T/E School District goes from a $1.5 Million Deficit to having a $4 Million Surplus Four Months Later – A $5.5 Million Discrepancy! How is this Possible Mr. Business Manager?

How is it possible that in June, the TESD Business Manager claimed a projected deficit of $1.5 million for the 2018-19 year and then based on that, the taxpayers received a 3.91% tax increase for 2019-20?  Then fast forward less than four months later and this same Business Manager tells the school board at the Finance Committee meeting this week that not only did the District not have a deficit for the 2018-19 year but instead it magically had a $4 million surplus — A $5.5 Million discrepancy! How is this possible?

In the T/E School District, residents have faced annual tax increases for the last fifteen years.   If you recall, in mid-December 2018, the District first presented the 2019-20 budget with a proposed 6.1% tax increase and that 6.1% increase hung over taxpayers heads for six months! Finally in June the proposed tax increase was lowered and the school board approved a 3.91% increase. And with the 3.91% tax increase, our school district received a special distinction … we had the second highest tax increase in the Philly region!

Do you fully understand what happened?  To recap … from December 2018 to June 2019, taxpayers were faced with a 6.1% tax increase. In June 2019, taxpayers ended up with 3.91% tax increase due to a projected deficit of $1.5 million. Now four months later, the taxpayers are told that the District didn’t end up with a deficit after all. Nope, actually the 2018-19 year ended with a $4 million surplus. Again, I ask why is there a $5.5 million discrepancy and and why did taxpayers receive a 3.91% tax increase?

I don’t know about you, but as a taxpayer I find the “fuzzy math” approach wholly unacceptable! And let’s not forget, the Business Manager received a new 5-year contract starting July 1, 2019 with a base salary of $210K plus annual raises and bonuses.  Oh, and he is also the responsible party for the $1.2 million accounting error from the year before; which to date remains unresolved (although the Board voted to have the Business Manager make the correction months ago).  As a top-notch school district, don’t the taxpayers of T/E School District deserve better?

Although I did not attend the Finance Committee meeting, I watched the video (the District does not tape Finance Committee meetings but fortunately residents now do!) Neal Colligan did attend the meeting and provides the following commentary.

It appears to me that taxpayers should have received ZERO tax increase. And somehow the District’s update of $4 million “found money” and the $5.5 million discrepancy was not worthy of making it on to the Financial Committee agenda. School board, where is your outrage?

From Neal Colligan —

The Finance Committee meeting started with a quick review of minutes and a presentation of year-to-date financials.  The committee received an update on Special Education costs.  Seemed to be on track but this report was not posted in the Agenda so I can’t comment on the details (for fairness, the report should make the Agenda for future meetings).

The next section of the meeting was the most eye-opening.  Couched under the item Capital Planning- the Board was informed that their 2018-19 projected deficit (last year) of $1.5 MM is now a $4 MM SURPLUS. 

It was difficult to follow the Business Manager’s explanation of the changes (and I watched the video twice – thanks Doug Anestad and BUILD T/E).  Seems to be greater revenues of $1.6 MM-increased interest earned, State revenue increase, transportation subsidy received and increased State funding for Special Ed ($500,000).  On the expense side another $1.6 MM in savings in non-instructional items under the categories of supplies and repairs and a savings in Special Education purchased services of $760,000.  I know this doesn’t add up to a $5.5 MM swing but the details were not complete and not included on the Agenda items.

The discussion was centered on “what to do with this new-found surplus” but certain Board members (Murphy and Sweeney particularly) seemed surprised (as was the audience) at the BIG swing from deficit to surplus in the just completed (June 20, 2019) fiscal year.  Mr. Sweeney correctly noted that this knowledge in real-time would have certainly influenced his vote on the last tax increase (3.91%).

Some of the discussion on what to do with this money and “below-the-line/above-the-line” differences, transfers to other funds (Capital), and the relation of the surplus to authorized spending was a bit painful to watch … but I’m speaking as an accountant so I know these are easier concepts for me.  This decision will be tabled for another meeting but, IMHO, the Board needs to quickly become familiar with the process here as it relates to what they can do with their surplus after the year is completed.  They can be forgiven as they are not “financial” people but they’ll have to get up to speed fast on the rules.  Not a single Board member (although Sweeney touched on this) considered the taxpayer in this discussion (i.e.: could surplus be used to offset future tax increases).

The final part of the meeting briefly touched on the Committee’s goals going forward.  Mr. Sweeney had suggested changes to the budget process as well as additional detail be required from the Administration to help the Committee understand the District finances.  This was also tabled for a future meeting.  Mr. Dorsey supported the discussion of changes in the Board/Finance Committee process and the importance of this initiative.  Comments from the audience included: getting real-time financial numbers from the Administration; on-going busing issues and suggesting a format for review of Budget variances over a longer historical time frame.

Thank you Neal! Here’s a link to the Finance Committee video.

Make sure to watch the video to the end for the resident comments.  Sadly, some District parents are still experiencing transportation issues – young children sitting on the buses for a long time, including on school grounds. Parents continue to ask the District for a tracking app (for buses) which “may” happen at the December Finance Committee meeting.

The “kick the can” mentality is allowed to continue with no sense of urgency. Where is the accountability and demand to fix the busing problems … right, the Transportation Director reports to the Business Manager. Why is it that so many issues in this school district lead directly the Business Manager (and then sadly, HE is allowed to prioritize).

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  1. Consider this-the 2018-19 tax increase amounted to about $2.6 MM and the we finished the year with a $4 MM SURPLUS. One way to look at this: none of the tax increase for 2018-19 went to educational costs….it only served to increase the District’s surplus. How much of the $4.28 MM tax increase for 2019-20 (current) will be needed for educational programming in the current year???

    The District habitually runs a surplus (8 of the last 10 years….Ray: check me here)….who has a claim to that money? The District clearly treats it as THEIR money…maybe it is. How about the local taxpayers who fund 81 cents of every dollar in the District….do they have a claim…they’ve been over-taxed for education? This is a contract year: if the past teaches us anything….the employees’ Union will also make a claim: “you have a long string of surpluses, there’s plenty of money to increase wages and benefits”. They’re not wrong (and this is not a knock on Union negotiations-just pointing out the past strategies).

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    Ray Clarke Reply:

    What on earth is going on in TESD? Is anyone at the controls? Certainly not the School Board, who (with the partial exception of Ed Sweeney) accepted the $5.5 million “October surprise” as nothing but good news. Are they so dazzled by the reflected glow of student test scores that they can not see persistent egregious management failures and simply depend on the state’s Act 1 backstop to exert a bare level of financial control?

    Let’s just take one example of the incomplete information about the causes of the $5.5 million surprise – investment income. If there is one number that should be known with precision DAY BY DAY it’s that: what CDs etc. the District owns, what are their interest rates, when do they mature, etc. If the District did not know, then that’s dereliction of duty. If they knew, but did not tell the Board, that’s even worse.

    To recap: Monthly financial reports are not worth the paper they are printed on. The budget process is unmoored from current year performance and designed to maximize tax increases. The Board engages in endless debate about whether to spend the “surplus” taxpayer money on expanding the high school or just put it under the mattress. The Finance Committee goals are the usual pablum.
    Nothing changes.

    (Well, almost nothing: the Finance Committee received an oral report on Special Education from Chris Groppe, which is progress towards opening a window into that fast growing $25 million annual expense, but no details were documented).

    It’s becoming hard to care any more. Huge thanks to movie star Neal who did his best to arouse the slumbering, and to Doug and Jamie for providing the video for those of us unable to attend. (A personal plug here for the Tredyffrin Citizen Stormwater Task Force formed on Monday: stay tuned for resident-focused priorities and solutions!). So, sorry, Neal, I can only subjectively confirm your impression of habitual surpluses, but I do think that the surplus has rarely if ever been as large as $4 million.

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    Liz Mercogliano Reply:

    As usual Neal you are the accounting expert.
    Can we get an outside consultant to evaluate this ongoing mystery.
    Before one would hire a lawyer, a review of numbers by a third party.

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  2. TE would be wise to look to school code regarding the transfer of the $4M surplus from the General Fund to the Capital Projects Fund. The business manager wants to have the board vote on the transfer in the current fiscal year (2019-20), but record the transfer in the previous fiscal year (2018-19). Bad idea! Here is the relevant section of the School Code 687(d):

    (d) The board of school directors shall have power to
    authorize the transfer of any unencumbered balance, or any
    portion thereof, from one class of expenditure or item, to
    another, but such action shall be taken only during the last nine (9) months of the fiscal year.

    If the board wanted the transfer to be recognized in the 2018-19 fiscal year they should have voted to do so before June 30th. Why is the business manager rushing the board into a decision that could be taken at leisure. What is the downside of making the transfer in January, February or later and recording the transaction properly in the 2019-20 fiscal year? Why the rush to fudge the transfer into the 2018-19 financial statements?

    I suggest the board get written legal guidance from PDE much like was done in the case of modifying the AFR before voting on the transfer.

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  3. Having sat at the negotiating table with the union I can attest that the negotiators are quite familiar with financial statements and any reported surpluses. The negotiators know when a district is flush with cash and use it as a negotiating lever.

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  4. The PDE Manual of Accounting tells the district how to recognize fund transfers and it’s clear the transfer must be recognized in the fiscal year the transfer “arises” by board vote. Thus, if the board votes to authorize a transfer this month the transaction can’t be fudged into the previous fiscal year.

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    Pattye Reply:

    Thanks for supplying the legal documentation Keith, but you know that saying, “If there’s a will, there’s a way”!

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    Doug Anestad Reply:

    Some members of the school board still don’t understand that the school district is supposed to follow the PDE Manual of Accounting. They still won’t acknowledge that Art McDonnell didn’t follow the accounting standards back in the 16-17 school year and pretend that following the rules doesn’t matter.

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  5. Art was the negotiator for the District last contract cycle. Is he underhandedly building the surplus to make it easy to grant raises to the teachers union? Why does Art build the surplus under false pretenses year after year. Why does the Board let him do it? Why do taxpayers let the Board let Art do it?

    Thank-you Neal and Keith.

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  6. Why not do what a resident in lower merion did and sue the township regarding the consistent lying about revenue leading to increased taxes?

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  7. So we have a surplus, and yet my children sit on buses or wait at school because transportation cannot figure out a time change, my children’s schools are in desperate need of HVAC upgrades, and don’t even get me started on the lack of security measures in place for our schools. The Administration weaponized the Teacher’s Union against parents asking for a literacy committee, yet they won’t spend funds on special education or literacy.
    Unbelievable that this district is ranked as high as it is. While the taxpayer may be suffering from constant increases, our kids are the ones who really bear the brunt of Mr. McDonnell’s antics.

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    Also Concerned, and annoyed Reply:

    Agree wholeheartedly, Concerned Parent. We never know when our child’s bus will come. Could be anytime between 7:55 and 8:25. And if our kid isn’t standing in the street, the bus pretty much blows by and we’re then forced to drive him, which makes us late for work. Then they wonder why he’s grumpy when he gets to school, to a classroom that is 80 degrees in the spring, to a reading program that isn’t helping him learn the basics…

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    Also Concerned, and annoyed Reply:

    Oh, hey, TE All Call told me to check Powerschool for an update to his times. Checked. Times are the same. Fail, fail, fail.

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    Pattye Reply:

    What in the heck is it going to take to FIX the bus issues in T/E??? Seriously!!

  8. Lol what about the fact that Art has multiple DUI’s and even wore an ankle bracelet to work…had to get an Uber to go to district meetings…it’s a joke! But if teachers had DUI’s omg they would never be allowed in a classroom..total double standard why is he even allowed near children?

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    Pattye Reply:

    In private industry, much of the issues surrounding our Business Manager would be questioned and ultimately probably not tolerated. Sadly, our Business Manager continuous to receive pass after pass.

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    Easttown resident Reply:

    At this point, I can’t help but feel like the fact that Art McDonnell’s egregious mishandling of issue after issue continues to go unchallenged comes down to the School Board allowing this to happen. How is it that Art still has not fixed the accounting error when the Board voted to have him do so months ago? Isn’t it as simple as “do as you’re instructed (given that he’s had ample time) or you’re fired?“ That’s how it would work in the private sector. If the School Board refuses to hold McDonnell accountable, they should be voted out this fall.

    Does anyone know if any of the candidates running have any sort of financial background? I feel like that’s the type of voice we so desperately need on the Board to challenge this man, since replacing him seems out of the question (though I’m not sure why).

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    Pattye Reply:

    For months members of the community struggled to have the school board understand the $1.2 million accounting error (after letters were sent to the PA Dept of Education, etc.) — finally, the Board agrees and votes in favor of Art correcting the error. However, I remember at the time thinking that they didn’t place a time frame around it — which normally, an employee perhaps wouldn’t need because when the boss tells you to do something you do it. Like I said, the man sets his own priorities and obviously, fixing the accounting error isn’t high on the list.

    The same thing about the fixing the bus situation — not a high priority. Again — if he was in the private sector and told to make it right, maybe you would get 30 days?? Now in mid-October, he’s busy and tells the Board “maybe” by December. The man can do whatever he wants, when he wants, without accountability. I can’t figure it out — is the Board afraid of what would happen to the District if he left?

    The saddest part for me is that several of my financial expert friends (far more qualified than me!) have repeatedly offered to help the Board — but instead of taking help(for free!) from the experts in the community, they continue to be guided by the Business Manager.

    It is beyond troubling!

    Another Easttown resident Reply:

    Kate Murphy is running in Easttown as is former TESD Personnel Director Sue Tiede.

    Sue worked side by side Art McDonnell for years. She is a part of the culture in this District that allows Art to operate the way he operates.

    Mary Iten is also on the Easttown ticket. Mary voted against the Literacy Committee right after weeping and telling parents how she’s for parents. It was very very strange.

    If she supported parents like she said she does, her actions would have backed up her tears and she would have voted for parents and not against them. They would have been tears of joy, not tears of guilt.

    Easttown Parent,
    My offer is still open to get together and meet.

    Liz Mercogliano Reply:

    Check TESD.net for the business manager’s employment contract. PA is an “at will “ state.
    The questions becomes who is responsible for evaluating his work performance?
    The school board can ask for his resignation.
    And of course, any employee can hire a lawyer to protect whatever rights are in his contract.
    I suggest the Board, if Art truly is not meeting performance measures, put that in writing in his file. Offer a remediation process and keep documenting.
    While on the TE the School Board, I never fault a person for a behavioral health issue.
    The employer should offer employee assistance.
    I don’t judge based on a genetic propensity for addictive personalities.
    Call Department of Education law department for information, read his contract and move forward.
    If the contract is at will you may have a case. But if he seeks legal he can ask for the balance of his contract and more.
    Obviously, let’s get it in writing.

    It’s supposed to be about students/taxpayers Reply:

    Mary,

    Thanks for your comment. You said what many who have been around a while have been thinking. Sounds like you could be a teacher and only a teacher would have the confidence to say it. (It’s true, but most people, Iike me, couldn’t say it)

    If I’m right and you are a teacher, no worries, you can do and say pretty much anything you want to do and say too…..including, telling 12 to 13 year old girls not to work hard because their greatest achievement in life will be that of a trophy wife so why bother. You can call students stupid, low functioning, you can call them morons and ask them if they’re on crack cocaine when they walk in your room. If someone complains after the 300th time, you may be suspended with pay 3 or 4 times……so far. No worries though, you won’t be fired. Teachers and Administrators rule.

    So you can throw stones at Art all you want. You’ve got it pretty good too!

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    It’s supposed to be about students/taxpayers Reply:

    Mary,

    Not only wont you be fired for viciously attacking defenseless, powerless 13 year old 8th graders, your peers will support you even though they know you viciously verbally attack the self worth of children, and they write on community blogs about how horribly you ve been treated because the High School Principal moved you “from one building to another” while they are completely silent about your abhorrent unacceptable behavior towards your students.

    I wrote the HS Union President asking for a meeting (who is female) (who will be demanding ANOTHER huge raise on top of her outlandish salary soon) thinking I would surely get support. She wrote me back saying that since she couldn’t speak to me, the meeting would be of no value to her. (What does that mean?)

    So everyone knows exactly what goes on, and it keeps going on.

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  9. As has been mentioned before, these wild swings of projections vs actuals are a normal yearly occurrence for our district. They are expected because the district’s Business Manager, Art McDonnell, manipulates the numbers on purpose to show massive deficits every year independent on what is really happening. In short, he is using scare tactics to get the school board members to vote for the maximum allowed tax increases each year instead of giving them accurate information and allowing them to make their own independent choice that should be theirs as our elected representation. Most of the school board members have caught onto this manipulation and vote for deficits each year doubting that deficits might even show up. At least three school board members are still completely falling for Art’s manipulation of the numbers and believe his bogus projections.

    This unprofessional behavior by Art McDonnell has unfortunate side effects. One is that it makes it very hard for the board to make regular annual capital contributions to pay for regularly scheduled maintenance. When you show a deficit, it is hard to show a bigger deficit by mandating a capital contribution. If the projections were more accurate and showed a surplus, scheduling capital contributions would be much easier.

    Instead, the school board has been issuing bonds lately with very high interest payments over the length of the bonds. This is due to how the amortization of the bonds were done. Most of the school board members don’t understand this because they trust Art on financial issues and therefore rushed to vote on the bonds before doing any analysis despite three community members asking them to do so. Not sure why the school board members continue to believe Art. If someone has lied/deceived me as many times as he has the school board members, I would not want to rely on him in the future for information.

    The board should seriously consider taking school board member Michele Burger’s advice and consider transferring most of the surplus into the capital reserves. As a matter of fact, I would advocate transferring around $10 million over to capital reserves from the surplus and the current fund balance. If the high school expansion doesn’t fit the requirements for a one time need of the fund balance, what does? Why have a fund balance as high as we do?

    By using the surplus and a portion of the fund balance to reduce the debt load that is needed for the high school expansion, the school district will have more operating money for the classrooms in the future as they won’t be using as much for paying back bonds and the interest that goes along with it.

    Based on how the last bonds were structured, it is painfully obvious for anyone who takes the time to do a deep dive on them that the administration is optimizing for the short term, not the long term. This makes sense once you understand that both Art McDonnell and Dr. Gusick will probably be retiring at the end of their current contracts and don’t live in the district. Why should they care about the long term financial stability of the district? The question is, will the school board members figure this out and do what is best for the long term financial stability of the district or will they continue to blindly believe what Art tells them?

    I would like to thank school board member Ed Sweeney for spearheading the effort to try to fix the financial numbers reported to the state to match the real numbers instead of the bogus numbers that Art reported and then covered up. I would also like to thank Kate Murphy for supporting Ed in trying to fix the numbers. I would also like to thank him for listening to my comments at the school board meeting when the lawyers for the district were trying to deceive the school board into believing outrageous lies about auditors. Ed was willing to ask them follow up questions where the lawyer finally admitted one of the lies presented to the board. Ed asking the questions was extremely import as the school board doesn’t allow the community to directly ask questions to any presenters whether they are school administrators or legal council – you know, the people our taxes pay for to give those presentation. If we were, many of these deceptions could be exposed much more quickly. Why does the school board think this is necessary? Tredyffrin Township Supervisors don’t treat the public with this level of incivility. Perhaps we will have representation at some future date that treats the community as a resource instead of something that has to be muzzled and controlled.

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  10. Bravo – although we’d have to swallow the indignity of our own money being used to defend against the suit!

    At the end of the day, the blame for sanctioning all of this lies with our School Board, and with the couple of notable exceptions above, these nodding dogs need to have their nascent political careers snuffed out in November. With elected position comes solemn responsibility.

    Pattye – not sure what your circulation is … but it can’t be high enough with insights like these to spread. Thank you for being the voter’s dog with a bone.

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  11. As a senior citizen on a fixed income I find the 4 million dollar surplus
    insulting to TE taxpayers. TOTAL incompetance once again from the overpaid business manager.
    There were 6 months of long meetings ,charts and discussions along with the threat of a 6% tax increase . Had tbe original rate prevailed this district would have had a 6 million dollar surplus . How could this happen …the school board just found out Monday night at Finance ? What about the cuts to various programs and services? Will they be restored now that the district is flush ?
    The only bright spot is Ed and Kate..thank you.

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  12. Doug..the district had to deal with tax surpluses MANY years ago. There was a discussion on refunding taxpayers but the cost was prohibitive. I think a policy was written and they set up a Rainy Day Fund with the excess. No idea what happened with the money or the policy.

    [Reply]

    Doug Anestad Reply:

    CHV, there is a fund balance that you can think of as a general savings account and a capital reserve account that can only be used for capital items like repairing buildings, building extensions, etc.

    For years, the district was putting the extra money into the fund balance (the general savings account). Because of the “surprise” surpluses, they really built that account up. I don’t remember what it is now, but it is in the tens of millions of dollars.

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  13. The Business Manager does what he does for at least one of two basic reasons: (1) no one tells him no; and/or (2) someone wants him to do it. It’s as simple as that.

    Ultimately, the School Board is accountable – although perhaps the Superintendent has the first layer of responsibility. Too many School Board members are unqualified to handle this situation. They don’t understand it, and find it easier to ignore it rather than uphold their obligation to the community.

    Remember the last election cycle? You get what you pay for, and to me it appears we are missing some of the members of the old board.

    If as a community we believe we must hold the Administration accountable from a financial perspective above all else, then our voting should reflect candidates who are best qualified to perform that function. This is not a Rep/Dem issue, it’s a money issue.

    If we had nine Board members with an appropriate financial background, this nightmare would never occur. Why in this successful community is that such a difficult request?

    [Reply]

    Doug Anestad Reply:

    You are spot on. Some school board members don’t even seem to understand that the Business Manager, Art McDonnell, deceives them over and over again. That became apparent at the last school board meeting.

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    T/E Anonymous Parent Reply:

    It’s so obvious that it’s painful to watch.

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    Taxpayer Reply:

    TE Anonymous Parent,

    Thank-you for your insightful comment.

    You say above:

    ———-Too many School Board members are unqualified to handle this situation. They don’t understand it, and find it easier to ignore it rather than uphold their obligation to the community. ————

    And:

    ———-If we had nine Board members with an appropriate financial background, this nightmare would never occur. Why in this successful community is that such a difficult request?———

    It’s not a difficult request and although most Board Members don’t have a financial background, they don’t need one.

    We are very, very fortunate in our community to have at our disposal Neal, Ray, Carol, Doug, Mike and Keith who go to meetings and who can explain the numbers in very plain terms. Granted, Ray and Keith can go off sometimes, talking to each other, using acronyms eg. CPI, EIT etc. not realizing they lose readers in the process but Neal writes as plain as plain can be so a school kid could understand it. And so does Doug. Board Members know exactly what is going on and they know exactly what they are voting for and against. Why do Board Members knowing what’s going on, support the Business Manager when they know what he presents is wrong and misleads taxpayers? Why do taxpayers keep voting for Board Members who mislead them? Those are the real questions.

    Don’t take my word for it. Don’t trust anyone but yourselves. Look at Kate Murphy and Ed Sweeney’s voting records. They always vote for you and your children. So please vote for them. A vote for Kate and Ed is a vote for you, the taxpayer/parent.

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    T/E Anonymous Parent Reply:

    I see the District as a $150 million annual business, and each member of the Board owes it to us (and themselves, quite frankly) to have an appropriate financial background. I didn’t state they had to be CFOs, possess CPAs, etc. I also didn’t state that all of them were financially incompetent. Just a wish some could bring a little more to bring to the table than what we’re getting….and collectively, they’re deficient. Can’t state otherwise and complain about the Business Manager’s maverick ways.

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    Taxpayer Reply:

    TE Anonymous Parent,

    I agree that Board Directors should have appropriate financial backgrounds, but isn’t that on citizens and tax payers to elect Board Members with appropriate financial backgrounds? We had a candidate a few years back who has beyond an appropriate financial background who got blindsided and labeled the last 2 weeks before the November vote, voters got scared off by the underhanded tactics of the opposing party and now look what we have: A Valley Forge Middle School teacher who fights for the highest taxes possible,——— based on fraudulent numbers by a Business Manager who does whatever he wants to do,———- who wants to “empower”
    teachers more (how can that even be
    possible?) by setting the School Calender around them, and who are now demanding a multi million dollar parking lot for their convenience.

    Two MORE ex teachers are running for the Board. One worked side by side Art for years. She sat with the 50+ teachers who came to the Policy Meeting to rally against parents getting a Literacy Committee that the Valley Forge teacher voted down after telling parents he knew he was voting against parents who got him elected.

    To the 50+ teachers who showed up to fight against tax paying parents at the Literacy Policy Committee Meeting,

    At the end of the meeting, a parent stood up and kindly thanked you for coming and said how much she appreciated you after you angrily attacked the initiative. She invited all of you to gather at St. Joe’s the next week for a gathering to learn more about this topic.

    How many of you attended that?

  14. As a retiree I’m appalled at this surplus; all at the hands of Art McDonnell, the business manager. I live on a fixed income & every year I fear I won’t be able to pay my TESD RE tax. I have railed about Art for over 2 years, saying he should be fired and he certainly should NOT have a new contract!!!! Who on the board was in favor of that; in light of what has come out about his DUI. I do not envy the board members & the position they’re in; I certainly would never have wanted to run for the board. It can be a thankless job. I cannot, for the life on me, understand the busing problems; there was plenty of time for the district to train the drivers on correct procedures & routing. Did Krapf hire all new drivers who they didn’t train? How the hell can a driver get lost in the Glenhardie/VF estates area just blocks from the school. Inexcusable.

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    Doug Anestad Reply:

    It is reprehensible that Art McDonnell not only is not getting fired, he is getting a pay raise and bonus to boot.

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  15. My name is Ed Sweeney and I have been on the Board for three and a half years. I was the School Director who led the Board to revise the AFR after the belated revelation of 1.2 million dollars of invoice errors had been discovered that affected our ability to tax. It was a painful exercise and the Administration was resistant in my view. Once again, I have the unpleasant duty of informing the community of what appears to be a serious financial reporting issue on the administration’s part. I have already blogged about this issue on my web site, http://www.edsweeney4te.com, where I comment on TE school issues and local politics. It is time the Board took collective action to get our house in order. As President Harry Truman said, “the buck stops here.”

    One long-time Finance Committee citizen-observer, Neal Colligan, called it TE’s “September Surprise.” This is where the board is belatedly informed almost every year that a projected deficit has produced a surplus. Board members found out for the first time on Monday at the Financial Committee that the projected 1.25 million deficit for FY 2018-2019 was at least 4 million dollars in the black. This should not happen in my view! The failure of the Administration to keep the Board informed about the state of TE Fiscal Affairs in “real time” is a very serious issue. This much variance between the predicted result and the actual result was not expected. I say this as a Board member. It comes on the heels of another serious failure: the failure to promptly inform the Board of 1.2 million dollars of unpaid invoices which led to effecting our ability to tax. That issue caused many months of heart burn for the Board.

    Where the buck stops is a long-time political adage coined by President Harry Truman to describe who was in charge. In his case, Harry Truman said the buck stops with him, because he was the President.

    In Pennsylvania, under the Public School Code of 1949, “where the bucks stops” is with an elected Board of Directors. I am on this Board. You elected me. I am one of nine. The buck is supposed to stop with us collectively. A majority board vote sets policy. We hire the people to run the district and deliver to us the information we need to make decisions.

    We set tax rates based on our budget estimates. We prioritize what we can do based on budget projections. We make important additions or cuts based on our budget estimates. One of our roles as Board Member is to ensure we can communicate accurately the financial and budget picture of the District. In short, to make accurate decisions, accurate predictions are important. The need for more accurate budget estimates is something School Board President Scott Dorsey has been working on in conjunction with several Board members like myself. But this variance makes me feel we need to make sure we are getting the best possible information in “real time.” Is this variance as the Administration suggests the result of the natural complexity of our budget and difficulty in predicting unexpected scenarios? Or, as some of the members of the community have suggested, is there a real problem with how we forecast revenues/expenditures and when the Board and public are told in “real time” what the financial picture of the District is. Public confidence is a key. As a Board member, my own confidence in the Administration is sorely tested by huge swings like this one.

    The taxpayers could have had better relief if we had better budget projections. Additionally, why the scare of a 6% tax increase this last budget cycle (which I voted against from the outset and joined School Director Kate Murphy at saying the rate of inflation, 2.9%, was reasonable ) if we were going to end up so far in the black for 2018-2019? Serious reform needs to be made in this area.

    I submit there is growing understanding that we need a true hard look into how the Administration provides us with the information to do our jobs. This “drilling down” has been talked about repeatedly in our Finance Committees with a group of observers who are financially knowledgeable. In the last few years, we have adopted some, but not all, of their suggestions.
    I have proposed that my colleagues on the Board adopt a comprehensive written Financial and Budgetary Reform program. I will talk about these reforms as time goes on. These suggestions were sought from persons in the community knowledgeable about financial matters. I urge others on the Board who are like minded to provide a new way of looking at how we use the budget process. This is the 21st Century. A professional district needs to plan like professionals. Our Board, collectively, should grip with both hands the responsibility of where the buck stops!

    I would also add on a separate, but not completely separate note, what is wrong with a Literacy Committee???!!! Once again, the buck stops here.

    This is my view and not the view of the Tredyffrin-Easttown School District Administration or the Board.

    [Reply]

    Pattye Reply:

    Thank you Ed for taking the time to comment. So now where do we go from here …?
    1. When will the $1.2 million accounting error be corrected? The Board directed Art McDonnell months ago but it has yet to be done!
    2. How is it possible or OK that a $1.5 million deficit magically turns into a $4 million surplus. The Business Manager tells the Board at a Finance Meeting of the surplus as if it’s no big deal — the public does not even have the courtesy of the issue appearing as an agenda item.
    3. The ridiculous bus situation remains for many of the parents in the District — yet McDonnell is “busy” and maybe can get to it in December.

    All of these problems go directly to Art McDonnell yet nothing changes. There is absolutely no way that this type of performance by an employee would be allowed to keep his/her job in the private sector — yet, not only does McDonnell keep his job, he’s rewarded with a 5 year contract with a $200K+/yr. salary plus annual raises and a bonus. How in the world is this possible? Why does the School Board refuse to hold him accountable?

    Ed, I recognize that you are but one of nine school board directors; and I do give you a lot of credit for commenting on Community Matters, but what are we, the “taxpayers”, supposed to do? Surely, there has to be a better path than for the School Board to simply follow the direction of Art McDonnell.

    [Reply]

    Taxpayer Reply:

    Ed,

    Thank-you so much for your comment above. I clicked on your link which took me to your blog which I read in its entirety. I love it!!! Well done!!!!

    If you’re a still undecided voter in Ed’s voting District in the Valley Forge area, please click on Ed’s link above and read his blog in its entirety. It gives a complete picture of who Ed is, what he stands for and who he in reality represents: Taxpayers, students and parents.

    If you’re a still undecided voter in Kate’s voting District in Easttown, know that Kate, like Ed, supports taxpayers, students and parents. Please look at Kate’s initiatives and voting record.

    Please tell all your friends about this site and encourage them to read Pattye’s essays and the accompanying comments. Ed’s blog is also a great resource for information.

    Please vote for Ed and Kate.

    [Reply]

  16. The TE School District is quite under control. That 3% tax increase wasn’t as bad as the 6% right (a negotiating tactic) and now there’s a surplus from once was a deficit. Quite under control.

    [Reply]

    Pattye Reply:

    Interesting comment. To be clear the latest tax increase was 3.91% not 3%, marking fifteen straight years of tax increases. Annual tax increases is hard on many taxpayers in the community – and especially difficult to understand when deficits become surpluses in the actual budget. These surpluses are taxpayer dollars and should remain in the pockets of the taxpayers. I will have to disagree with you – from a budgetary standpoint, the District is not under control.

    [Reply]

    Keith Knauss Reply:

    A budget is only a guess at what will happen in the future and budget-to-actual deviations are to be expected. A $4M surplus is rather large and it’s important to understand the reasons for the surplus and why it was communicated to the board at this late date. If the surplus is due to unforeseeable events (e.g. an unusually health workforce leading the favorable healthcare expenditures, unexpected bump in state revenue, some high cost special ed students leaving the district, an large upward tick in interest income)then we can give Art a “pass” and be happy there was a surplus. But if the $4M is due to sloppy budgeting then it’s different matter. The board relies on good budget estimates to make good taxation decisions.

    The best way to determine the reasons for the surplus is to compare budget to actual and locate the line items that produced the surplus. The Audit provides such a comparison as a normal part of the auditing process. The audit is almost done and it should be easy for Art and the auditor to produce the comparison. See an example below.

    I’m uncertain why Stephen S would use the phrase “a negotiating tactic”. The business manager, the board and the public should be working cooperatively to achieve what is best for the community. This should not be a negotiation where the parties are in conflict. We’re all on the same side. (I hope)

    [Reply]

    MALLAM Reply:

    When looking at this summary there are two line items that account for the largest contributions to the surplus. Both are under the “Other Financing Sources(Uses)”. One is listed as “Budgetary Reserve” with a 1.32 million surplus, and the other 1.825 million surplus of “Transfers Out”, a nondescript line item. The total is a surplus of 3.145 million. Perhaps these in particular should be questioned more intensively for future year’s budget planning, looking too at these for past years’ results.

    [Reply]

    Neal Colligan Reply:

    Right…and there’s the issue. This is last years (’17/’18)…the expected ending Fund Balance of $27 MM becomes the Actual Fund Balance of +$30 MM…..another surplus from a deficit projection (transfers are elective and stay within the District albeit in a different Fund). It’s the Fall Surprise that keeps happening.

    Keith is right-the analysis is key AND these Special Programs expenses (over Budget above) were overstated by the Accounting error we’ve been discussing…..

    [Reply]

  17. Pattye mentioned that Art informed the board in June that the deficit was estimated to be $1.5M. She missed something. Art tells the board the deficit is even larger at $2.5M at the same June meeting where the board is trying to make an informed decision on the 2019-20 tax increase. As we now know the supposed $2.5M deficit is really a $4M surplus. How someone could screw up an estimation so bad when 11 out of 12 months were in the books is beyond me.

    [Reply]

    Pattye Reply:

    $2.5 million deficit is really $4 million surplus = $6.5 million discrepancy! It’s going from bad to WORSE — what is the public supposed to do? Someone reported that a school board director is saying that “we” (members of the public) are spinning the situation?? The only person spinning the situation is Art McDonnell and the administration and school board are just going along!

    [Reply]

  18. Based on the history with Business Manager, Art McDonnell, and the number of final years with excess funds at year’s end, can the tax payers believe him for future projections? I’ve had several questions:
    1) Why was he given a new 5 year contract in consideration of his dismal response and responsibility demonstrated to the board?
    2) What conditions in his contract would allow his association with the district to be discontinued?
    3) How is he “awarded” his 10% of salary bonus? Is there a review and approval by the board? Are there yearly objectives he needs to achieve, as in any business / corporate organization? If not, why not?

    And on a separate topic but brought up in previous posts,
    I’ve been quite concerned that there seemed to be little questioning of the projected $400.000 cost to change start times of the school day. What are the reasons for this extravagance? How much, if any, was assigned to overtime for the Business Manager? And how much was to be applied to resetting the bus schedules? The implications of my questions should be obvious to anyone paying attention to what has happened this fall with both the budge and the bus fiasco. Finally with the bus routes and schedule, why is there no way to have tracking of the buses in real time using GPS on each bus? This information could and should be accessible to the parents particularly for the youngest
    children.

    [Reply]

  19. I agree that the last election was a bad one for the district – particularly in regards to financial issues. We are getting what we paid (voted) for, and as I pessimistically believe….this will continue to occur as not enough voters take the time to understand. It’s politics and the way we vote.

    What we have to hope for is that each Board member ran for office with the sincere attempt to better the district. Those Board members also need to undertake some honest self-criticism of what they do know and don’t know, thereafter at least attempting to educate themselves on the issues or at least ask questions to bring dialogue into the mix. Staying quiet for fear of saying something stupid is not what we want. Each of them needs to understand with their election comes a duty, a duty that they wanted.

    Ugh.

    [Reply]

  20. I find it rather funny that so many here are complaining about the financial incompetence of the school board.

    You get what you vote for.

    The proprietress of this blog (who has done many good things in this community) wrote an unfortunate post here in the past complaining that the “Easttown Republicans” were still running the school board after the Democrats took the majority for the first time in a while.

    Well, those bad “Easttowners” actually had a level of financial competence: Doug Carlson has an MBA from the Fuqua School of Business at Duke, and Virginia Lastner was a CPA. The teachers contract the had a part in negotiating was a model to follow.

    They lost their last election – to two people who have little if any financial background, and apparently little, if any, interest in holding the administration accountable. One of them had almost no experience in the real world, and has since resigned.

    Why did Doug and Virgnina lose in that blue wave? I guess some voters couldn’t make the distinction between the _________ in the White House and a local school board candidate.

    You get what you vote for.

    [Reply]

    Pattye Reply:

    As a lifelong registered Independent, I’m not sure that I would ever have written a blog post quite as you state — I would have stated post-election, a new ‘D’ majority on the school board previously lead by the ‘R’s. But beyond that you’d have to show me a reference.

    With the oversight required by the school board, I have long been a proponent of electing those with the necessary skill set to fill the position. And yes, we can agree — that we get what we vote for which is why voting is so important, even in non-presidential years! As I have done in past elections, this past week I sent a series of questions to school board and supervisor candidates. The candidates are asked to respond to each of the 4 questions and starting on Tuesday, each of the questions will be posted daily on Community Matters along with the individual candidate response. Responses will not be edited and participation is completely voluntary. To reconfirm the importance of specific experience/background as a school board director, it is the focus of one of the questions.

    [Reply]

    Easttowner Reply:

    Pattye, I meant no offense and wasn’t calling you out in particular, I was just making a point that you do get what you vote for.

    As to your query about the relevant post:

    http://pattyebenson.org/tag/easttown-republicans/

    Perhaps I misinterpreted this passage as a complaint, but it sure seemed so:

    “With Carlson as Board president and Lastner in charge of the District’s Finance and Facilities committees, it looks like the Easttown Republicans are taking charge of the TE School District! How’s this possible … for the first time in the District’s history, five of the nine school board members are Tredyffrin Democrats!”

    [Reply]

    Pattye Reply:

    Thanks. Sorry for confusion, merely meant that post as an observation.

    It has been my view over the years that the school board President and Facilities and Budget chairs tend to a high visibility (power?) on school board and it was surprising to me that the ‘D’ majority voted in favor of ‘R’s to fill the rolls. It was not intended as a judgement on the qualifications of either person, as you are correct that the finance background/experience of Carlson and Lastner was an attribute to the Board.

    Since that point, I believe that Democrats have held the positions – currently Michele Burger (D) Facilities chair and Todd Kantorczyk (D) Finance chair. School board president Scott Dorsey was elected to the School Board and to the position of President of the board as a Democrat. However in the last month, he has changed his party affiliation from a ‘D’ to ‘Independent’. Interesting that this was a very recent change, in advance of the November Election.

    Taxpayer/another Easttowner Reply:

    Easttowner,

    Yes, best for D and R alike to vote for Kate Murphy and Ed Sweeney. Kate and Ed have demonstrated through their words and consistent votes for tax payers, parents and students that they truly represent the best interests of their constituents.

    Easttowners, vote for Kate, because she votes for you.

    Valley Forgers (moms). Vote for Ed Sweeney, because he votes for you.

    Don’t take my word for it, don’t trust anyone but yourselves. A little research will reveal that what I’m saying is true.

    [Reply]

    T/E Anonymous Parent Reply:

    Amen!

    [Reply]

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