Great Valley School District

The Clock is Ticking Down for T/E School Budget . . . Will Property Tax Increase be the Highest of our Neighbors

The clock is ticking down . . . the T/E School Board votes on the final budget for 2011-12 on Monday, June 13, 7:30 PM at Conestoga High School.  The preliminary school budget contained a property tax increase of 3.8%.  Will that tax increase remain in the final budget or is possible that the school board members may consider a lower increase?

The school board and the administration have battled their way through the 2011-12 budget since last fall, with regular school board meetings as well as finance and special budget meetings.  The board and administration thoroughly reviewed many budget strategies and made difficult educational and programming decisions. The school district reached agreements for the 2011-12 school year with the teachers union (TEEA) and with the non-instructional union (TENIG).  In the spirit of shared sacrifice, union members from TEEA and TENIG showed their support for the school district and agreed to a variation of a salary freeze to help the bottom line of the District’s 2011-12 budget.

According to the TEEA agreement with the T/E school district, the teachers will have their salaries frozen for the first 6 months of the 2011-12 school year based on their final paycheck of the 2010-11 school year.  As part of the agreement, TESD agreed there would be no involuntary furloughing or involuntary demotion of teachers for 2011-12.  The cost savings for the TEEA agreement is approximately $1 Million to the school district.

The agreement reached between TENIG and TESD is a zero percent wage increase for the 2011-12 school year.  The savings to the school district with TENIG’s salary freeze is $300K.  Adding the additional reduced overtime wages and the total TENIG savings to the District is approximately $450K.

The school board members applauded the efforts of TEEA and TENIG . . . the combined total help from the two unions represents nearly $1.5 million in savings to the school district. 

Here’s my question . . . given the substantial level of savings, due to TEEA and TENIG’s spirit of shared sacrifice, will the school board also recognize the ongoing sacrifices of the taxpayers in this school district?  Will the school board consider a reduction in the proposed 3.8% property tax increase?  The preliminary 2011-12 budget could not predict the $1.5 million savings from the unions, so should the taxpayers expect the final budget to reflect those savings?  I believe that the 3.8% includes taking the full Act 1 exemptions but maybe in light of the union savings, the percentage increase could be reduced.

In anticipation of TESD’s final budget vote on Monday, I thought it would be interesting to see where the currently projected 3.8% property tax increase measures up against other local school districts. I think that it is fair to use Radnor, Lower Merion and Great Valley school districts for comparison.  Generally speaking, these school districts are comparable in level of education quality and I would think that the economic climate of the taxpayers is similar.  Each of these school districts has approved their final budgets —

  • Radnor Township School District1.4% tax increase Lowest RDSD tax increase in years. RTSD credited the Radnor teachers’ sacrifice in reaching a contract agreement for the low tax increase.
  • Great Valley School District 2.9% tax increase  GVSD Superintendent Alan Lonoconus, said of the tax increase, “We tried very hard this year to make sure the impact to programs was as gentle as possible. But we also kept in mind the economic conditions not only of our district, but of the nation.”
  • Lower Merion School District3.3% tax increase  Lowest tax increase since 1984-84 fiscal year

Although not an adjacent school district and perhaps not as highly ranked academically as Radnor, Great Valley, Lower Merion and T/E school districts, I was fascinated by West Chester School District’s final budget decision —

  • West Chester School DistrictNO tax increase.  The 0 percent tax increase balanced WCSD budget by taking $3 million from their fund balance.

It is not surprising that the taxpayers of WCSD overwhelming supported the decision of their school board leaders not to increase taxes.  In reviewing the demands of their school budget over the last months, there was much discussion between school board members and residents in regard to the severe economic conditions facing the residents, rising gas prices, high unemployment, etc. Many taxpayers in the WCSD complained that they are already financially pushed to the limit — the 0 percent tax increase decision came as welcomed news.

As it now stands, unless the T/E school board members reconsider, a property tax increase of 3.8% is on the table for a vote at Monday night’s school board meeting; this increase will represent the highest increase among our neighbors. TESD is a great school district, and one for which we all can be proud, but likewise could be said for Lower Merion, Great Valley and Radnor school districts.  My guess is that the argument that some will make is that TESD currently has a lower tax rate than these other mentioned school districts and therefore taxpayers are in a better position to afford the tax increase.  Correct? 

I have not done a research analysis but I believe that TESD may have the highest fund balance of any of these neighboring school districts. (In fact, I think I read somewhere that TESD fund balance is one of the highest in the state).  Some could argue that the fund balance represents over-taxing of residents in prior years, so . . . now that the taxpayers of this community need financial relief can we ask that the TESD use more of the reserve and lessen our property tax increase?

To help the community, the teachers, secretaries, custodians, cooks and maintenance personnel in this school district have shown us the meaning of shared sacrifice.  Is it possible that TESD will acknowledge the sacrifices of the District taxpayers, and lower the expected property tax increase?  Or, is this just wishful thinking on my part . . . ?

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A Perfect Storm for Chester County’s 2010-11 School District Budgets

On the eve of TESD’s important Finance Committee Meeting, I found this timely article by Mary Jean Curley, PR director for the Chester County Intermediate Unit particularly apropos.  We are focused on our District’s budget; can we take solace in knowing that we are not alone?  

In the past, readers have taken issue with my reference to the current school budget situation as a crisis, but I believe this is just the beginning.  Read Mary Jean’s article and look at the statistics . . . at a minimum, we are on the brink of a crisis. Dramatic cuts were required to balance the township budget for 2010; and I think tomorrow night we will see the school district forced to likewise make some difficult decisions on programming cuts.   Whether it is the township budget or the school district budget, as difficult as this year has been for budgets and necessary cuts, it’s going to be 2011-12 budget situation that is going to challenge all of us.  Creative suggestions and visionary ideas will be required from both the township and school boards.

Chesco schools struggling to balance budgets with needs

By Mary Jeanne Curley is public relations director for the Chester County Intermediate Unit.

From Avon Grove to West Chester and everywhere in between, Chester County school districts are struggling to balance students’ needs and state mandates with taxpayers’ pocketbooks.

“There are a number of factors that are contributing to the shortfall in school budgets across the county and, in fact, the state,” said Joseph P. Lubitsky, director of administrative services for the Chester County Intermediate Unit. “The economy is a major factor; both interest revenue and tax revenue are down as a result of the recession and the bottoming out of the housing market.”Controlling health care costs, which even in a good economy is a challenge, is exacerbated in this economy, and now we are also contending with dramatic increases in the school employee  retirement system,” he continued.

While local school districts all have unique situations, this year they share their budget woes and the cause of those woes, namely increased contributions to the Pennsylvania School Employees Retirement System, higher health care costs, reduced interest earnings, declines in real estate taxes and the costs of unfunded state mandates.

At the top of every district’s list is the increase to the employee retirement system contribution. The local contribution will increase 72 percent this year and continue to increase every year until 2015. According to the retirement system’s projected employer rate, Pennsylvania school districts’ contribution rates will go from 8.22 percent this year to 10.59 percent next year and to 29.55 percent in 2012. The rates will then level off at 33.6 percent in 2015 and remain above 30 percent until 2020. For the Intermediate Unit, this means going from $2.5 million this year to $4.4 million next year and to $20.5 million in 2015.

The Great Valley School District, which recently passed a resolution urging legislative action for school employee pension reform, estimates pension contributions will cost the district an additional $12 million over the next five years, beginning with a $1.3 million increase next year.

The Great Valley School Board also voted not to apply to the state for an exception to raise taxes above the 2.9 percent index allotted under state Act 1. Contributions to the employee pension fund and special education are two costs for which school districts are allowed to apply for an exception.

The Great Valley School District is not alone in voting to remain within the confines of the Act 1 index. Avon Grove, Coatesville Area, Downingtown Area, Oxford Area, Tredyffrin/Easttown and other school districts have taken similar positions. The Chester County Intermediate Unit lacks taxing powers of its own and relies on its funding from its member school districts.

Health care costs also continue to spiral out of control. For example, medical renewal costs in the Kennett Consolidated School District are expected to increase by 40 percent, in Owen J. Roberts by 39 percent and in Phoenixville Area schools by 27 percent.

In addition, while special education costs continue to rise, state and federal support for the mandated programs has steadily decreased as an overall percentage of support. Special education costs have risen at the Great Valley School District from $2.8 million in 1999 to a projected $10.1 million next year. Meanwhile, state and federal funding rose from $1.1 million in 1999 to $1.5 million for 2010-11.

State support has gone from nearly 40 percent to less than 15 percent of the district’s total budget.These costs alone would strain a district’s budget, but coupled with decreased interest and tax revenue, they have created a perfect storm for school district budgets in the 2010-11 school year.

The tax base in Chester County has steadily eroded over the past seven years, decreasing by $12 million in the past school year alone. School districts hardest hit include Avon Grove, Downingtown Area, Great Valley, Kennett, Oxford Area, Tredyffrin/Easttown, Unionville and West Chester Area. Tax revenue has decreased $654,023 for Kennett, $218,898 for Great Valley, $184,000 for Octorara and $180,442 for Oxford.

Interest earnings are down as well. The Intermediate Unit’s interest earnings are down from $1.2 million in 2007 to a projected $627,991 next year.

Similarly, Great Valley predicts interest revenue for 2010-11 will fall from $1.9 million in 2007 to only $90,000 next school year, or an annual loss of nearly $2 million in revenue. The decline has been sharp over the past three years, with last year’s interest only generating $390,169, a net loss of $640,182 from 2008-09.

All of these factors are leaving school districts with three options: cuts costs, raise taxes, or find alternative sources of revenue. With many county schools boards opting not to petition the state for exceptions that would allow them to raise taxes above the state-approved index, all districts are looking at a combination of these three options.

For example, to close a $4.9 million budget gap, the West Chester Area School District eliminated 19 staff positions and put stadium lights on hold, and it may change school bell schedules, consolidate bus routes, raise student parking fees and increase taxes 2.9 percent.Several school districts are looking at charging facility rental rates for the first time or increasing existing rates.

In the Great Valley School District for the 2009-10 school year, the school board eliminated nine full-time positions and 12 teacher extra-duty positions and reduced summer workers by 50 percent, theme readers by 50 percent and instructional aide by 3,500 hours.

For the 2010-11 budget, just to maintain the status quo, Great Valley officials will need to cut expenditures by $1,645,933 and raise taxes 2.9 percent. The Chester County Intermediate Unit has deferred hiring staff and has eliminated 18 positions. It has reduced energy and operational costs by $268,000 a year. In addition, the Intermediate Unit continues to work with the school districts to save money through joint purchasing, in which participating schools realize an annual cost reduction of $2 million by bidding for supplies jointly.

The Intermediate Unit’s self-insured medical program continues to contain health care costs, and while the Blue Cross fully insured program saw an average rate increase of 30.88 percent, the Intermediate Unit’s rate increase is projected to rise just 2 percent next year.

Although not bound by the Act 1 index, the Intermediate Unit has made a commitment to its member school districts not to raise costs above the average county index and has kept its member core contribution rate unchanged. The Intermediate Unit is also working with school districts to find alternative funding sources. It recovered $2.9 million in costs for Chester County school districts through medical reimbursements for services provided to special education students. Districts are responsible for these costs as part of the students’ educational programs.

Many school districts are requesting community input to help them through this fiscal crisis and have extensive budget information on their Web sites. To find out more about a school district’s budget process, visit the district’s individual Web site. A link to all Chester County school district Web sites can be found at www.cciu.org (click on the “Find Your School District” link).

Mary Jeanne Curley is public relations director for the Chester County Intermediate Unit.

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Continuing to Discuss TSED Teacher Pension Plan

Following up on my last post about the Great Valley School District, I think that I am beginning to understand their resident involvement. One of the best parts of Community Matters is that readers bring new information to the discussion.  I received a comment from ‘Berwyn Reader’ that offered interesting insight on the Great Valley School District (GVSD) residents and their ability ‘to hold the line’ on school tax increases. A few years ago, Brian O’Neill of O’Neill Properties (Worthington project) asked GVSD to be a lender on his Worthington project.  In the end, GVSD choose not to lend money to O’Neill.  However, because of residents concerns, Great Valley Stakeholders was formed about 18 months ago and has become a sort of watchdog organization for the Great Valley residents.  The purpose of the Great Valley Stakeholders is to provide information to the public and School Board to ensure fiscal responsibility, transparency and better communication between school board and taxpayers. 

Here’s hoping that Community Matters will be able to provide similar information to taxpayers and Tredyffrin Easttown School District school board members.  Many of our residents who have provided commentary to this site on the school district topic have helped us better understand our own budgetary process.

Beyond the current 2010-11 school budget discussion, I remain concerned that many of our taxpayers do not understand the PSERS (Public School Employees Retirement System) teacher pension plan and how our taxes are going to be affected as a result.  I found an interesting statement from the Commonwealth Foundation on pensions. The Commonwealth Foundation is an independent, non-profit research and educational institute that develops and advances public policies based on the nation’s founding principles of limited government, economic freedom, and personal responsibility.

Public Pensions: Beginning in 2012-13, taxpayers will see a dramatic increase in their contributions to pension plans for state and school district employees. This scenario is due in large part to misguided policy decisions-including substantial increases in pension benefits in 2001 and 2002, and deferring increased payments following fund losses-as well as the recent downturn in the stock market. Pension contributions are estimated to rise by $1,360 per homeowner/household, resulting in higher property and state taxes. Additionally, local pension plans are facing major deficits. . .

 A few weeks ago a opinion article written by Thomas Gentzel, Executive Director of the Pennsylvania School Boards Association appeared in the Philadelphia Inquirer. This commentary titled, Change Pennsylvania Pension System or Prepare for Catastrophe should be a  must-read for all taxpayers!  Here’s the link:

http://www.philly.com/inquirer/opinion/80562927.html

Comments anyone?

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Great Valley School Board Votes to Keep Tax Increase within Act 1 Index of 2.9% . . . But at What Price?

Great Valley School Board Votes to Keep Tax Increase within Act 1 Index of 2.9% . . . But at What Price?

 On January 13, I wrote about the ‘standing room only’ crowd at the Great Valley School District (GVSD) budget meeting. (Here’s the link for that post). This week the GVSD board held their regular business meeting with 300 residents in attendance; the major topic was the $3.2 million deficit in their proposed 2010-11 budget. With a projected budget of $78.3 million, the school board voted 6-2 to keep any increase in taxes within the state’s Act 1 index of 2.9%.

Applying for an exception to Act 1, would have allowed the school district to raise taxes as high as 4.7%. Some of the school board members argued that by keeping the tax increase to the 2.9% rate may force the administration in to making some drastic cuts in programs and/or personnel. (However, in the end by a margin of 6-2, the school board votes in favor of using the Act 1 index).  There were many residents in the audience who wanted to hold the line on tax increases to the 2.9% or less; some expecting 0% tax increase.  There did not seem to be an explanation as to how the budget deficit would be handled; no clear cut answer as to what programs (or people) might find themselves on the cutting block. Because the school board decided not to seek exception to Act 1, a preliminary budget approval is not required until April.  The school board will continue the discussion at the finance committee meeting in early February.

Does this news from our neighbors have any effect on us taxpayers in the Tredyffrin Easttown School District?  The taxpayers of GVSD have taken a stand (and it appears that the new school board members agreed) to do whatever was necessary to balance the budget, just not raise taxes beyond the 2.9% threshold.  Do you agree with their decision?  Would you rather see TESD hold the line at all costs — rather than increase taxes above the 2.9% Act 1 index?  This decision is going to require GVSD to make major cuts in program/personnel . . . how are the school board members going to make that decision?  With the large program cuts required in the Great Valley School District, I certainly would not want to be the person making up the list of programs/personnel for the cutting block!

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