fuzzy math

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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