demotion

Three T/E School District Contracts Due to Expire in 30 Days … What is the Status on the Teachers (TEEA) Contract, Non-Instructional Group (TENIG) Contract and Act 93 (Administrators) Agreement?

The TESD Finance Committee meeting agenda for Wednesday, May 31, 6:30 PM is available here.

The school board is on the countdown to the approval of the 2017-18 budget on Monday, June 12 but there’s a major open issue as indicated in the agenda for tomorrow’s meeting. Actually, there are three unknowns or ‘TBD’ as stated on the draft budget as shown below:

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For the first time that I am aware, the school board is faced with the contracts of the District teachers (TEEA), the non-instructional group (TENIG) and Act 93 (administrators) all expiring on the same date — on June 30, 2017. In years past, the contracts terms were staggered. To my knowledge, there has been no update from the school board regarding any one of these three contracts that expire in a month.

In years past, the threat of outsourcing of some of TENIG’s employees was considered by the school board (as a budget savings).  In tight budget times, the District’s custodians, secretaries, maintenance workers and kitchen workers all became a target for outsourcing during budget negotiations.  Don’t get me wrong — I’m no fan of outsourcing.  (We don’t need to look any further than the school board’s decision to outsource the aides and paras and ask how that has worked out.)

In the current TENIG contract (July 1, 2014 – June 30, 2017), the custodians received a 2% salary reduction and additionally had to give back 1 week of their vacation.  (The rationale was that the District had to hire subs when the custodians are on vacation).  The other members of TENIG (security, kitchen, maintenance, and cafeteria) received a 4% salary reduction in the new contract but their vacation benefit remains intact.  Since the current TENIG contract required salary reductions, it does not seem plausible that these T/E workers would not receive an increase in the new contract (at least the new contract should bring the TENIG employees back to their June 30, 2014 salary level). The public doesn’t know the answer.

The current TEEA contract (July 1, 2014 – June 30, 2017) was ratified in February 2014, months in advance of its June 30, 2014 expiration date. The contract protected the jobs of the District teachers and included a ‘no furloughs or demotions’ clause through June 2017.  The teachers received salary increases based on their step movement in the matrix.  The contract included a Distance E-Learning Pilot Program that ran the length of the contract, expiring on June 30, 2017.  If you recall, TEEA previously filed a suit (and won) against the District over their implementation of distance learning so it was somewhat surprising to see its inclusion in the contract. Are we confident that the new TEEA contract will honor the ‘no furlough or demolition’ clause contained in the current contract?  The public doesn’t know the answer.

The third TESD contract due to expire in a month is the Act 93 Agreement — the District’s administrator compensation plan. The current Act 93 Agreement (January 29, 2013 – June 30, 2017) included a one-time bonus for service in the previous two and one-years and a one-time bonus of 1% of the individual’s salary award each June.

At the time the Act 93 contract was signed, there was discussion that the lowest paid groups – the TENIG workers – were taking a salary decrease whereas the administrators’ salaries were increasing.  So with the teachers, administrators and the non-instructional workers with contracts expiring in a month, it’s going to be interesting to see if fairness will prevail. Will the administrators continue to receive an annual bonus? The public doesn’t know the answer.

For me, the problem is that there’s been no update whatsoever in the contract negotiation process and the final budget is to be approved in a couple of weeks on Monday, June 12.

Although the draft budget includes a maximum tax increase of 3.4%, it indicates a $1.6 million deficit. The plan is to make up the deficit with a transfer from the District’s fund balance. Plus, we do not know the impact of the teachers, administrator and TENIG contracts on the budget. As indicated in the graphic above, the three contracts are ‘TBD’.

I re-read an old Community Matters post on this topic from April 2012, ‘Seeking Transparency in TESD Teacher Contract Negotiations’  which had a follow-up post on May 17, 2012, ‘TE Teachers Turn on Transparency Lights in Contract Negotiations’. In re-reading these posts and the many comments, what was striking was the need for regular updates to the public by the Board. The lack of information and/or misinformation during the contract negotiations aggravated an already difficult situation. In the CM post of May 17, 2012, I wrote,

” … making the teacher contract negotiation process transparent for the public would help the community understand how our children will be taught and how our tax dollars will be invested.  The relationship between teachers and school administrators is an important element in what shapes this school district.  There is no better way to understand this relationship than to observe the contract negotiation process. …”

Harping on the lack of transparency and public information by the school board does not seem to work – except maybe in an election year! (School board directors Doug Carlson, Virginia Lastner and Scott Dorsey are up for re-election although Scott has no opposing candidate.) No doubt the school board would lament that they cannot provide updates during the contract negotiating process as its explanation for keeping the public in the dark.

The final approval on the TESD 2017-18 budget looms in two weeks, Monday, June 12. When will the school board provide the public with the three contracts? When will the final budget (with the missing ‘TBD’ contract information) be made available to the public?  Perhaps some of these answers will be available at the Finance Meeting on Wednesday night.

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PA School District’s Financial Problems … Taxpayers Draw the Short Straw

Pennsylvania State Education Association (PSEA) the state teachers union recently released a study, Sounding the Alarm, which looks at the financial crisis in school districts across the states.  The paper examines how districts are being forced to cut educational programming to meet the demands of school budgets because of the public schools financial crisis.

The PSEA report identifies the following five key problems that have combined to create a financial crisis in the public schools.

1. State Budget Cuts. Unprecedented state funding cuts and the elimination of key funding programs have compounded underlying, systemic problems, particularly for lower-wealth districts.

2. Charter School Payments. Charter and cyber charter school laws result in a net increase in costs to school districts.

3. Declining Tax Bases and Rate Limits. Declining local property values and caps on property tax increases have eroded school districts’ tax bases and curtailed their ability to raise much-needed revenues.

4. Underlying Fiscal Weakness.  School districts showing the greatest underlying financial weakness had fund balances averaging 1.27 percent of total expenditures. These districts tend to be relatively small, rely heavily on a single source of revenue, have a small amount of buffer within their budgets, and carry a heavy debt load. They range in type from urban school districts, to small districts in the coal regions and Monongahela Valley, to rural districts in the central and western parts of the state.

5. Pension Cost Increases. A decade-long “holiday” that allowed employers to avoid paying their share of retirement contributions, coupled with investment losses from 2008 and 2009, forced the current increase in employer payments.

In the Education section of today’s Philadelphia Inquirer, we learn that Philadelphia schools may not be opening in September due to a budget gap for 2012-13 of $218 million! The school district officials are hoping that the five unions operating in the Philadelphia public school system will ‘giveback’ $156 million to help next year’s budget.  There is discussion of privatizing the custodial services; officials think they can raise another $50 million from maintenance, transportation and custodial cutbacks.  Even if this wishful thinking translates into a reality for Philadelphia public schools, they figure they will still end up short by $94 million.

In the meantime, Mayor Nutter is trying to collect $90 million in taxes for the school district next year by shifting to AVI (Actual Value Initiative) system for property taxes.  Nutter claims that the new system will more accurately indicate the increase in market value of properties in the city but includes two tax hikes to Philadelphia’s properties owners.

Whether it’s PSEA or Mayor Nutter in the city, why is it that the solutions have one thing in common – the burden falls to the taxpayer with increased property taxes.  I’m really struggling to understand how taxpayers are going to survive the increases in the tax bills.  We all want the quality of the school districts like T/E maintained, we get that our property values are tied directly to the desirability of the educational program but … if the residents can no longer afford to live in these communities, than what difference does it make?

Layer the state funding cuts with the teacher’s pension and health care benefit cuts and add in the community’s demand for excellence in the schools and you are left wondering how are the school districts supposed to balance their budgets?  Answer seems simple … either decrease spending or increase revenue.  Problem is that the school boards are finding themselves left with few options short of jeopardizing the quality of education, as they discuss options to increase revenue.  One of the more unfavorable budget strategies left on the table is demotion of professional staff for economic reasons and increasing class size.  Of course, there was another revenue source but that option was not taken to the voters — the Earned Income Tax.  It was decided that it would not pass a voter referendum.  While that is probably correct and an EIT would not have passed, I wonder how the community is going to feel about increasing property taxes and possible decreasing property values.

Like many people in this community, I too feel the frustration as we sit on the sidelines of the District’s budget discussions and watch for updates from the teacher negotiation talks.  I have asked for transparency in the negotiation process but apparently, that is not to be … interesting to note however that in some parts of the country, teacher contract negotiations are held in the public.  For instance, in Idaho the state law allows public attendance at all labor discussions.

Below is a comment for Community Matters from a resident that shares his/her frustration:

Comment from ‘Damage Control’

T/E Budget Crisis Solved!

Move to Haiti. Yes, you’re reading this correctly— move to Haiti. Students, teachers, administrators, board and taxpayers – move to Haiti! … where they use rags as soccer balls, bicycle rims for basketball nets, parking not an issue. Teachers get paid $5,000 per school year, administrators reap $7,000 and yes, like all the other districts, the superintendent makes $10 worth of stogies (not stoga’s). Best of all, UNICEF and the Salvation Army “underwrites” the entire school system!

School board, what nerve you have in asking non-profit organizations to help with a bailout. I am not a teacher nor do I have children in attendance. I’m just an old taxpayer who sees the “writing on the wall” with this school board and this particular cost savings “strategy” is one of the reasons that prompted me to write this piece.

How dare you! How dare you ask non-profits for a handout when you have $30 million in reserve! You say this reserve money is set aside for rainy day issues, sick day payments, retirement, etc.—Total BS and I don’t mean in a masters or PhD degree sense! How dare you ask these non-profits when your net worth far exceeds any amount these local non-profits could attain even if they all pull together!

Aretha Franklin sang about RESPECT, Rodney Dangerfield got more. You, the board, gave NO respect to Ms. Whittaker, the TEEA president at the last school board meeting. Granted, you announced and stressed at the meeting that only TE residents could speak—a.k.a.—allowed to be heard. Excuse me? Is Dr. Waters a resident? He speaks at school board meetings and he commutes from a different time zone!!! And, by the way, who pays for his gas—TE resident tax payers do! A TE resident voiced that the TEEA president be heard—you board, denied that request. By denying Ms. Whittaker the 1st amendment right of every American, you fired the “first shot” deep into the bowels of the TEEA ship.

Am I just blowing smoke? Don’t think so. Threats of cutting family coverage without ability to purchase such coverage, demoting top educated and experienced teachers, over-crowded classrooms, etc. will only bring together teachers, students, parents and the many news cameras and media to every school in this top-notch and one of the richest school districts in America come this September. Lines drawn, let the battle begin—what a shame! There will be no winners.

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A Review of Radnor Twp School District’s Teachers Contract … Will the Results Help T/E Teachers?

The following Community Matters post, “Signed, Sealed and Delivered … Radnor Twp School District & Teachers Union Ink 3-year Contract with Salary Increase … Is there handwriting on the wall for T/E Teachers?”  is from March 23, 2011.

A year ago, the Radnor Township School District signed a 3-year contract with their teachers union( RTEA) that was surprising, given the economic situation of the times.  Fast forward to 2012, and T/E is in the midst of their own contract negotiations.  This post and the attached comments from a year ago, make for an interesting commentary to compare and contrast where we are in our own teacher negotiation process.  Can we learn anything from the decisions of our neighboring school district?

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“Signed, Sealed and Delivered … Radnor Twp School District & Teachers Union Ink 3-year Contract with Salary Increase … Is there handwriting on the wall for T/E Teachers?”
~ Community Matters, March 23, 2011

It is now official, Radnor Township School District and the teachers union, Radnor Township Education Association (RTEA) have voted to approve three-year contract, September 1, 2010 – August 31, 2013. Below are some of the highlights of the contract.

Salary Highlights:
Salary freeze September 1, 2010 – March 3, 2011 (6 months)

Year One Salary:

  • No step movement
  • Average pay increase after freeze: 1.57%
  • Top salary step remains at current level
  • Average lump-sum payment for top salary step: $749

Year Two Salary:

  • RTEA members move to next step
  • Average pay increase: 3.26%
  • Top salary step remains at current level
  • Average lump-sum payment for top salary step: $1,206

Year Three Salary:

  • RTEA members move to next step
  • Modest increase to top salary step
  • Average pay increase: 2.66%

Health Benefits Highlights:

  • RTEA members agreed to significant increase in the cost of health insurance
  • Stating March 4, 2011, teachers move from fixed contribution to a percentage-based contribution
  • Year One – salary contribution 0.75% – 1.5%
  • Year Two – health care plan changes from Blue Cross to lesser premium-cost plan, with increase co-pays doctor and hospital visits (salary contribution 0.85% – 1.5%)
  • Year Three – salary contribution 0.95% – 1.65%

Retirement Option:

  • Eligible teachers will receive a one-time retirement payment from $25K – $50K (depending on number of retirees). The retirement option is in effect for limited time to allow district to reduce payroll.

OK, so looking at the contract inked between the Radnor Township School District and RTEA, is the handwriting on the wall for T/E School District?  So much for Gov. Corbett’s recommendation for a one-year freeze . . .  Radnor’s teacher union only agreed to a 6-month freeze.  However, after the 6-month salary freeze, the teacher union pulled off 7.5% salary increase for the following 2 ½ years of the contract.

Remember, if a teacher qualifies for a step increase, his or her salary increase would actually be higher than the average yearly salary increase. Radnor’s teachers contract is remarkable given today’s economy and budget shortfalls!

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How to Close $1.5 Million Budget Gap is TESD’s $1.5 Million Question!

With channel 6 ABC news cameras rolling and with a standing room crowd, Tredyffrin-Eastttown School Board held its monthly school board meeting last night.

Passion, commitment, support, devotion … adjectives that describe the steady stream of District students who spoke on behalf of their teachers at last night’s school board meeting.  Waiting for hours for the opportunity to show their opposition to demotion of District staff, they ranged from the 13-yr. old young girl who read her college sister’s plea to save the arts and music programs to a current Harvard student who spoke about passionately about his Conestoga physics teacher who gave his life meaning and direction.  There was a young man who delivered an emotional appeal in German, than translated and re-delivered the words in English, on behalf of his special German teacher.  One after another, the students would explain the sacrifices of their families to move to this area, all because of the quality of the school district.  Interestingly, more than one of the students suggested that the School Board let go of the technology purchases, the Smart boards, the computers, etc. and save the teacher’s jobs instead.

Least someone suggest that the teachers union somehow orchestrated this show of solidarity by the students (and parents) for the District’s teachers; I don’t think that would be possible. Anyone who has raised a teenager knows they have to ‘believe’ in the cause, their passion cannot be supplanted and forced by someone else.  No, what was clear last night was these kids believe in this school district and believe in the teachers who are making a difference in their lives.  It was quite stunning to witness.

Of course, the looming budget deficit remains.  After $10 million worth of cuts over the last 3 years, the decreasing local revenue, increased contributions to the state pension fund and diminished state and federal revenue, the District is continues to face a financial crisis.  School boards across the state are faced with the same difficult challenges as TESD … how to balance the budget amidst these challenges.

The projected TESD 2012-13 budget deficit is $5.9 million. With the Act 1 allowable 1.7% tax increase plus exceptions, the District can reduce the deficit to approximately $1.5 million.  That includes the $50 sports and activities fee, approved last night for all middle and high school students who participate in one or more activities.  But how to close the $1.5 million budget gap is the $1.5 million question.

School board members spoke of their support for the teachers, many explaining that they have children in the District.  They suggested that their ‘hands were tied’ and that very few options remain on the table to close the budget deficit and again suggested that students and parents send letters to the state legislature demanding relief.  With few options remaining, the school board is being forced to look at the possibility of increasing class size and demotion of senior members of the staff.

Some have suggested that the school board should have pushed for a taxpayer referendum for an earned income tax on the ballot.  Although too late for November’s election, it was reiterated that these types of tax increase referendums historically have not passed in Pennsylvania.  In addition, the results from the tax study group indicated that there was no support for an EIT in TESD.  Hindsight being 20/20, I would have to ask what was the downside for the school board to take the question to the voters.  We have to remember that only 20 percent of the taxpayers in TESD also have children in the District.  So, it’s complete speculation if there would have been enough interest to get the EIT passed.

Unfortunately, for TEEA, it looks like it is going to be up to the teachers to help save the school district through their contract negotiations.  How much are they willing to sacrifice?  How much of their benefit package and salary increase are they willing to forego?  I don’t think any of us (and that includes the School Board) wants to see the quality of the education diminished through increased class size and he demotion of some of the District’s best teachers.  We know that the District cannot afford the teachers’ health care plan at its current level, but is a benefits change enough to make up the $1.5 million District deficit?  I have no answers.

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T/E Fund Balance … Panacea to District’s Budget Shortfall?

The Tredyffrin Easttown School District School Board is contending with decreased local revenue, higher health insurance costs, increased contributions to the state pension fund, and diminished state and federal revenue. These problems do not make TESD unique; school boards across Pennsylvania are facing the same issues.

To suggest that Pennsylvania school districts are challenged by the financial crisis would be an understatement. As School Boards struggle to balance their budgets amidst these challenges, there is unprecedented concern as they look for solutions.

In TESD, the teacher contract talks continue as a backdrop to the ongoing budget discussions of the school board. With the current teachers’ contract set to expire on June 30, 2012; we are starting to see the battleground lines drawn in the sand. I am beginning to fear a “us versus them” mentality is developing. Many of the comments on the last Community Matters post were focused on the health insurance benefit plans of the teachers. I have to believe that the T/E teacher’s union TEEA accepts that the district can no longer afford to sustain their members’ health care plan at its current level – simply not possible.

Teacher unions fight for their members’ financial self-interests. To be clear, I do not have a problem with that motive – after all, isn’t that the primary reason ‘why’ a teacher would join TEEA and pay dues. Some may suggest that it appears that both TEEA and the school board are more focused on the money than the education. Let’s hope for the benefit of the District’s children, that conclusion reached by some is incorrect. Many of T/E teachers are also residents and parents. TEEA may be hoping to keep their benefit package intact but I have believe that the quality of the district’s educational program is every bit as important to most of its members.

Monday’s School Board meeting should be an indicator to the community on whether the teachers and the School Board are working toward the same goals or not. A couple of important topics for discussion at the meeting will be demotion and increased class size. I have previously written that increasing class size by one or two students may not be a problem, but could this be seen as the beginnings of change to the quality of TESD education? Increased class size may mean that teachers cannot focus as easily on individual students’ needs.

Just the talk of ‘possible’ demotion in TESD for economic reasons, is sending a negative tidal wave to TEEA. It is worrisome that the professional staff may be feeling devalued based solely on this budget strategy discussion. According to a recent TEEA press release, “T/E Teachers Willing to Help Create a Financial Bridge to the Future” the teachers union fully understands the District’s financial crisis and has prepared an ‘extremely reasonable solution’ to the School Board. However, according to TEEA, there has been unwillingness on the part of the School Board representatives to discuss their offer. The article further states that if demotion in the District moves forward, it is likely that some of the teachers will be forced to seek employment elsewhere. In reading the press release, I bought into this part of their argument.

However, the following paragraph from TEEA caused me pause,

At the same time, the Board has made assumptions about our future financial condition based upon many worst-case scenarios. They assume no future revenue growth, continued real estate decline, and continued lack of state and federal funding. These assumptions ignore significant increases the district made to its reserve fund in the past year. A more reasonable projection would account for an improving employment rate in Chester County, a real estate market that is beginning to rebound, and other indications of improving economic conditions.

To be fair to the School Board, they would not be doing their job if they were not realistic in their budget projections. Governor Corbett has focused his blame for the current budget crisis in Pennsylvania schools solely on the shoulders of local school boards. With Harrisburg’s major public education funding cuts, it is precisely the school board members who are now mired with this mess as the state pushes school funding responsibility on local school districts. I believe it is a bit quixotic for TEEA to suggest that the School Board should take a more positive (unrealistic?) approach to improving economic conditions. I am all for taking the ‘half glass full’ approach to situations but its needs to be tempered with realism. Rather than ‘worst-case scenario’ as suggested by TEEA, I hope that our School Board is attempting to be realistic in their projections.

In the latest TEEA press release, ‘Teachers Hope for Open Dialogue, Ask Community to Share Voice’, they offer a list of questions for community members to ask at Monday’s School Board meeting. Much of their focus is on the District’s fund balance, and the suggestion that the reserves be used to fund the budget shortfall. According to the TEEA, our school district currently has a reserve fund that is 26% of revenue, whereas other local school districts have fund balances of 8% to 10%. TEEA states that the PA School Boards Association recommends a balance no greater than 5%.

I believe that TESD has the largest fund balance in the state – someone please correct me if this wrong. And since the fund is taxpayer’s money, do you agree with TEEA and that a buy down from the reserve is in order to help fund the 2012-13 budget?

However, what are the repercussions, if any, with this approach for future budgets or future emergencies?  Moving forward, you don’t know when a roof is going to need major roof repairs or a school boiler is going to need replacement. Few school districts have amassed anywhere close to the significant fund balance as TESD. Maybe we should view 2012 as an ‘emergency’ and with that approach, use the fund balance as TEEA suggests.

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T/E School District Budget Options . . . Pay Waiver, Demotion & Furlough Discussion

I attended the T/E marathon ‘Budget Workshop’ last night.  For nearly 3 hours, the school board members and district administration waded through 30+ slides which contained so many charts and graphs, it was hard to take it all in.  The slides and their detailed explanation took up the vast majority of the evening with probably the last 30 min. devoted to audience questions. The workshop included three new cost-saving ideas that were ‘new’ to me  – a ‘pay waiver’, demotion and furlough.

There was a pivotal slide labeled ‘Options to Close Remaining Shortfall’ that grabbed my attention.  Slide #26 indicates the remaining budget shortfall (after taking budget strategies) at $3,570,509.  Two options listed to close the shortfall – (1) Outsourcing of custodial services $950K and (2) ‘Pay Waiver for remaining staff (TEEA and TENIG) $3,000,000.  We understand the outsourcing option; an RFP has gone out with a return date of early April.  An announcement detailing the results of the RFP should be available early May. 

What is a ‘pay waiver’?  If I understood it correctly, the school district would ask the teachers union not to take their contract guaranteed pay increase for 2011-12.  This would be a one-time pay waiver (a give-back of sorts).  Unlike a salary freeze that could be retroactive (as in the 6-month salary freeze in Radnor’s recent contract) or a salary freeze the first year but larger increases in the second year of a contract, a pay waiver would not be made up in a future contract. There was no indication that TEEA has been approached with this proposal.  Although several school board members praised the teachers, they also suggested the reality and the severity of the economic times, call for a ‘shared sacrifice’ by the taxpayers, teachers, etc.  This is a bold proposal and it will be interesting to see if there is any comment or discussion from TEEA. 

The other ‘get my attention’ moment of the evening was Dr. Waters suggesting that the district would explore  ‘demotion’ and ‘furlough’ as possible ways to close the shortfall.  He cited PA School Code 1151 in regards to demotion.  I did a bit of research and determined that Section 1151 of the School Code provides for the demotion of professional employees. While this section does not make mention of demotions for economic reasons, case law has established that school districts are permitted to demote professional employees for economic reasons, so long as such demotions are not arbitrary and capricious under the law. Expanding the provisions of Section 1124 would similarly allow school districts to furlough employees for economic reasons.   

What would this mean for the school district budget?  Far less staff would be affected and programming would be maintained.   It appears that by law, the school district superintendent would be empowered to review the entire school system as a whole to identify where reduction in staff could occur.  Very interesting news.  I sensed a real determination from Dr. Waters that he was doing everything in his power to help with this budget deficit.  Although he certainly did not say that he would evoke demotion or furlough measures, there will be further discussion on the subject.

Although there was much other discussion in regards to cost-cutting measures, these particular suggestions were ‘new’ to me and caught my attention.  I left the meeting last night with a real sense of the seriousness of the financial situation and of the battle to close the $3.5 million remaining shortfall. 

I would strongly suggest that State Rep Warren Kampf and Sen Andy Dinniman need to play a role in our local school district issues – I’d like to see a public forum with their attendance.  I believe that I recently read that Kampf attended a Phoenixville School Board meeting (or one of their subcommittee meetings?).  If Kampf or one of his staff workers is reading Community Matters, I am making a public appeal that he attend a T/E School Board meeting. . . . aside from serving as our State Representative, Kampf lives in the T/E school district and I would like to see him personally involved in our school district’s budget issues.

Ray Clarke also attended the budget workshop and provided his editorial comments..  It is interesting to have both perspectives of the evening and I thank Ray for his notes below: 

Tonight’s TESD “Budget Workshop” did not really live up to its title, but was nevertheless an informative, if a little selective, exposition of the underlying forces driving the district’s finances – and driving them to steep deficits.

  • The real estate-based gravy train has run off the rails – the tax base is declining and there’s no sign of recovery in transfer taxes
  • The state is exacerbating the problem – reduction in the social security reimbursement, flat special education funding despite increasing enrollment, and a tax increase formula that will limit property tax increases to around ~1% for at least the next couple of years.  There’s even talk of eliminating “Exceptions” and reducing the PSERS match – but that last would just be insane.
  • As it is, PSERS will be the biggest expense increase – up $1 million each year for the next two years, $1.5 for each of the two years after that and $3.5 million in 2015/16
  • The district has reduced staff by 60 in the last two years, but the vagaries of grade and school specific demographics will require a staff increase next year despite likely flat enrollment.
  •  New news: there are tools within the PA School Code that would allow for selective staff “demotions” to meet budget deficit situations.  This may be a way to implement previously attrition-dependent changes such as the teaching period changes at the high school.
  • With all known realistic strategies and a 3.77% property tax increase including the now-approved exceptions, the 2011/12 deficit would still be $3.6 million
  • Other ideas continue to be studied: $400,000 of reasonably tangible and realistic notions, and maybe an equal amount of less tangible but possibly realistic ones. A few multi-million dollar ideas with profound impact on the culture and educational quality are further on the list, but seem likely only in extremis
  • Which brings us to the big issues, laid out individually by the administration: outsource custodial services and obtain a “pay waiver” from both the TEEA and TENIG.  There was no indication that the Board has received any proposal from the unions, much less one that would forgo (“until better times”) $3 million of pay increases.  However, there was considerable emphasis on the need for shared sacrifice, and it is starkly apparent how such a move could bring the deficit somewhat back into range.  There was no commentary from the TEEA – unlike from the TENIG representatives, who, as at previous meetings, appealed to emotion rather than the pocket book.  As that process evolves, it would be great if TENIG could quantify the cost savings they claim they could bring to the district.

Bottom line: my view is that the district continues to make the best of the hand it has (including of course, the cards picked up from generous previous contracts and other decisions).  The key question: what will the unions do to show that they can remain relevant, and be part of the solution, not part of the problem?

And even if the deficit can be reined back some, PSERS remains the issue.  

There was an interesting chart that documented the Employer Contribution Rate from 1988 to now.  The rate started out at 19%, declined for 13 or 14 years to 1% (thanks to a booming stock market), at which point the benefit multiplier was increased to 2.5, COLA rules changed and bubbles burst, whereupon the ECR started up again, to next year’s 8.65% and then 33.37% by 2015/16 and for the next decade, even after last year’s Harrisburg “fix”.  Employee contributions have been consistently 7.5%. 

So, how to fix this (and the related SERS for state employees)?  Any solution will likely have to be approved by taxpayers.  If the problem is dumped in the local lap, the increases are fundamentally unaffordable without a referendum: be it for, say, 10% property tax increases or an equivalent EIT.  Even if Harrisburg rose to the occasion, that might also involve a courageous appeal to voters: for a change in the Constitution (“Any unilateral substantial change in public employee pension benefits that constitutes a “net detriment” to the employees is a constitutionally impermissable impairment of the employment contract”), or for issuing a Pension Bond to deal with the unfunded liability. 

Now there’s something to write to Dinniman and Kampf about!

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