Much appreciation to Ray Clarke for attending last night’s TESD Finance Committee and also for his thoughtful and well-written notes. I see that the EIT discussion continues . . . and also I’m glad to see that the Board is looking beyond the 2010-11 school year in their budget discussions. Here are Ray’s notes:
The TESD Finance Committee was a smooth affair tonight. Bottom line: the proposed 2010/11 budget to be taken to the full Board next Monday will call for a 2.9%, $2.5 million, property tax increase, $5.3 million of expense cuts/revenue programs, $1.4 million of fund balance contribution, plus a Contingency (which would if needed come from the Fund Balance) of $1.8 million. At $29 million, the year-end fund balance will be in good shape to support this.
The full board was present, but only the Finance Committee voted on the few issues teed up for debate. Debbie Bookstaber continued to be the greatest advocate for fiscal restraint, supporting a lower tax increase and no administration pay increases (the vote was for an increase of 2.9%), and also supporting administration proposals judged to improve the Special Education offering at lower cost – a point she won when the $300,000 cost was recommended only as an addition to the Contingency.
There was lively discussion on the pros and cons of activity fees. Kevin Buraks was a vocal supporter, citing as a benchmark the cost of non-school travel and other sports programs. I liked Ann Crowley’s idea of a all-student “Activity Fee”, along the lines of college activity fees. Participation in quality extra-curriculars is important, and a small fee which is spread across the student body can generate meaningful revenue, with no debate about what activities to include and with no direct link that would discourage participation, while users of the services will bear a small part of the cost. In the end, the administration was charged with coming up with $80,000 in fees, probably from the 1500 Middle and High Schoolers that participate in at least one sport, while perhaps the Crowley idea may be studied for future years..
I was pleased to see that there was full acknowledgment that this budget solves only the coming year’s problem. In the following year, the gap is back up to $7 million. Revenues will be flat – an assumed 1% assessed value increase offset by a decline in federal stimulus funds. So cost increases go straight to the deficit. $3 million in salaries, $2 million in benefits (net PSERS, and healthcare up 10-15%), $1 million (~5%) increases in other expenses and ~$1 million in property expense and fund balance transfers that I guess restore one time cuts from 2010/11. And that $7 million deficit is after an assumed $400,000 increase in investment earnings but no increase in debt service (capitalized interest?).
We might expect a similar plan of attack on the $7 million next year – program cuts, fund balance and taxes. Administration has proposed $2.7 million of program changes which are being studied under the Education Committee. As for taxes, maybe property owners will not be the only well to draw on. (I think I heard a comment that the Act 1 index will allow a property tax increase of only $1.7 million (2%) for 2011/12 (absent Exceptions)). The Committee handed out a draft timeline for discussion of an EIT that could reclaim taxes already paid and going outside T/E. On that, the first step for a July 2011 implementation would be a September 13, 2010 Finance Committee meeting.
All in all, it seems the Administration and Board are working diligently to maximize the value from the mix of cards in their hand and on the table