaberg and myself) to send a formal complaint to the Pennsylvania Department of Education (PDE). For the record, the T/E School Board and Superintendent Gusick were copied on the letter. (Click on “formal complaint” link to read letter).

Although Art McDonnell maintains that the District’s accounting error is not a legal problem, apparently PDE does not agree with his assessment … as a result of our complaint, the matter is now under legal review at the Department of Education. The business manager also stated that the annual financial reports cannot be changed once submitted – again, not true. Art McDonnell, there is a “do-over” button! According to PDE, all you need to do is hit the revision button on their website to make the corrections!

It is absurd that citizens are now going to the Board of Education to get resolution — folks, this is not an insignificant problem. Where do we go from here?

I share with you Ray Clarke’s comments from the school board meeting:

Monday’s budget discussion and vote was a good illustration of the challenge facing even the most diligent of School Board members.  They learned more than a year after the fact that not only was there an error in the numbers submitted to the Department of Education (PDE) to authorize the allowable tax increase for next year, but also that the error could have been corrected in time for consideration of this year’s tax rate.  The arithmetic and PDE processes are a little complicated, so the most concerned of them request a full analysis from the Business Office.  After six weeks and two meetings they finally tease out that the maximum accurate increase for the coming year is 3.9%, and that the district forwent an opportunity for a 0.8% additional increase for the current year.  None of this is documented, and the Board and public have to wait until May 13th for whatever comes next.  In the meantime, the Proposed Final Budget contains the 6% tax increase and the Board has given the Administration no mandate to come up with any concrete plans to balance the budget with a lower tax increase.

Because the Board can not, for some reason, accept the fundamental argument that our School District should base its taxing decisions on calculations that are materially correct, they are left with a problem.  There are no experts in school district finances on the Board, so they tend (to a greater or lesser extent) to accept what is told them.  They are told that the auditor said the error was not material and the audit was “clean”, but we know the audit is unrelated to the Annual Financial Reports (AFRs) from which the tax increase is authorized by PDE.  They were told on Monday that the District does not complete a worksheet for the Exception, but we know that it does complete the AFRs which generate that worksheet.  They were told on Monday that the calculation is “locked down by PDE, you can’t change it, it is what it is”, when we know from PDE that there is in fact a “Start New Revision” Button on the on line AFR system!

The community members who have asked PDE to look into this are not experts in school district finances either, so how do we know what the Board does not?  We do know that there’s a problem with submitting incorrect numbers to the state and a problem with allowing the situation to fester, and we also know that it’s a good idea to get counsel from folks who do have the needed expertise and are not central to the problem themselves.

So I think it is past time for the Board to commission an independent review.  Completely independent unaffiliated with the Administration.  A good candidate for this would be the lawyer that has advised the Board in the past on financially complex contract matters, Jeffrey Sultanik of Fox Rothschild.  In the meantime, I guess the public has to wait for May 13th, take some comfort in the four No votes on the Budget and rely on our neighbors on the Board to eventually come to terms with the fact that a 6% tax increase based on inflated numbers is just not tenable.

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Digital Billboard Appeal by Catalyst POSTPONED until Wednesday, May 29 – Now you can attend ‘Jefferson’s Daughters’ Lecture on April 25!

First, I must thank Matt Baumann, Tredyffrin Township’s assistant township manager for notifying me today (Sunday!) that the digital billboard appeal by Catalyst Outdoor has been postponed. Witness availability precipitated Catalyst’s request for the date change and a special Zoning Hearing Board hearing for the appeal is now scheduled for Wednesday, May 29, 7 PM.  Please mark your calendars!

You may notice that additional BAN the Digital Billboard signs went up in the last view days in and around Paoli.  Not anticipating that the Zoning Hearing Board date would be changed, here’s hoping that these signs will not be stolen during the next 30 days — we need them to stay up!

Sometimes things in life just happen the right way … I had been stressing about this upcoming Zoning Hearing Board meeting because it conflicted with Tredyffrin Historic Preservation Trust’s spring lecture also scheduled for Thursday, April 25.  For 15 years, as president of the Trust I have never missed a lecture but yet knew that I had to attend the Zoning Hearing Board appeal.

I am so grateful that I can now attend this special lecture with author and Villanova University history professor Catherine Kerrison. Dr. Kerrison will present her latest book, ‘Jefferson’s Daughters’, the remarkable untold story of Thomas Jefferson’s three daughters — two white and free, one black and enslaved.  (Click here for lecture flyer). And how great that the author is a Berwyn resident!

The lecture is Thursday, April 25, 7 PM Reception, 7:30 PM Lecture at historic Duportail House in Chesterbrook.  Tickets are $15 and can be purchased on the Trust website, www.tredyffrinhistory.org  Following the lecture, books will be available for purchase and signing by the author!

So glad that Catalyst postponed their Zoning Hearing Board appeal — this is a not-to-be missed lecture!Facebooktwittergoogle_plusredditpinterestlinkedinmail

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