Kevin Mahoney

No EIT for Tredyffrin Easttown School District in 2012!

Based on Ray Clarke’s notes below from the Finance Committee and the School Board meeting on the Earned Income Tax, sounds like it was quite a night!  First off, the big news to report — there will be no EIT voter referendum question on the April primary election ballot.  The same two people, Kevin Mahoney and Anne Crowley, favored taking the EIT to the voters as they voted similarly in October 2010.  Please read Ray’s comments and I would like to hear from others who attended the meeting last night.

A couple of fascinating school district meetings last night. Bottom Line: a motion to advise the townships of a possible intent to put an EIT on next year’s ballot was defeated 7:2 (Mahoney, Crowley).

My own take, but watch the action for yourselves….

The usual arguments were rehearsed by both Board members and audience, but the ones that I felt carried the day were that “now is not the time” and “we’re going to try really really hard to get Harrisburg to find another of your pockets to take the employee pensions from”. Dr Brake had a well-reasoned position that also made the point that the current political climate would not allow a thoughtful debate and the Board could avoid “roiling the community” further by not putting it to referendum now.

But that was not what kept this audience member awake. Just about every board member (campaigning or not) berated the political machine for the campaign tactics.

Dr Brake contrasted legitimate “contrast pieces” with “offensive” “making stuff up”. Then Republican operative Tom Colman launched a defense of the election tactics, and acknowledged that he had orchestrated a personal campaign against the Act 1 tax in 2007. That brought up Jenny Wessels to state that she had been miss-represented in the campaign and to commend the Board for their non-partisan approach. Then followed Debbie Bookstaber, in a long soliloquy berating her colleagues for their political statements.  Must see TV!

A few interesting audience comments:

Ed Sweeney: strongly against an EIT and wants the tax policy to attract the “right people” (high income earners?)

Melody Price: a thoughtful appeal for a balanced approach that considers all potential solutions.

Unknown audience member: “three words – Taxed Enough Already” (that was helpful!)

Barbara Morosse: There is more expense for the district to cut, including through teacher salary structure changes.

Notable board member comments:

Rich Brake: wants to completely recalibrate the teachers’ contract, do away with the matrix.

Kevin Mahoney: a) lest anyone thinks that companies are not interested in property taxes, consider the multi-million dollar GSK assessment appeals, b) maybe school districts should be freed up from rules that limit investment options to be able to earn returns like UPenn endowment’s 15%

Betsy Fadem: Don’t think we can use the Fund Balance to balance the budget because the School Board has committed it….

Which brings me to the evening’s opening act, the Finance Committee. Four things to remark:

[1] The minutes that Pattye had puzzled over were corrected: the administration proposals for the $1.3 million funding restoration were not authorized by the last Finance Committee but referred back to the Education Committee.

[2] A discussion of the Fund Balance commitments, which include $7.6 million of “vested employee services”, along of course with $15.4 million of “future retirement plan stabilization”. The accounting is much different to the GAAP I’m used to, but here’s my takeaway:

  • These amounts are based on arbitrary board policies
  • The PSERS commitment is based on the next five years, the employee services on almost but not quite the full lifetime liability
  • They are only commitments to the extent that it takes a Board vote to change them
  • Few if any other school districts have a commitment for vested employee services, and pay as they go.

So, “vested employee services” appears to be another way to sit on taxpayer money without fully revealing what the actual liability is, what the additions and payouts are from year-to-year, and where the funding for the liability comes from. And, in general, the PSERS liability is going straight up for the next 5 years, holds flat for the next 10, and then starts to decline. So would the policy mean that the district sequesters say $25 million of taxpayer money until that decline starts in 2025 or so?

I think that Mahoney committed the next Finance Committee to review the policy. At the very least it would be good to know exactly how all this works, and why it is that TE policies need to be different from other school districts.

[3] Groundwork laid for the ongoing property tax-to-the-max strategy: next year’s Act 1 Index estimated at 1.7%, Exceptions for PSERS and special education 1.7%, total property tax increase 3.4%, $2.9 million.

[4] The fourth thing was …… err ……. ooops …… oh yes:

The Finance Committee approved a contract with a marketing agency for selling promotional space on district property. The net annual revenue to the district is projected to be $160,000. The agency was the only one that responded to the district RFP. The contract states that the District has to approve all content, sponsors, advertisements; in the meeting it was stated that the Board approval is required.

If I think of any else, I’ll add it as a comment.

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State Returns $1.3 Million to TESD — Restore Educational Program Cuts or Add to Fund Balance?

In reviewing the summaries of the T/E school board committees, I was interested to learn from the Finance Committee report (below) that almost $1 million is coming back to the fund balance due to lower than expected medical claims.  That’s good news!

Also it was confirmed at the Finance Committee meeting, that the state would be returning $1.3 million in funding back to the school district.  Now there’s a question for school board candidates — what would you do with the $1.3 million?  Would you restore some of the educational programming cuts in the district?  If so, which ones?  Foreign language in the elementary schools?  Maybe Latin in the middle school?  Or, would you suggest that the $1.3 million go into the fund balance?

Finance Committee, Chair: Kevin Mahoney
Prepared by: Administrative Liaison

The Finance Committee met on October 17, 2011. The Committee reviewed a draft copy of the District’s 2010-2011 ending fund balances provided by the local auditors. The administration explained how the fund balances are required to be shown as committed, assigned or unassigned on the audited financial statements according to new GASB regulations. The Committee reviewed the fund balance commitments and agreed with the amount shown in the medical stabilization commitment and the fund balance from the athletic fund should be committed. The administration explained that due to lower than expected medical claims spending from the self funded health benefits plan, expenditures would be about $947,000 less than projected resulting in an addition to fund balance.

Next the administration presented the results of the September Treasurer’s report. According to the report the District will be receiving $1.3 million more in State Revenue during the 2011-2012 fiscal year than was originally anticipated and budgeted. All other revenues and expenditures are within the budget amounts. The Committee discussed how the additional State revenue would be used which included possibly reinstating cuts made to the educational program to balance the 2011-2012 budget or using less budgeted fund balance to balance the fiscal year. The administration presented the proposed reinstated budget cuts that they were approved by the Education Committee. The Finance Committee asked that the proposal to reinstate these budget cuts be presented at a future Board meeting.

The Committee also reviewed the budget calendar, paying special attention to the due dates that relate to the Earned Income Tax (EIT) Study Group and discussed how EIT revenue sharing with the Township would work. Finally the Committee reviewed the budget projection model and asked the administration to make a few changes to the assumptions for future review of the model.

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Milestone Agreement Between T/E Teachers and School District: Is it a ‘Salary Freeze’ or a ‘Pay Waiver’. . . Does it Really Matter What We Call It?

There was a milestone agreement between the T/E teachers and the school district last night.  I am not sure whether we call the TEEA-TESD agreement a salary ‘freeze’ or a ‘pay waiver’ but, . . . if both sides are happy, does it really matter what we call it?

The school board members presented the details of the new teacher union offer.  The offer from Tredyffrin Easttown Education Association (TEEA) was read and the discussion opened for public questions. The board voted on the proposal and the agreement won unanimous support from the school board.  

To read a copy of the TEEA-TESD agreement, click here.  If I understand the agreement, here are the important points:

  • 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.
  • For the second 6 months of the 2011-12 school year, the teachers salaries will ‘unfreeze’ and they will advance.
  • With this agreement, the T/E school district agrees there will be no involuntary furloughing or involuntary demotion of teachers for 2011-12.
  • This agreement is a one-time cost savings for the 2011-12 school year only and is not precedent setting.  The agreement does not extend the current contract and negotiations for the next contract will be on schedule.

I asked Pete DePiano, union president of TEEA for his thoughts on the TEEA-TESD agreement.  He writes,

“I am so proud of the membership of TEEA for stepping up with this offer during these difficult times. Likewise, I am happy that the Board was able to accept. A special note of gratitude must be extended to Mrs. Cruickshank, for we were in constant communication behind the scenes for a VERY long time working on this – even prior to the Corbett announcement. It was that continued line of open dialogue that made this all possible. We are looking forward to a wonderful conclusion of the school year as we continue to serve the greatest students in the greatest district in the Commonwealth of PA.”

Pete DePiano
President, TEEA

______________________________________________________

Ray Clarke attended last night’s school board meeting and at my request kindly shares his thoughts below.

Re the Earned Income Tax Study Group, I want to personally thank Kevin Mahoney for suggesting that the group members be apolitical.  The school board members made it clear that no one from the school board would be on the study group and I applaud their efforts in making the selection process open and transparent!

Important developments at tonight’s School Board meeting
  1. The Board voted to accept an offer from the TEEA to defer next year’s contracted pay increase for six months with no change to the contract termination date. After six months, salaries will increase to the contracted 2011/12 levels, with step and level movement. There will be no furloughs or demotions during 2011/12, and 2012 retirees will be protected. This is expected to save the District $917,000 in 2011/12. The five year model, which assumes no salary increase in the next contract, claimed that these savings versus the previous projection continue into the out years – although I remain puzzled about that, since the matrix and distribution in place at 6/30/2012 is unchanged under the offer. It may be important to understand expectations on this going into the next contract negotiations.
  2. The impact on next year’s budget is fairly clear, though. The board approved a budget that has a 3.8% property tax increase and a $2.2 million draw down of the fund balance, with an additional $1.9 million possible in the event of specific contingencies. There was no appetite for an Activity Fee for next year, and very different philosophies from all Board members that spoke. Only Kevin Buraks voted against an amendment to remove it from the preliminary budget. Worth looking at the tape to review the issues.
  3. The Board defined the process for obtaining citizen input on the pros and cons of an EIT, through a Tax Study Group. They will select 9 residents for the Group based on information to be requested in a May 16th mailing to residents. Work to be completed by October, for a November decision by the Board whether to move the process forward towards an April 2012 referendum. Important difference from the 2006 effort: the group’s role is not to present a recommendation, but to help educate the Board and the public. The Board is looking for representation from across T/E, and wants the group to be apolitical. All meetings to be open to the public; not sure if that’s very conducive to a deep dive into the economics, but maybe that’s not the purpose.
  4. Per Dr Brake’s legislative report, there seems to be some likelihood that the Legislature will reverse or limit the Governor’s proposed capricious Social Security reimbursement cut, so that may help TESD’s budget (at best, by $1 million). It also seems probable that the local ability to increase taxes beyond the Act 1 limit will not be completely eliminated, retaining at least the possibility of PSERS and special education Exceptions.
A final pet peeve: once again this year the gaming rebate was used in the context of an offset to the property tax increase. If the rebate was increasing by $171 that would be true, but in fact it’s just the same ~$180 it has been for every year since 2008/9. At least it wasn’t Dr Waters this time, but rather Dr Brake, who I thought might know better.
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Looking to T/E Teachers for ‘Shared Sacrifice’ – Pay Increase Waiver not Salary Freeze

School districts across the state are scrambling to plug projected budget gaps stemming from deep cuts in state funding and TESD is no different. The use of “shared sacrifice” has become a common and oft-repeated phrase in today’s political discourse. As school district budget deadlines loom, we are see that teachers (fairly or unfairly) are finding themselves of in the limelight on this topic.  In my view, we do need to boldly address our deficit crisis, but we need to do it in a way that is fair.

Last night’s TESD Finance Committee meeting had a very different tone than the last school board meeting. As the school board and administration discussed the few remaining available budget strategies, I had a sense that the school board was digging in its heels, expecting a ‘pay increase waiver’ versus a ‘salary freeze’, which the teachers union previously offered.  Although the T/E teachers union (TEEA) states the value of their salary freeze offer is $2.5 million, the school board counters that the freeze does nothing more than extend the teacher contract by a year and ultimately costs the district more money.  Encouraging the teachers union in the path of shared sacrifice, the school board prefers the teachers consider a pay increase waiver which, if I understand correctly, requires opening their current contract.

Credit needs to be extended to TEEA for their offer of a salary freeze to the school district. For some teachers, they believe that by offering a salary freeze, they are sharing the sacrifice. Let’s remember that Gov. Corbett suggested that teacher unions offer a salary freeze to their school districts to help with budget deficits. (I don’t recall his using the words, ‘pay increase waiver’.)  Yes, there is a budget crisis in school districts across the state; but I admit that I have difficulty with the breaking of a contract, which was negotiated in good faith by the teachers.  If contracts mean nothing then should we all go home and break our car purchase contract, our mortgage contract, and every other contract we signed in good faith where we expect both parties to be honorable.   What about ‘negotiating’ after the contract is fulfilled . . . ?

Looking at discussion from the other side, the school board is struggling with the remaining budget shortfall.  So . . . what do they do?  In their minds, they believe that the teachers should help with a ‘pay increase waiver’ (shared sacrifice) which according to their calculations could net $3 million.  At the meeting I had a sense that the school board is listening to the public and are interested in keeping the process transparent.  They offered that they have heard from TENIG, the non-instructional union, and are reviewing the offer.  Keeping the community ‘in the loop’ will prove a win-win for the school board, the teachers, and ultimately the taxpayers.

Setting aside the timeline debate of the April 14th TEEA teacher union offer letter of a salary freeze, and the rejection of the offer by the school board, last night the Finance Committee presented their side of the argument in favor of a pay increase waiver.  According to their analysis, the school district budget projection for 2011-12 is as follows:

  • Budget Projection as of May 2, 2011:      $3,170,509
  • Budget Projection (TEEA and TENIG Pay Increase Waiver:   $170,510
  • Budget Projection (TEEA Proposal Letter):         $946,122
  • Budget Projection (Custodial Outsourcing):        $2,370,438

Following the Finance Meeting, I asked Pete DePiano, president of the teachers union for his thoughts.  Here is his response,

“The 450+ members of the Tredyffrin/Easttown Education Association will stay true to their integrity in attempting to come up with a final cost savings offer for the district’s consideration.” 
 
Pete DePiano
President, TEEA

DePiano’s response tells us that the teachers are continuing to work on possible solutions to help with the budget crisis. Open and honest communication between the teachers union and the school board will aid greatly in the ongoing budget discussions. I want to believe that both sides can work together for the sake of the kids and the community.

Ray Clarke kindly offers his comments on the Finance Committee meeting below:

  • The TEEA proposal is judged to be worse on a 5-year time horizon than the status quo, because the projected $2.05 million of savings in 2011/12 is offset by salaries in the following years that are $0.5 million higher than they would otherwise be, due to two years of step movement rather than one. The higher salaries also trigger proportionate benefit cost increases, but there appear to be no fundamental differences between benefit programs, premium contributions, etc. in either scenario.
  • The salary “waiver” has the greatest impact on the district because the saving occurs every year. Although the model was presented without tax increases, it looks to me that, under this scenario, very modest increases in taxes (property or EIT) and gradual use of the “PSERS stabilization” fund balance could allow the district to fund the retirement fund beyond the five-year time horizon.
  • The Board did appeal again to the community to make their voice heard with legislators regarding the PSERS problem, and our frequent academic economist commenter also reminded us once again of the fundamentally bankrupt public pension plans. A couple of data points: the recent “fix” assumes an 8% investment return, and provides retiring career teachers with my estimate of an equivalent $1.25 million annuity. Just to keep this simple, here are the options:

 1. Reduce the liability by undoing the multiplier increase for all, not just new hires (the decrease needs a change in the state constitution, unlike the increase…)

2. Increase taxes:
a) statewide  (Marcellus gas, personal income, corporate income, etc.), or
b) locally (property, income)

3. Redirect spending from somewhere else. Like where? Pick your poison! What would Dinniman and Kampf propose?

  • There was a very unsatisfying discussion of a possible Activity Fee, punting it along to next week’s board meeting. Needless complications about different bases for charging. The bottom line: salaries and transportation for (non-mandated) extra-curricular activities cost the district $1.14 million a year. 80-85% of students participate in at least one. Nobody is making any argument that these activities are not totally worthwhile. A universal charge could be simply administered. So the issue is straightforward: do these continue to be funded by all taxpayers, or do families with high school and maybe middle school students bear a little more of the cost? Hopefully the full Board can have a discussion along these lines next week.
  • The timeline for an EIT study seems very compressed. The Board is considering appointing a study group; they need to get on that right away. If an EIT makes enough sense to put to a referendum, there’s a November 16th deadline for notifying the townships of that intent.
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Countdown to Primary Election May 17 – T/E School Board Candidates Resumes

The Pennsylvania Primary Election is 3 weeks from tomorrow — Tuesday, May 17, 2011. As I previously announced on April 11, I will provide all the candidates resumes on Community Matters. I hope that by providing in-depth information on local candidates will encourage increased voter turnout for the Pennsylvania Primary Election. Historically, voter turnout in Tredyffrin Township has been low for the Primary Election, (particularly in a non-presidential year) — here’s hoping that trend will change on May 17. 

Currently serving School Board members Karen Cruickshank, Jim Bruce and Pete Motel are seeking re-election. Two of the current school board members, Debbie Bookstaber and Kevin Mahoney have decided not to see re-election.

The School Board candidates for the Primary Election are listed below.  (Click on candidates names to read their resumes). It is my understanding that all school board candidates have cross-filed as both Republican and Democratic candidates. Easttown candidate Craig Lewis was contacted and invited to supply his resume but he failed to respond. If Mr. Lewis would like to have his resume included with the other candidate resumes, I would be happy to add it.

Tredyffrin-Easttown School Board Candidates:

  • Easttown, Region 3: Peter Motel (R) **
  • Easttown, Region 3: Craig Lewis (D) No Response from Candidate

**  Incumbent

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Outsourcing of Custodial Services Would Save T/E School District Almost $1 Million . . . Should this Cost-Cutting Measure be Considered?

Last night was the T/E School District’s Finance Committee Meeting.  One of the solutions offered to help close the looming deficit for the 2011-12 school district budget is the outsourcing of the custodial services. Outsourcing of the custodial service is expected to save the school district an estimated $950K in the budget.  Last night, several members of the district’s custodial union (many of whom are township residents) attended the meeting to make the case to preserve the current custodial arrangement. 

From Pete Bannan’s article in today’s Main Line Suburban newspaper on TESD Finance Committee Meeting, Pete reports:

” . . . All the school-board members were present for the meeting and the pleas during the public comments did not fall on deaf ears. Finance chair Kevin Mahoney said the school board wasn’t doing this to save money but is required by state law to balance the budget.
 
“The options are evaporating,” said  Mahoney. “The governor’s budget turned a $2.2-million shortfall into a $3.6-million shortfall.  It’s simply a matter of economics.”
 
Mahoney said no decisions had been made. The proposal is due April 4 and the board has 120 days to review it. Mahoney also said the school board is open to ideas and constructive ways  to reach its goals. He suggested the public contact elected state officials, such as State Rep. Warren Kampf, State Sen. Andrew Dinniman and Gov. Tom Corbett, and ask for real pension reform. . . “

 Ray Clarke attended the Finance Committee meeting and offers the following notes for Community Matters readers.  As always, I am grateful for Ray’s attendance at school district meetings, his analysis and then for sharing them with us!

Monday’s Finance committee meeting vividly illustrated the problem TESD finds itself in.  

Very many TENIG (Tredyffrin Easttown Non-Instructional Group) members and others spoke about the value of the current system with experienced, stable, professional and flexible staff, compared to the risks of a possibly cheaper, but high turnover, less trustworthy, and less committed external provider.  There was also commentary about the impact on diversity.  There was much talk about membership in the T/E Family, and a wise – but unfortunately innocent – CHS student suggested that a family would sit down and work out a fair solution for all its members, rather than focusing on one group.  (No prizes for guessing the elephant in this particular family room!)

The out-sourcing analysis does offer a glimmer of hope, though.  The district has issued an RFP, responses due May 4, which then must be given to TENIG by May 11.  TENIG is allowed 120 days to respond.  Let’s assume that out-sourcing would really save the $950,000 estimate.  Now, the district has already identified overtime and substitute strategies that would save $150,000 with the existing staff.  Is it wishful thinking that the staff could use their professional experience to identify further cost-saving practices, and offer compensation roll-backs and benefits adjustments that could move the impact over 50% towards the expected cost savings?  Taxpayers might be very willing to pay a premium for service assurance.

After 90 minutes the committee got down to a review of budget projections.  The $1.3 million impact of the PA budget was confirmed, with the $1.1 million reduction in Social Security reimbursement to the 15% “aid ratio” being the real surprise.  Apparently it has been at 50% for as long as anyone in the room could remember.  I would think that this might be subject to lobbying: where is Kampf on this one?  It apparently squarely targets districts like TE that have a low aid ratio.

There was agreement to move ahead to crystallize a number of strategies listed with low or moderate impact on the education program.  The biggest ones:

– Change the prescription provider: Impact $250,000
– Eliminate raises for all non-union staff: $395,000
– Integrate Applied Technology into Elementary Core: $300,000
– Plan for a 5% increase in medical costs (vs previous 10%): $412,500
– Fees for extra-curricular activities: $80,000

The result of all of this is $2.3 million of fairly solid strategies (including all the above except the last) and $0.45 million of more speculative ones (including the last).  The current scenario assumes $0.15 million of the specualtive ones, for a total of $2.4 million of strategies.  Add in Act 1 and Exception tax increases of $3.2 million (3.8%), subtract the $1.3 million state cuts, the $8.9 million deficit comes down to – a mere – $4.6 million.

Board policy does place some limits on use of the Fund Balance, but one obvious use is to pre-fund approved programs implementation-limited by contractual attrition rules.  There was an example presented of how $1.1 million could be designated in this way in 2011/12.  (I worry that there might be a little double counting with the above $300,000 AT elimination – does that need attrition?).

It’s fairly clear that the $29 million Fund Balance could absorb the $4.6 million draw down, but beyond that the picture is bleak.  Annual deficit projections of $10 million or more (after Act 1 tax increases, driven by benefits) show that the district can not afford even flat TEEA salaries without the fund balance being wiped out in 2 years.

Here’s where the State House Bill to allow teacher furloughs to balance the budget comes into play.  According to Dr Waters, that would allow action even with a CBA in place.  However, Dr Brake reported that although the bill was up for Committee hearings, those hearings were abruptly cancelled (!).  But the legislative process does continue, apparently.

We know that there are some actions involving furloughs that are already approved as having minimal educational impact.  Others, like modest increases in class sizes, might be similarly low impact.  Getting to $10 million can hardly be done without real impact, though.  When it comes down to students and jobs versus union compensation, we might find out who is really part of the TE Family.

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What do Sidewalks, McKenzie’s Brew House and St. Davids Golf Club have in common? Tredyffrin’s Board of Supervisors Meeting

Today’s post includes a roundup on a variety of topics. 

Due to President’s Day, Tredyffrin’s Board of Supervisors meeting will be Monday, February 28.  Based on the length of the agenda, we could be in for a long evening!  Here are some of the scheduled highlights: 

Sidewalk Subcommittee Presentation – This is the third attempt at this presentation; the first date cancelled because Bob Lamina was out-of-town and the second date was rescheduled because presenter and subcommittee chair Tory Snyder. 

A bit of Sidewalk Subcommittee history . . . Do you remember Tredyffrin’s Board of Supervisors meeting back on February 22, 2010? If you recall, there was much debate about the St. Davids Golf Club sidewalk requirement in their land development plan.  First, the supervisors voted to return the $25K sidewalk escrow to St. Davids and then, based on public opinion, opted to reverse the decision in February 2010.  

Because of the St. Davids escrow debate, a Sidewalks Subcommittee was formed to review (with public input) the future construction of sidewalks and bike lanes in the township. The township continues to hold St. Davids sidewalk escrow pending the outcome of the Sidewalk Subcommittee’s recommendation and then ultimate vote of the Board of Supervisors relative to sidewalk requirements in the township.  Understanding the open liability issues on land development projects, the sidewalk subcommittee was presented with an end-of-the-year timeline to present the supervisors with their recommendations. Public hearings and a public survey were included in the sidewalk subcommittee analysis.  It is my understanding from attending their meetings that St. Davids sidewalk is included in the sidewalk presentation.

Interesting agenda item:  Schedule a public hearing on March 7, 2011 to consider a liquor license transfer in the Township – I was curious about this agenda item and contacted Mimi Gleason and discovered some potentially good news for the township.  McKenzie’s Brew House is expanding and is interested in a location in Tredyffrin – the old Charlie Brown Restaurant location in the Valley Fair Shopping Center.  This will be a multi-municipality liquor license transfer, as they will be moving the license from the old Basil’s in Willistown Twp to the Charlie Brown location.  According to Mimi, this transfer does not require any sign-off from Willistown, just needs our supervisors support and approval.  Moving to the same shopping center (in the Bargain Bookstore – Tuesday Morning location) is Meeley’s Furniture Store, taking both floors. Filling empty retail and restaurant locations is good news for the local economy!

Planning Commission Annual Report – listed as an agenda item, I admit I do not recall the Planning Commission making a public presentation of the annual reports in the past. Wonder if there is any relationship between the timing of this annual report and the upcoming Public Hearing on March 21 to discuss an amendment to the Subdivision and Land Development Ordinance giving the Board of Supervisors the authority for approval or denial of a land development plan. (Currently this authority is with the Planning Commission). 

Newly appointed supervisor Mike Heaberg will be taking his place for the first time at Monday’s Board of Supervisors meeting.  I wish Mike well and know that his financial expertise and independent views will prove an asset to the community.  Speaking of supervisors, the candidate petition signing is underway for the school board and the board of supervisors.  On the school board side, I cannot offer much public information, except that five of the nine school board seats available.  Three of the five current school board members will seek re-election (Karen Cruickshank, Jim Bruce, and Pete Motel) and two board members will not (Kevin Mahoney, Debbie Bookstaber). I do not believe the slate of school board candidates is finalized – I think the deadline is March 8 for petition signatures. 

Tredyffrin’s GOP held their endorsement meeting this week and endorsed Mike Heaberg and Kristen Mayock as Republican at-large supervisor candidates.  Heaberg was also endorsed to run in the special supervisor election.  Paul Olson and John DiBuonaventuro were endorsed as eastern and western district Republican supervisor candidates.  On the Democratic side, opposing Heaberg and Mayock, as at-large candidates are Molly Duffy and Ernie Falcone.  It is my understanding there will not be a Democratic candidate for the western district slot.  I am unsure if either Duffy or Falcone will oppose Heaberg in the special election. 

Here’s an interesting and creative way to increase revenue for the school district.  There is a proposal in Radnor School District for ‘naming’ opportunities.  The current policy on the ‘naming’ of school facilities is restricted to honoring community members for their contribution to the community or school district.  By relaxing the naming requirements may offer some financial benefits to the school district.  This idea has some potential . . . a science lab, a hallway; the auditorium . . . all could have naming opportunities.  Maybe the school district permits the naming on a yearly basis and the naming opportunity goes to the highest bidder.  Just a thought . . . TESD, any interest?

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How Will T/E School District Close the $5.3 Million 2011-12 Budget Gap?

The Finance Committee meeting is Monday, February 14, 7:30 PM at the T/E Administration Office, West Valley Business Center, 940 West Valley Road, Suite 1700, Wayne.  Click here for the meeting agenda and 2011-12 Budget Development Plan.  

At the onset of this 2011-12 budget discussion, I want to give tremendous credit to the school board members who serve on the Finance Committee – Chair Kevin Mahoney, Debbie Bookstaber, Jim Bruce and Kevin Buraks.  Their task is overwhelming and the 148-page 2011-12 budget document attests to their hard work, especially given the challenging economic situation of school districts.  As a taxpayer, I am grateful and thank them for their diligence on our behalf.

Increased pension costs are the biggest hurdle in the coming years to school districts across the state. The challenge is how to balance the defined benefit plan of the teachers with the rising costs to maintain.  How will school districts fund the pension plans, provide the same quality of education and not place the burden on the taxpayer . . . ?

Although I took time to review the budget documents provided for Monday’s meeting, I admit that my eyes glazed over on some of the details.  If any of my assumptions are incorrect or if I have misinterpreted the information, here is hoping that someone will provide clarification.

As presented, the 2011-12 budget has projected revenue of $107M, which includes $1.2M revenue from Act 1 tax increase (1.4%) and $2.4M revenue from Act 1 exceptions (2.8%).  Projected expenses are $112M, which leaves an imbalance of (-$5.3M). Without the $1.2M revenue from Act 1 tax increase and the $2.4M in revenue from Act 1 exceptions, the imbalance would be (-$8.9M) versus the (-$5.3M).

Although the 2011-12 budget gap is narrowed with the Act 1 tax increase and the Act 1 exception; there remains a deficit in the 2011-12 budget of (-$5.3M).  If all strategies of Level 1 are instituted (as outlined on pg. 107 of the budget development plan), the deficit is reduced by $1M and the imbalance drops to (-$4.3).  Under this plan, the remaining $4.3M of the budget deficit is to come from the district’s fund balance.  The school district has a Moody’s AAA bond rating . . . is that rating jeopardized by using $4.3M in fund balance dollars for the 2011-12 budget? Understanding that the fund balance is taxpayers money; how much reserve is required to maintain the district’s bond rating? 

All Level 1 strategies suggested under this budget development plan appear straightforward and practical ways to cut expenses.  I did note two secretarial positions to be eliminated at a combined cost savings of $135K are included on the Level 1 list. 

The more interesting and/or surprising strategy suggestions are included in Level 2 and Level 3.  Level 3 requires attrition for implementation.  It is interesting to note that the Level 2 strategies, should they all be implemented, would provide a cost savings to the district of $6.7M +.  I would expect the dollar amount savings from Level 2 strategies would be substantially greater than $6.7M, probably closer to $10M, maybe more.  Why?  Because Level 2 includes the selling of TESD property including (1) the 16 acres on Jefferson Lane in Chesterbrook (earlier discussion on Community Matters questioned the feasibility of selling that property);  (2) 738 First Ave, Berwyn; this is a 10 acre parcel where the ECS building sits. (As an aside, it was my understanding that the ESC building was contracted for demolition but it is still standing) and (3) 945 Conestoga Road, 0.33 acre of residential property next to Teamer Field. 

In further review of Level 2 strategies, a few suggestions caught my attention; such as outsourcing of custodial services . . . could result in a savings of $950K.   I believe that the custodians (along with the bus drivers, lunchroom staff and possibly some secretarial employees) are unionized which could make the change to outsourcing more difficult.  However, with nearly a million dollar savings involved in custodial outsourcing, it could be worth further exploration.

On the Level 2 list, is a suggested $2M savings to the school district with the elimination of all non-mandated student transportation.  The remaining transportation would be what is required by the state. Combining the outsourcing of custodial services and the elimination of the non-mandated bus transport, would provide almost $3M in savings. 

Another Level 2 strategy that has an associated savings tag of $1.5M, (but a suggestion that probably is not practical and should be removed from consideration) is to require athletic and extra-curricular activities to become completely self-supporting.  Families would be required to underwrite the cost of student participation or if unable financially, seek help from FLITE. 

Contained in the Level 3 list are several staff reductions, many of which would affect the elementary grades.  Here are those specific strategies and associated savings:

  • Eliminate Literacy Intervention Program $111,000
  • Eliminate Elementary Math Support Positions $350,000
  • Eliminate Four Elementary Reading Specialist Positions $300,000
  • Eliminate Elementary Strings Specialist Position $75,000
  • Eliminate Middle School Reading Specialists $300,000
  • Eliminate Middle School Math Support Positions $125,000
  • Reduce each High School Department by One Teacher $375,000
  • Eliminate Elementary Applied Tech Program $300,000 

 If my math is correct, the above listed eight cost-savings equate to approximately $2M. However, I have to believe that some of these staff reductions could directly influence the quality of TESD education.  Remember, these are Level 3 strategies not Level 1.  However, just the fact that they appear on any list, makes them a possibility. 

The last Level 3 strategy listed is interesting and apparently was discussed at Friday’s Facilities Committee meeting – the redistricting of the elementary schools.  According to district enrollment patterns predicted for the next 5 years, there is a need to consider redistricting.  Devon Elementary is at 100% capacity and has become the largest elementary school.  The savings is ‘to be determined’ because it is possible that redistricting could keep eliminate the need for additional space at Devon Elementary.   However, this would impact those families living on the redistricted streets. 

Ray Clarke attended the Facilities Committee meeting on Friday and offered the following notes from the meeting.  It would seem that storage and maintenance facilities continues to be discussed but with no clear solution.  I know that the ECS building was slated for demolition but would it be possible (at a far lesser cost) that the ECS building could be retrofitted as a storage facility – not for use by staff or students which could be affected by the building’s environmental issues – but for use as storage.  It is obviously too simplistic a solution so there must be a reason that it is not possible.  

Ray Clarke’s Notes from Facilities Committee meeting, 2/11/11

Some interesting and worthwhile discussions at the TESD Facilities Committee meeting on Friday, with many financial implications that are likely to be further explored on Monday’s Finance Committee.  It’s good to report that the tone is very cost conscious – almost as if all the money that the Committee is spending is its own!

The first hour or more was consumed with a couple of items relating to use of the district sports facilities.  (Perhaps these could/should have actually been on the published Agenda?).  An adult soccer league would like to use Teamer Field; that would require a change in district policy and reversal of an understanding given to neighbors when the field was built.  The revenue being discussed is material, and I believe that this warrants thorough consideration on Monday in the context of revenue strategies.  A travel softball team has offered to redo the barely used and poor condition baseball field at the ESC site (one of four fields there) at their own expense.  They have already done this for a field at Devon Elementary, and there seems to be no downside.  The Committee was just about able to make a decision on this one! (Subject to a final check with the school athletics people).  Larger issues that arose: a) the amounts the district charges seem to be low (another revenue strategy) and b) maybe as use gets more widespread the district will need to improve the scheduling system to ensure fairness and utilization.

The Committee revisited the issue of facilities for storage and maintenance, starting with the question: what do we actually need?  The discussion was a little disjointed and difficult to follow, but it seems to boil down to: we need warm storage for snow clearing equipment (so it works on cold mornings!) that doesn’t involve sharing space with the carpentry shop, plus we need at the least to fix maintenance issues with the current building.  The architect had come back with new plans for spending $2 million, taking about $0.75 million out of the first draft from a month ago.  However, Dr Motel did not let the Committee even get to those plans.  The majority of the Committee seems very conscious of the need to rigorously question all spending, although Betsy Fadem spoke for this project being part of the original plan for the non-educational facilities (but not the budget??).  There is a good opportunity here to consider the full cost of in-house functions: for example, loading the carpentry shop with an incremental facilities cost changes the out-sourcing equation considerably.  The administration is to come back at the next meeting with a full costing out of the options, from Do Nothing (but essential maintenance), through Add Temporary Space, Build New Facilities, to Restructure (some?) Operations.  (It would be great if at least one of the Committee could have an on site review of the facilities and issues).  Another topic relating to budget strategies at the Finance Committee.

Perhaps a good time to make the point that Bond Money is still Taxpayer Money. Bondholders are just not giving their money to the district because they like to see us have nice facilities!  Although there may be no short run impact on the millage rate or the operating budget, and we can perhaps keep on borrowing, that money has to be repaid in the long run.  The latest bond has to be spent on capital within a certain period, but there seems to be no problem with that!  Again, relevant to Monday’s discussion.

Finally, interesting early data from just one week of kindergarten registration.  Four of the five elementary schools are at an average of 75% of projected kindergarten enrollment, but Devon is already at 100% of the projection – and already enrolls over 100 students more than the average of the others (522 vs 420).  The district as a whole has plenty of elementary capacity, but Devon is an exception.  There is a facilities plan if an extra class is needed there next year, but the longer term may require other solutions.

Despite the Agenda, no discussion of the IT plan – the consultant had a sudden conflict.

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School Board Votes Against Continuing EIT Discussion at this Time

The vote last night by the T/E School Board stunned me – they voted 7-2 against sending a notification letter to the Tredyffrin and Easttown Townships that the school district would consider a voter referendum on the EIT on the May ballot.  Their vote last night was only to continue the process of discovery – there was no downside to the notification to the townships.  The School Board would still have until the March 18, 2011 deadline to decide whether to take it to voter referendum in May.  Kevin Mahoney and Anne Crowley believed that it was important to continue the public discussion and voted in favor of sending the notification to the townships; the other 7 members of the school board voted against.

I do not understand this school board decision.  Faced with a $7 million deficit that needs to be funded, why would these seven board members take an option off the table prematurely?  The school board may not have enough details now to make a decision about the voter referendum but the beauty of the vote last night was that they did not need to make a decision now – just buy themselves some more time by notifying the townships and continuing to work towards a March decision. After continuing to research their options, if the March 18, 2011 deadline came and the School Board was not comfortable with a voter referendum on the issue, they could decide then not to take if any further.  However, by taking it ‘off the table’ last night, seven members of the School Board took away that option.  

Why did the School Board go to the trouble of having a public meeting on EIT if this was going to be the outcome?  Why not handle the decision democratically and let the public weigh in?  Whether it is an increase in property taxes, imposing an EIT, cutting programs and/or staff . . . something is going to have to change and there will be a cost to the taxpayers and/or to the school district programming. Again, why remove one of the options unnecessarily without full discussion? 

A reason to vote against continuing the process by some of the School Board members could be the thought that the EIT referendum would fail out the polls in May . . . but without a crystal ball, how could they know?

In my opinion, with the school district facing a $7 million deficit, keeping all options on the table as long as possible should be the goal of the school board, rather than second-guessing the future.  Perhaps the 7 members of the School Board have some kind of funding solution in mind for the future . . . taking on the teacher union at the next contract negotations? 

Ray Clark attended last night’s School Board meeting and provided the following notes:

At its meeting on Monday, the School Board voted 7-2 against sending to the Townships a letter of intent regarding the implementation of an EIT in 2011/12 and for setting up a Commission to study the issue between May and September 2011.  Kevin Mahoney was in favor of sending the letter to allow continued discussion this year, while Anne Crowley wanted further information for another Board meeting before the November deadline for the letter.

The most common reasons advanced in favor of the delay were:
  –  An EIT could maybe be a good idea, but in the opinion of the Board, the voters would vote it down if presented with options and asked next year.
  –  There is not enough time (5 months (October 26 2010 to March 18 2011) to resolve the many unknowns (versus May to September 2011?).
  –  Because T/E will have to solve the $8 million gap problem by cutting education programs, drawing down the fund balance and/or going to a property tax referendum, there will be pressure on the unions to accept compensation reductions in the contract beginning 2012/13 and 2013/14.
 –  Harrisburg will eventually fund PSERS at no incremental cost to T/E.
 –  That an EIT will harm property values more than a property tax increase.

Betsy Fadem introduced a nice piece of analysis by calculating the percentage of residents (seniors, income earners, children, maybe pets [just kidding!]) who are currently paying an EIT, and implying that all the remaining residents would have to pay an EIT if it were introduced by T/E.  Thankfully Kevin Mahoney was able to point out that there are five residents in his household, but only one is, and would be, paying an EIT!

Separately, but relatedly, Karen Cruickshank noted that the Education Committee had voted in favor of increasing teacher workload at CHS and of an effective reduction in CHS periods (combined expense-saving potential, assuming workforce reduction through attrition, approx $1.5 million per year).

I would definitely encourage residents to watch the replay of the meeting to assess their representatives’ perspectives.

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