Pattye Benson

Community Matters

6% tax increase

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

May 27, 2019
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With just two weeks until the final budget is approved for the school district, where is the school board in the process? We know that the 6% tax increase proposed in mid-December has not changed. Rumors continue that the school board will approve a lower tax increase yet the public remains in the dark.

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

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

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

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

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

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

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

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

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

Some questions that arise:

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

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

Taxpayers Facing 6% Tax Increase in T/E School District as Questions about Possible Accounting “Timing” Errors Remain Unanswered! Finance Committee Meeting and Budget Workshop on Monday, April 8

April 6, 2019
24 Comments

This blog post is follow-up to my last article. Upcoming on Monday, April 8, 7 PM at the high school is the TE School District Finance Committee meeting and Budget Workshop II. The agenda materials were released last evening – Click here for Finance Committee agenda and Budget Workshop materials.

Ever the optimist, I had high hopes that the agenda for the meeting would address budget and accounting questions from the last School Board meeting. Residents raised serious issues at the Board meeting, including the “timing error” of special education expenses. I found nothing in either the agenda for the Finance Committee or the Budget Workshop materials regarding these issues.

As was discussed in the last blog post, the T/E taxpayers are facing the largest tax increase in decades – 6%. Although the school board has assured us since December that the tax increase would be coming down, the number has only moved from 6.1% in December to 6% in April.

As was suggested at the last School Board meeting, resident Ray Clarke believes that the District’s accounting mistake could reduce the proposed tax increase significantly – Ray goes as far as to suggest that the tax increase could be lowered by as much as 50%! I personally asked at the School Board meeting for confirmation that the Board would review this situation – so why isn’t the accounting timing mistake on the Finance Committee or Budget Workshop agenda for discussion? When faced with a 6% tax increase, why wouldn’t the School Board want to look at every opportunity to possibly lower that number?

We elected our School Board directors to provide oversight; with independent thought and transparency. In a little over three weeks, on Monday, April 22, the Board will take a vote on the “Proposed Final Budget. Realistically speaking, how are they going to move the dial to a more acceptable increase in three weeks!?

It is important that the School Board knows that the public finds a 6% tax increase (or 5% increase for that matter!) completely unacceptable! If the largest tax increase in decades troubles you, please contact the School Board at schoolboard@tesd.net and/or plan to attend the meeting on Monday.

Ray Clarke reviewed the Finance Committee agenda and the Budget Workshop materials. Here are his comments; read carefully the unanswered questions at the end of his remarks:

There is little new in the materials, although the annual drama production continues to unfold. We are heading to the second intermission, with a vote on the “Proposed Final Budget” on April 22nd.

For the current year:

– Investment income is already year-to-date nearly $1 million, or 3 times, over the full year budget

– The projection for benefits expense has jumped from the budgeted $15.6 million, past last December’s estimate of $16.1 million, to $16.9 million now. Still less than 2017-18’s $17.5 million. A self-funded plan is certainly going to be variable and, given the capabilities of medical billing systems, likely another area subject to timing difficulty.

– “Other” expenses are exactly unchanged from the budget at $47.4 million,

– So this year’s deficit is now projected at $2.28 million.

For next year:

– The Special Education Exception tax increase remains at 3.642% for a total tax increase of 5.964%.

– The reported $4.5 million increase in purchased professional services from 2016-17 to 2018-19, on which the tax increase is largely based, remains unchanged.

– Second look healthcare projections and prescription drug discounts have reduced budgeted expenses by $575,000.

– With the 6% tax increase and the latest expenditure numbers, next year’s budget is now projected to have a slight surplus.

Key questions thus remain to be answered:

— What expenditures were incurred for Special Education services provided by the CCIU in 2016-17 and 2017-18?

— If those expenditures were different to those provided to the Department of Education to authorize the tax increase Exception, what action does the Board plan to take?

— How should the community reconcile the county-certified assessment history of assessed value used by the Townships, showing a 1.2% increase in the past year, to the numbers submitted by the School district to PDE, showing a 2.5% increase?

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