Notes from Tredyffrin’s Supervisors Meeting & TESD Finance Committee Meeting

Last night was the Board of Supervisors meeting and unfortunately I was unable to attend due to regularly scheduled DuPortail House Board meeting.  Although the supervisors meeting was short, there was a notable issue from resident John Petersen under the resident comment section.  Petersen asked for relief from the township on stormwater damage to his property and cited neighbor’s property where stormwater damaged was repaired by the township.  It is my understanding that the township manager claimed that the damage to the neighboring properties is different, and as a result, the township is not responsible for Petersen’s driveway stormwater damage.  What recourse does Petersen and other homeowners with similar stormwater damage have with the township to receive repairs?  I’m not sure what the difference was between the two properties, but if there was stormwater repair to a resident’s property, does that now open the floodgates for other residents to ask (and receive) the same type of consideration from the township?  Perhaps John can explain the difference between his damage and his neighbors stormwater damage. I know that we support fair and equal treatment for all citizens.  

Follow-up:  I spoke with John Petersen and he will not be commenting on his stormwater damage.

There was a TESD Finance Committee meeting and my friend Ray Clarke has provided some very interesting notes from the meeting.  It seems that EIT has reared its ugly head again and will be discussed at an informational session in October.  I about choked when I read Ray’s notes concerning the possibility of an 8% property tax increase!  Folks, we may have squeaked by last year but between the township and the school district, the picture is not looking good for 2011.  I fear that the budgets in 2010 were band-aid solutions and just put off the inevitable.  

I’ll be interested in your comments, both on stormwater damage to private property and also on the Ray Clark’s remarks about from the Finance Committee meeting.

Ray Clark’s TESD Finance Committee Meeting Notes . . .

1.  The current year P&L
 – Already $1 million in the hole because although transfer taxes are budgeted on a 7 year rolling average, there is no mechanism to bring that amount into the P&L from the General Fund or any Transfer Tax Fund, so the P&L has to reflect the actual expected amounts.  Budget $2.7 million; expected actual $1.7 million (last year $1.8 million)
 – Revenues are also under pressure from a high number of residential and commercial property appeals, with an average 20% reduction in value (see EIT discussion later!)
 – Offsetting the revenue declines and ~$0.3 million of unbudgeted teacher movement across the salary matrix (is this a surprise?) are about $0.7 million of PSERS expense deferral (thank you Harrisburg), and about $1 million of savings from a reduction of 15 teaching positions as part of last year’s strategies.
 – Also on the downside, $0.3 million of the expense savings are being rethought – money to come from the Contingency, unused in previous years

2.  Un-expensed unused vacation/sick time liabilities
 – The liability (General Fund designation) for vested employee services nearly doubled last year, to $6.2 million (fully one fifth of the General Fund balance!).  As far as I can see, the $2.8 million increase was never expensed, just a below the line item.  The increase came from a review of the liability; it’s not clear that there is any process for annually reviewing and updating the liability in a way that flows through the operating budget.  Maybe others can help me on this.

3.  Anne Crowley stands up for due process
 – There was a proposal to pay $300K for a new scheduling/report card/transcript/etc. system from the same vendor who has been severely limiting support of the current system.  The reason being, the great support provided by the vendor – until they don’t, apparently.  And annual maintenance is over 50% of the capital cost.  Of course we all know how important is is for these reports to be right (but the system doesn’t protect against the bad data that has been known to show up!), and the vendor is reputable, but at least let’s make this private equity-owned vendor just a little concerned about losing cash flow!  Mrs Crowley lead the charge on this and hopefully there will be a good market justification and maybe some cost savings before this gets passed through the Board Consent Agenda.

4.  Addressing next year’s $7 million gap – the EIT option
 – Administration’s estimate for the Act 1 cap next year is 1.4% – worth only $1.25 million.  So, we’d be looking at one or a combination of:
     a) Asking voters in May 2011 to approve “exceptions” and increase property taxes by 8% (or more to offset declining assessments)
     b) Cutting expenses (Superintendent Waters claims they are “to the bone” already)
     c) Asking voters in May 2011 to approve an EIT
 – The general attitude of our elected officials at the meeting seemed to be a regret that the cap and voter-unapproved property tax increase could not be higher
 – Mrs Fadem noted that five** School Board members’ terms are expiring in 2011 and she considered that asking for an EIT would complicate any re-election bids.  (**Bookstaber, Bruce, Cruickshank, Mahoney, Motel)
 – Although it’s known that November 16th is the deadline to notify the Townships of the intent to put an EIT to voter referendum, very little other information is available.  What is the aggregate income of the District residents?  How much revenue could be raised at what rate?  What rights do the Townships have to appropriate any of the proceeds?  How much is already being paid by TESD residents that would stay within the District?  What percentage of residents already pay an EIT?  How would an EIT or property tax increase differentially affect senior citizens and other voter blocs?  How much would the tax cost to administer?  What is the likely year-to-year variability in income?  Is there a limit to the rate that the District can impose?  Can TESD reclaim the tax paid to Philadelphia? Etc.
 – The officials seemed ready to declare the result of the referendum without answers to these questions – today’s outcome would be no different to the voter response to the (totally different) question four years ago.  However, cooler heads prevailed, and an information session/workshop is to be scheduled for mid-October.  An important occasion, I’d think.

5. CHS parking slots sold out at $100
 – up from $10.  But there are major issues with increasing student admission to Teamer Field from $3 to $5.

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Updated: September 14, 2010 — 9:23 AM

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9 Comments

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  1. Did the BOS decide on a fee for student rental registration?

    Also, I was looking at the upcoming Planning Commission agenda and am wondering why the Twp wants to change the zoning of Radbill Park from residential (R-1) to commercial (C-1) ? Are other parks zoned commercial?

    [Reply]

    Pattye Benson Reply:

    Christine — This is curious. I checked the Planning Commission’s agenda online and the Radbill Park zoning change is not listed. I called a Planning Commissioner to ask — he says that when he received his agenda in the mail the Radbill Park zoning change was on the agenda and was surprised that it is not on the agenda online. The assumption is that the item was removed and will not be discussed. In case anyone wants further information, township mgr email is mgleason@tredyffrin.org

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  2. Thanks Ray. I was out of town — but to be candid — nothing is a surprise, all of it has been presumed for a long time, and no one is going to fix it until they get a sense of what the township will do vis a vis EIT.

    Two comments that are troubling if I read them correctly:

    1 – Transfer tax budgetted as a 7-year rolling average….on what order? They budget exactly what they want to budget. They get a number from a 7-year rolling average, but considering the declining CLR and an economy in the tank, they were sorely ignorant if they used a budget number that reflected nothing more than a rolling average. Shame on them.

    2 – the vacation/sick time and SEVERANCE liability was always tracked, but it was also scheduled to expire/be limited based on contracts with the admins drawn in the early 2000s….but absent explanation from me (they never asked), it apparently was not only not completed, it was continued. Current contract language refers to that specific contract as a “floor” for benefits instead of the “wrap it up” that it was intended to be. Escrow in the fund balance was maintained to identify that money — it cannot be carried anywhere else except as fund balance — though it should be “earmarked” for the purpose. It doesn’t influence budgets — just identifies / claims its share within the fund balance (or escrow — however the government allows them to identify it). It is an annual review if done as intended. WIth the extension of several administrators (Waters and a few others)., this liability will not only continue, it will grow….cannot help you beyond that.

    [Reply]

    Ray Clarke Reply:

    The transfer tax is set according to one of the TESD policies. Not all that bad, if there was a mechanism to actually bring the 7 year rolling average (which maybe could include an estimate for the current year as the seventh year) into the operating budget from the general fund.

    Thanks for the help with the unused employee entitlement time. I guess my questions remain: is this an actual liability TESD may have to pay? Does it change every year? Should that change be recognized as an expense? I think I’ll send a note to the School Board.

    Another key question for the EIT discussion: can the tax be levied on non-residents but employees in the district? To the extent that those employees don’t have an EIT in their home jurisdiction would that be additional funding for the district/township?

    I should have mentioned that the Finance Committee is going to ask for expert help from the likes of Franklin and Marshall with data for the information session. I do acknowledge that precise numbers may not be possible, but the less voters rely on emotion and the more on data, the better the outcome is likely to be.

    Of course, it’s not much of a surprise that the last referendum question about a PIT was defeated – the burden of that would fall exactly on those people paying the most property taxes now. Why substitute one tax for another, plus add the administrative overhead that a PIT would involve? New times, new issues, new solutions. I hope that political calculations and assumptions about voter behavior by school board members seeking re-election don’t preclude finding out what voters actually think.

    [Reply]

    Andrea Reply:

    I don’t understand the transfer tax answer. Here is policy 3210 on Revenue from Local Sources. It clearly states that assumptions for estimating are set annually and discussed with the Finance Committee…to suggest that they are BOUND by a number is somewhat lazy on their part….they actually have to REVIEW the numbers. Anyway, here it is:

    Revenue from local sources is revenue produced within the District, which is available for current expenses, capital outlay, and debt service. These revenues include but are not limited to real property taxes, interim real estate taxes, real estate transfer taxes, amusement taxes, sale and lease of District property and any other taxes authorized by law. Assumptions for estimating budgeted local revenues, including the collection rate, should be established annually and discussed with the Board’s Finance Committee. A report comparing budgeted revenues to realized revenues should be presented to the
    Board’s Finance Committee each month. Revenue from local sources shall be deposited in one of the Board-approved central depositories which shall be designated by the Treasurer or Chief Operations Officer.

    As to the escrowed obligations: they cannot expense them until they incur them. They are a non-profit and no “bottom line” but they incur them as they accumulate (sick leave accrues and goes into a common “sick bank” on retirement, but there was a time where they accumulated and were paid. They also get a severance payment if they have not taken a sabbatical and have been an administrator a specific amount of time (they are entitled to a paid sab. leave which would be quite disruptive — every 7 years under previous state laws but not sure what it is now). Anyway, they can be entitled to a year’s salary if they never take one as an administrator and then retire. The number could be quite large and was always “accrued” and designated under fund balance….but the laws for how to account for that may have changed in the last 10 years. I would do a Request for Information officially to ask for the details or just write the board an email asking for the info you are seeking. Good luck and thanks for the vigilance. Me, I’m tired.

    [Reply]

  3. To John’s problem: clearly there is a lot of history to that specific situation. However I can say that in general, the Township does have a Stormwater Committee that meets monthly and that provides a forum with both Steves, Mimi and others to address individual stormwater issues.

    It’s an interesting question as to where Township responsibility begins and ends: say someone builds a house on an empty lot, changes the slopes and experiences problems with water that previously infiltrated on the lot from upstream roads with no problem at all?

    Like Christine, I’m interested to find out what’s up with the items on Thursday’s Planning Commission agenda.

    [Reply]

  4. I know someone who is being sued by a HOA for causing stormwater problems on an adjacent property.
    His house is over 100 years old and the townhomes maybe 10. Can’t figure out why he’s responsible for their water issues. They shouldn’t have been allowed to build the townhomes over an underground spring and a creek in the first place!! Glad we now have a Stormwater Committee to look at these issues before they ruin someone’s life. I’m assuming they look at proposed development and not just problems that arise after the fact…

    The Radbill Park zoning issue has been removed? That’s strange. I thought maybe we were going to sell it…

    [Reply]

  5. I was under the impression the EIT was assessed on earned income paid to BOTH residents & emplyees who work in a township which assesses an EIT. In addition, EIT monies collected by an outside taxing authority (on residents who work outside the township (East Whiteland, etc.) would be paid back to the resident’s township if they pay an EIT where they reside. Since this is income earned from employment, residents who do not work would not be liable for the tax (ie seniors, unemployed, etc.) This is not a PIT (personal income tax) which was voted down several years ago.

    Many residents work outside the township(s) & they pay an EIT to the municipality where they work. There are also many residents who both reside & work in the township(s) & they do not pay an EIT. P.S. I was one of the latter until I retired last year.

    [Reply]

  6. I am amazed that even our local Volunteer’s on the School Board are more concerned about their egos than what is right for the Township or the school district and its residents. See the alleged comments by member Fadam concerning 5 spots on the Board up for re-election. My oh my – what a world we live in….
    I am also confused by paragraph speaking to Ann Crowley and a new system. did not understand the comments re the vendor…

    [Reply]

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