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.