Pennsylvania State Education Association

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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State Rep Kampf Supports Teacher Furloughing for Economic Reasons

In today’s Main Line Media News, Alan Thomas writes an article on our state representative, ‘Warren Kampf thinks he knows how to get the Pennsylvania Family back on track”. Thomas was able to get our state rep to offer some remarks on various topics.

On House Bill 855, teacher furloughing . . .

We learn that Kampf supports the bill that would permit the furloughing of teachers for economic reasons.  Current legislation only permits school districts to lay off teachers only if enrollment declines, districts consolidate or if a program is eliminated.

The proposed legislation, House Bill 855 would permit ‘economic’ as a reason to furlough teachers. The Pennsylvania School Boards Association and the state’s largest teacher union, Pennsylvania State Education Association (PSEA) are at odds over this proposed legislation.  Among some, there is fear this proposed legislation could be open the door to teacher layoffs.  House Bill 855 would allow furloughs to occur without regard for an employee’s seniority and experience.

According to Kamp, TESD is able to “reduce by 15 [the number of teachers] by going from five to six [teaching] periods a day.  However, the law prevents furloughing.”  Kampf supports the furlough legislation and thinks that it may pass before school budgets are due.

On the State’s pension problem . . .

Kampf’s solution is to “go to a defined-contribution plan for new hires, a percentage of payroll for employees, but that’s the end of it for the taxpayer . . . “

On taxing natural-gas production . . .

Kampf is OK with taxing natural gas production, as long as it is a low tax at the well-head, citing substantial revenue as the reason.

Kampf makes an interesting remark at the end of the article, referencing the taxing of the natural gas production — “The governor campaigned on no tax. My prediction – not going to happen.”   Apparently, Kampf believes that Corbett is going to have to reverse his campaign promise and tax the companies conducting the drilling.  Could taxing those companies involved in national gas production have an effect on job growth in those areas?  I don’t have an answer, just asking the question . . .

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Just In . . . State Teacher Union Encourages Local PSEA Members to Consider One-Year Pay Freeze

Seemingly to show support for the severity of the state’s economic situation, the Pennsylvania State Education Association (PSEA) is encouraging its local teacher union members to consider Gov. Corbett’s request for a one-year pay freeze in the following press release. 

Could this be the answer to school district problems?  Whether it is the possibility of furlough and school voucher legislation or the current anti-union sentiment that is sweeping the country, I think we should view this as a positive message from PSEA.  Do we know how much revenue would be saved by with a one-year pay freeze in TESD?

PSEA President responds to Governor’s call for a one-year pay freeze

PSEA President Jim Testerman released a March 16 statement responding to Gov. Tom Corbett’s call for school employees to consider a one-year pay freeze.

Testerman released the following statement:

“The education professionals in the Pennsylvania State Education Association have been willing to be good public partners and tackle tough issues before, and we’re willing to do it again.

“We hope to prevent a $1 billion cut in state education funding, but we also realize that tough economic times have hit many of our public school districts.

“We have serious concerns about some of Gov. Corbett’s proposals, but we want to do our part to ensure that our students’ education does not suffer as a result of the worst recession since the Depression.

“As part of his budget proposal, the governor requested that education employees accept a one-year pay freeze. The governor stated that this decision is ‘determined at a local level and arrived at by contract and collective bargaining.’ As president of the Pennsylvania State Education Association, I concur.

“I encourage PSEA members to seriously consider this request.

“Today, I sent a letter to the presidents of all PSEA locals.  I encouraged them to enter into discussions with their school boards about a pay freeze or other cost-saving measures to maintain class sizes and academic programs.  In some communities our members have recently agreed to economic concessions to maintain class sizes and academic programs. Their contribution must also be recognized.

“Such cooperation can help to preserve the academic gains made in Pennsylvania’s public schools over the last decade.

“Our scores on National Assessment of Educational Progress, the ‘Nation’s Report Card,’ are among the country’s best.  Our students showed progress in all academic subjects and grade levels.  And seven of 10 graduates are going on to higher education.

“We need public partners to join us in our effort to advocate for our public schools.  PSEA calls on parents, caregivers, and community leaders to ask legislators to prevent the cuts to school funding.  A pay freeze alone will not be enough to preserve the programs our students need to succeed in the future.

“Despite the difficult economy, we must remember that students only get one chance at a quality education.  Pennsylvanians must not permit this recession to rob our children of the opportunity public education provides to prepare them for a better future.

“Pennsylvania’s schools are among the best in the nation.  PSEA remains steadfast in its commitment to provide a quality education to the 1.8 million children who attend our public schools.”

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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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Sen. Dinniman Speaks out re State Teacher Union, Pennsylvania State Education Assocation (PSEA). . . Where’s the Cooperation . . . Is this an Indicator of the Future?

I think that we all agree that there is a looming pension funding problem in the Commonwealth.  Knowing this, I read with interest of the Harrisburg meeting yesterday calling to attention ongoing issues between the Pennsylvania State Education Association (PSEA) and the State Education Committee.  Sen. Dinniman is the minority chair of the Education Committee and is obviously frustrated and spoke out regarding the lack of cooperation on part of the teacher union.  (Article on this subject appears in today’s PA Independent, see below).

For those that are interested, here is the link for the TESD teacher’s collective bargaining agreement, 2008-2012.  I am not sure exactly when contract negotiations begin for the next contract but in review of the contract, I found the following which may indicate that discussions on the next contract would start in 2011.  Is this correct?   Tomorrow is the scheduled date for Methacton School District teacher’s strike . . . however, in an effort to ward off the strike there is a negotiation session scheduled for 8 PM tonight between the Methacton School District and teacher union representatives.  I’m guessing that the Tredyffrin-Easttown teacher local president Peter DePiano will be closely watching Methacton.

MEMORANDUM OF UNDERSTANDING ON SALARY SCHEDULES
Understanding that the demographics of the District will impact the matrix, the parties agree to a joint labor-management committee which will convene in the 4th year of the agreement to discuss possible strategies to keep increment costs down.

With our own school district beginning to have serious discussions about funding next year’s school budget, the article is timely.  We know that the funding deficit in the school district for 2011-12 may be as high as $8.5 million, based on this week’s Finance Committee meeting.  Understanding ways to handle the school district deficit . . . increasing property taxes, cutting school district programs and staff or imposing an Earned Income Tax (EIT); the upcoming School District meeting on Monday is important.  The School Board has arranged a public EIT presentation by the Pennsylvania Economy League at Conestoga HS auditorium, 7:30 – 9 PM, Monday, October 18.

 Education reform debate foreshadowed in Pa. legislative meeting
October 14, 2010
By Eric Boehm   PA Independent

HARRISBURG, Pa. — If Wednesday’s meeting of the Senate Education Committee is any indication, education reform could be an explosive issue in Harrisburg next year.

During a day-long hearing on the potential expansion of school choice options in Pennsylvania, state Sen. Andrew Dinniman (D-Chester), told representatives from the Pennsylvania State Education Association (PSEA) that reforms would only be possible with cooperation from the state’s largest teachers’ union.

Apparently, such cooperation has been difficult to come by. “We can’t engage in a dialogue with you guys,” said Dinniman, minority chairman of the committee.  “Either we talk or we don’t talk.  Because if we all pass in the night saying we care about kids, and we never come together to talk, then the kids of this commonwealth are going to suffer.” 

Dinniman told PSEA Treasurer Jerry Oleksiak committee members were very frustrated at being stonewalled by the union for several months.  He said repeated attempts to set up a meeting with union leaders have been cancelled or ignored, and lobbyists hired by PSEA have publically “made nasty comments” about himself and Senate Education Committee Chair Jeffrey Piccola (R-Dauphin), another supporter of school choice programs.

The PSEA opposes expanding school choice initiatives, including vouchers and charter schools, because the organization claims they put traditional public schools at a disadvantage for funding.

“We know what works,” said Oleksiak, who pointed to several successful public school districts in the state.   “We need targeted, direct resources into what we know works.  Long-term, bi-partisan commitment, put the ideology aside.  We need to address public education as a key civil right for the students in our Commonwealth.”

Dinniman said it took him nine months to get a list of educational priorities from PSEA when he was working to craft legislation, which he said made him wonder if PSEA’s commitment to students was “only window dressing.”

Wednesday’s hearing was meant as a preview for what is likely to be a major policy issue next year.  Both major gubernatorial candidates have signaled their intent to pursue school choice initiatives if elected. Piccola said the cost of public education has become too much for the state’s taxpayers to bear. On average, Pennsylvania taxpayers spend more than $13,000 per student in the state’s public schools, and funding has increased by 40 percent over the last eight years.  Despite the increase in spending, Piccola said student achievement has been flat statewide.

“We have to figure out how to spend the money we do have more efficiently.  And it is quite clear to me, and I think it is quite clear to Sen. Williams and Sen. Dinniman, that the systems we have created called public schools are not performing,” said Piccola. 

Piccola, Dinniman and state Sen. Anthony Williams (D-Philadelphia) plan to introduce legislation in January to expand the number of charter schools in the state and create a voucher program to give more families access to alternative public schools.

 Both major gubernatorial candidates in Pennsylvania have promised to make school choice a priority of their administrations.

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