Ray Clarke

Backlash Continues over T/E School District’s 3.9% Tax Increase – Some on School Board Defend Annual Increases

Since the publication of the Philadelphia Inquirer article regarding local school tax increases last week, there has been much discussion on social media — with at least two currently serving school board directors defending T/E School District’s tax increases on Facebook.  In T/E School District residents have faced annual tax increases for the last fifteen years.  And for the 2019-20 year, our District has the second highest tax increase (3.9%) in the Philly region.  Not a distinction many of us want.

Unlike some places, we are fortunate to have an abundance of educated and engaged residents in our community — and many with knowledge and expertise in finances. As examples, Ray Clarke, Mike Heaberg and Neal Colligan are residents with financial backgrounds who attend most school board meetings and routinely offer financial advice and comments.

Although school board members encourage attendance at its meetings, it has been my view that many of the comments and/or suggestions by residents are either ignored or not seriously considered. I believe that you should “play to your strengths” and would encourage the school board to take advantage of the financial expertise that some of our qualified residents are offering.  Everyone cannot be an expert in all things, so school board, why not take advantage of the high level financial skill set which exists in the community.

Following the publication of the recent Philadelphia Inquirer article, one of our financial gurus Neal Colligan wrote a letter to the T/E School Board.  The communication addresses the District’s finances and Neal has generously agreed to share it below:

Greetings School Board,

I’m writing to you on financial matters.  While I may appear to be a “broken record”, the financial decisions of the T/ESD affect everyone in our District whether they have children in the schools or not.  The Inquirer recently did a story on School Tax increases.  In this article, you may notice that T/E had the highest dollar increase in school taxes in Chester County for THIS year, for the past 5 YEARS and the last 10 YEARS.  It adds up and is, obviously, a burden to all property owners.

Next year, you will have to decide on a new teacher’s contract.  This is the largest (by far) municipal contract impacting our community.  A multi-year contract could well approach a Quarter of a Billion Dollars…it’s very important.  So, before you get into that issue, it may well be a time to look at recent financial decisions to see if we can learn anything about our process that could/should change in the future.

As you’re well aware, this past Budget season you learned that the District had filed erroneous State Financial Disclosure forms increasing your taxing authority beyond what it should have been. I believe you have begun to deal with the correction of that issue…I applaud those of you that moved to “do the right thing”.

Just this last year you approved a $30 MM bond issue even though you had no use for those funds for two years. You were convinced that “rates were at or near their low and that it was a good time to Borrow”.  We may want to examine that decision.  The Carry on that borrowing is substantial, for the two years that the money is unused it amounts to about $2.4 MM ($30 MM x .04% x 2 years).  Was that a wise move?  Rather than rates going up, as you were led to believe, rates have plummeted well over 100 basis points on the 10-year (the statistic that the bond seller used to compare).  This also has financial impact…in a simple calculation: $30 MM x .01% x 10 years…or $3 MM dollars!  That’s a possible interest savings of well over 5 MILLION DOLLARS.  That kind of money, even over a 10-year period, could fund a lot of educational expenses.

Those decisions have been made and we can’t go back even though we may wish we could.  The important take-away, IMHO, is your decision making process.  Are you getting the information you need to make good decisions, do you trust the “data” you are being given???  I suggest; we can do better.

Are your BEST people; Administration and Board representatives; in charge of formulating your strategies???  Do you need other professional voices; hired or volunteer; to help you make these large fiscal decisions.  If YES; and I think you would agree the answer is YES: now may be the time to get your “Process” in order.  Your coming up on another large Borrowing for the expansion of the High School, you’re coming off an accounting issue that was obfuscated and denied for a long time (by both your key Admin people and your key Board members), and you have in front of you the renewal of the LARGEST municipal contract in our community.  Those are BIG items; we’re counting on you to make good decisions.  Give yourself the best chance to do the right things by changing your Process if it helps.

Members of this community are always here to help.

Neal Colligan

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$25 Million Gift to Abington School District — Where’s Public Input and Transparency?

A gift of $25 million from Blackstone CEO and co-founder Stephen Schwarzman recently made news as the largest donation ever given to a US public school. But did the gift to Abington School District by its billionaire alum come with “strings attached”?  At the very least, the gift was poorly handled by the Abington school board; giving new meaning to ‘lack of transparency’.

Although I had read about the Schwarzman multi-million dollar gift, I didn’t know the spider web of secrecy until I received the following email from Ray Clarke:

I’m sure that you are aware of the news around the $25 million donation to his alma mater by Abington alumnus and private equity billionaire Stephen Schwarzman.  At first sight, this gift was nothing but good news for the community, but has become highly controversial for the many conditions around the gift (including both an original requirement to rename the high school and also curriculum changes) and for the lack of transparency in the process.  Abington is taking steps to address its issues, but today’s news brings the issue home to T/E.

It turns out that T/E solicitor Ken Roos is not only on the Board of a secret foundation set up a year ago to receive the gift, but also is the solicitor for the Abington district that did not release any details of the agreement with Schwarzman until the day it was voted on, and is now refusing to release the agreement in response to Right-to-Know requests because it “needs legal review”.

This is the same solicitor who in 2015 fought TE community member Neal Colligan all the way to the PA Office of Open Records, who then ordered the District to release all records of the secret meetings relating to the actions taken in response to the Affordable Care Act.

It appears that Mr. Roos took nothing from that 2015 experience, and the community should have little faith that, should TESD ever have the good fortune to receive a large donation from a billionaire with an agenda, he will be the one that will help the district uphold its responsibilities to the community.  Instead, I’m hopeful that we can rely on the values of transparency and engagement that many on this forum have worked with the district to build.

And if anyone knows billionaire TE alum, they should be encouraged to chip in here, but – perhaps as important – to use their resources and position to support equitable funding for all our public schools.

Ray

As thanks for Schwarzman’s donation, Abington school board directors decided to rename the Abington Senior High School to Abington Schwarzman High School – outraging parents.  Sadly, the Abington School Board directors never sought public comment and didn’t give the community advance notice about the vote. After a backlash over the billionaire’s naming rights, the vote was rescinded.  With apologies and a promise to involve the community in the process, a new agreement is to be signed by Schwarzman and the school district.

As wonderful as the Schwarzman gift is, unfortunately it is mired in the darkness swirling over the re-naming of the high school, secret foundation, etc.

And Ray is quite right to point out that Abington School District’s solicitor Ken Roos of Wisler Pearlstine is also the solicitor for T/E.  In addition, Roos serves as solicitor for Lower Merion, Upper Perkiomen, Upper Dublin and Cheltenham school districts.  With the level of activity in Abington School District and the multiple lawsuits in Lower Merion and Tredyffrin-Easttown school districts, where is the ‘good counsel’ that these districts should expect from its solicitor?

Transparency and public input should be a hallmark for school districts – why isn’t Ken Roos delivering this counsel to his clients?

TE School Board, are you watching?

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Saturday, October 14 — Antiquing & Planting Trees in Tredyffrin’s Great Valley

If you are looking for something to do this Saturday, October 14th there’s a couple of events in the Great Valley section of Tredyffrin Township that you may find of interest.

Polly Hagan Antiques will hold its annual Fall Barn Sale (9 AM – 3 PM) on Saturday and will feature primitives, collectibles and antiques. The barn is full so come early for the best selection. Located 1 mile west of N. Valley Road, the Barn Sale address is 2205 Yellow Springs Road, Malvern.  For questions/information call 610-209-4618.

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Saturday will be a beautiful autumn day with temperatures in the 70’s – a great day to get outside and help Open Land Conservancy with its tree planting.  The Conservancy is restoring the riparian buffer along Valley Creek and Cedar Hollow Run in the Cedar Hollow Preserve by planting 750 native trees.

When:  Saturday October 14th, 9:00am – noon or until we’re done
Where:  Cedar Hollow Preserve, 1635 Church Road, Malvern (Preserve icon on Google Maps)
What to wear:  Temperature appropriate clothing, sturdy footwear, gloves
What to bring:  Shovel, trowel, mallet

Important notes:
– Car Pool if you can, parking is limited
– We will plant in light rain, but in extreme weather will postpone to the following week-end.

The planting area was inundated with the invasive Phragmites Australis Giant Reed which had eliminated all native vegetation. This has been cleared to give an open planting zone with occasional wet spots, well suited for planting.  We will be using container seedlings of 12 different wetland-suitable tree species, planted inside staked protective tubes, “vole guards” and “mulch plates” to keep the deer, mice and weeds at bay.  Our community planting date will be preceded this week by a planting team from Siemens Healthcare.

As a reminder, the Conservancy is a non-profit, managed entirely by volunteers, supported by 500 members that owns and opens to the public six Nature Preserves here in Tredyffrin.  http://www.openlandconservancy.org

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House Tour, Hurricane Matthew, Fritz Lumber & T/E School District Finances!

Community Matters readers — I haven’t disappeared; it’s been a busy last month.  First there was the Trust’s 12th Annual Historic House Tour on Sept. 24 which I am delighted to report as extremely successful.  To the house tour guests and to the sponsors who support historic preservation and make the annual tour possible, we say thank you.  And a special thank you to the historic homeowners for opening their homes to the public – the historic homes really are the stars on house tour day!

Following the house tour, my husband and I went to our 100-yr. old house on Port Royal Island, SC for a few days.  On the intercostal waterways, the Sea Islands are located between Charlestown, SC and Savannah, GA, close to Beaufort, SC and Hilton Head.  We stayed on the island until Hurricane Matthew forced our evacuation and then spent the next 4 days wondering if our house survived. Although the area endured major destruction and many folks suffered great loss, I am happy to report that our house remained standing.  We did suffer some roof damage and are now maneuvering through the insurance process.

After returning from SC, my focus shifted to ‘Puttin’ on the Ritz … A Party in the Yard’ – a celebration of the Fritz family and the 153 years of the William H. Fritz Lumber Company in Berwyn on Saturday, Oct. 22, 7-11 PM. The property’s new owner Eadeh Enterprises is the presenting sponsor for the event — Company president Stacey Ballard has enthusiastically supported the event and the celebration of the Fritz family. On behalf of the Tredyffrin Historic Preservation Trust, we are excited to honor the contributions of the Fritz family to the community.  Guests will enjoy great food, live music and live & silent auctions plus the opportunity to walk the property for one last time. It really will be an evening to remember, tickets are available at www.tredyffrinhistory.org .

Here’s another historic preservation update — John Zaharchuk, owner of Summit Realty Advisors invited me to a meeting a few weeks ago with himself and Heckendorn Shiles Architects.  Summit Realty is the developer for the CVS project at the Covered Wagon Inn site in Strafford. With restoration plans and drawings now in place, it was a privilege to see the PowerPoint presentation for the Covered Wagon Inn along with samples of proposed materials.  In a word – WOW.  I was truly impressed at their enthusiasm and with the level of preservation detail planned for the 18th century inn.  Yes, we will have a CVS pharmacy on the property but the Main Line landmark is saved (and restored!) in the process!  Thank you John Zaharchuk and Heckendorn Shiles!

Supervisor and school district meetings continue and I appreciate the diligence of  my friend Ray Clarke to attend, especially given my absence of late.

Ray reports that the TE School District finance meeting this week was particularly lively and offered the following three topics of note for me to share.  I hope that you will take the time to review Ray’s remarks and offer your own comments.  As always, thank you Ray —-

  1. Substitute teacher daily rates. TE is at the low end of the rates paid by our regional peers, and the fill rates for vacancies are down in the 80% decile from last year’s 90%.  This is a nationwide issue and reflective of lower teacher graduation numbers.  The Committee agreed to the Administration request to match the rate paid by Lower Merion (not the best comparison?), which would make our starting rate of $115/day higher than 10 of the 13 peers benchmarked.
  2. Bond advance refunding. Lots of technical issues here, but a notable bottom line: the Committee is recommending that the Board approve next Monday the parameters of a bond issuance, even though our long-time bond counsel, Saul Ewing, disagrees with the investment banker (not the district’s Fiduciary) about the IRS rules, the structuring of the issue and, as a consequence, the savings.   Between now and Monday the District is going to shop for a counsel to give a more favorable opinion to approve 10 year debt service savings of at least $500,000 and hopefully over $1 million.
  3. Budgeting. There was initial discussion of a proposal to replace the (now accepted, I guess) surplus budgeting of prior years with a specific “above-the-line” (ie: in the tax base) appropriation for capital expenditure.  At current capital spending levels of $6-7 million a year and 75% funding by borrowing this would phase in an expense item of over $1.5 million a year.  A number of assumptions in this:

a) that budgeting will henceforth be accurate

b) that current taxpayers should pay an assigned percentage (of whatever size) of capital expenditures benefiting future students

c) that current residents should pay anything while the General Fund Balance contains $32 million of current taxpayer money, including $5 million already committed for capital projects and over $9 million for PSERS (for which the district can and does tax every year).

There are really important issues in all of this, and I hope that residents can find some time assess the pros and cons and let the Board know their opinion.

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Should the recent court ruling ordering Lower Merion School District to rollback tax increase make a difference in the way TESD School Board manages taxpayer money?

Tonight, Tuesday, September 20th is the TESD Finance Committee meeting, 7 PM at the TE Administration Offices, 940 W Valley Rd # 1700, Wayne, PA .  Residents encouraged to attend — your voices do matter!

With an agenda of 110 pages, the community is fortunate to have residents willing to review the information in advance of meetings.  Ray Clarke provides the following commentary regarding the agenda (click here for agenda).

There are a couple of items that the community might want to pay particular attention to in the light of the recent injunction ordering Lower Merion School District to roll back this year’s tax increase.

To recap, the Montgomery County judge found that LMSD (quoting from the injunction) deliberately over-estimated deficits, failed to predict surpluses, represented to PDE that costs for Special Education and retirement could not be covered without a tax increase, and transferred Fund Balance to assigned accounts to avoid the statutory cap of 8% of the annual budget while still raising taxes.  The judge found that LMSD’s Fund Balance commitments were funded out of the budget each and every year.

These findings will seem very familiar to those following the affairs of TESD.  Moving to the agenda:

Item 6, Bond Discussion: TESD is considering repayment of $18 million of higher interest bonds – arguably a sensible move – but by issuing yet more bonds at mostly 4%, when there is $32 million of taxpayer money sitting in the General Fund, supposedly “committed”, earning about 0.75%.

Item 7, Capital Funding/Fund Balance:  Seemingly to support this plan (only one option is presented), the district is re-publishing its Fund Balance Policy and Regulation (not always consistent with each other), along with the commitments from 2015/16, presumably to establish commitments for 2016/17.  There is no analysis of the capital spending plan.

A couple of questions:

–  Does TESD plan to continue the Fund Balance fiction that brought judicial sanction on LMSD?

–  Are we going to borrow another $18 million we don’t need at the second “generationally low rates” in two years?  (About a percentage point lower than those last generationally low rates).  And pay underwriters and lawyers $150,000?

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Judge Tells Lower Merion School District to Revoke Tax Hike — Could the same thing happen in T/E School District?

A significant decision in the Arthur Wolk vs Lower Merion School District (click on bolded link to read 17 pg. decision) case  was rendered by Montgomery County Common Pleas Judge Joseph Smyth this week.  Judge Smyth ordered Lower Merion School District to revoke its tax hike, claiming that the school district could not increase taxes for 2016-17 by more than 2.4 percent. If a Lower Merion resident could take on his school district for over-taxing (and win), this decision has far-reaching ramifications for other school districts, including T/E School District. Not only front page news locally in the Philadelphia Inquirer but the Associated Press has picked up the story with articles appearing in the Washington Post, Boston Globe and beyond.

In his decision, Judge Smyth ruled that Lower Merion School District had consistently understated revenues and overstated expenses so it could falsely raise taxes when in fact it had huge surpluses. TE School District residents are you listening?  Our school district has raised taxes for the last 12 years (see chart below) and continues to build its fund balance. The TE School District fund balance as of June 2016 school board meeting is $32,381,047. Just like Lower Merion School District, our school district continues to raise taxes and increase the fund balance. Folks, that is $32+ millions of taxpayer dollars!

Taxpayers in TE School District have seen their taxes increased for the last twelve years as follows:

  • 2016-17: 3.6%
  • 2015-16: 3.81%
  • 2014-15: 3.4%
  • 2013-14: 1.7%
  • 2012-13: 3.3%
  • 2011-12: 3.77%
  • 2010-11: 2.9%
  • 2009-10: 2.95%
  • 2008-09: 4.37%
  • 2007-08: 3.37%
  • 2006-07: 3.90%
  • 2005-06: 1.40%
  • 2004-05: Zero Tax Increase

Will the Court’s decision to revoke Lower Merion School District tax challenge the TE School Board to reconsider their budgeting approach?

Attending TESD Finance and School Board meetings over the years, we have witnessed knowledgeable, educated residents appeal to the District on this subject – Ray Clarke, Neal Colligan, Doug Anestad, etc. have repeatedly weighed in on financial issues with their comments and suggestions. The discussion of the TESD 2016-17 budget even had former Tredyffrin Township Supervisor Mike Heaberg  attempting to reason with the school board.  Sadly, the school board does not listen – but continues to increase our taxes, build its mountain of “fund balance” dollars and, for the most part, does so with a unanimous 9-0 vote.  Where does it end?

Having read the decision in the Lower Merion School District case, Neal Colligan (with input from Ray Clarke) provides the following economic analysis between LM and TE school districts.  Thank you both – and here’s hoping that the TE School Board reads it!

I know we’ve all been reading with great interest the results of the Lower Merion tax case which made its way to page 1 of the Inquirer today.  This is frighteningly similar to the operations of our School District and I thought it might be interesting to do some comparisons.

The resident case against the LMSD basically argued that they had District had entered into a pattern of projecting annual operating deficits during their budget (and tax rate increase) process and ended each year with large surpluses.  The lower Court judge agreed and ordered LMSD to rescind some of their current tax increase.  As you know; we’ve experienced the exact same pattern in T/E.  For each of the last 5 years; the District has projected a deficit in its budget deliberations; set an aggressive tax (sometimes the Max allowed in the Commonwealth) increase to “close the gap” ; and each year ended in a Surplus position.  It might be fun to dig deeper.

LM’s current budget allocates approximately $259 MM to District spending; T/E’s current budget is about $131 MM…just about half the size.  According to the press releases; LM accumulated $40 MM in Fund Balance over the last 6 years (16% of current budget); T/E has accumulated about $13 MM (10% of current budget).  In the prior six years LM taxes increases have been 21.01%; in T/E we’ve had 18.68%. (The Judge’s order states that since 2006 LMSD has increased its taxes by 53%; the increase in T/E has been 38%.  I used the more narrow, recent figure as LM’s increases were skewed in the early years).   LM’s accumulated Fund Balance is reported at over $57 MM (all Fund/Capital accounts included); T/E’s is about $42 MM (this includes Fund Balance and Capital Fund which was funded by Fund Balance transfer)…about 74% of LM.  Let’s go deeper: The Court commented in the LM suit that the District’s average overestimation of expenses was 5.5% and the average underestimation of revenues was 1.1%.  T/E has a similar history (I say it differently); in the last 10 years, our District has spent about 96% of its budgeted expenses (this budget drives the tax increase obviously) and collects about 101% of its budgeted revenue.  Does it all seem similar?

Some other interesting notes.  LM Enrollment growth in the last 4 years-9.03%; T/E Enrollment growth 1.46% (this statistic was used in the LM budget presentation to justify the tax increase).  Students (approximate): LM-8,200; T/E; 6,400.  Years in the last 6 that tax increase was in excess of Act 1: LM-6; T/E-5.  EIT in community: LM-No; T/E-No.  Special Education budget: LM-$46 MM; T/E-$20 MM.  Salaries: LM-$123 MM; T/E-$57 MM.

In many ways, we compare favorably to LM.  Remember that LM spends the highest amount on a per-student basis in the State.  Without getting too far into the weeds; the fact remains that we, like our neighbors in LM, have been given deficit budgets in each of the last 5 years followed by “necessary” aggressive tax increases.  Our results have been a production of SURPLUS in each of those years; just like LM.  That’s the fact pattern that this suit took to question.  The same fact pattern exists here…almost precisely.  It’s nothing new; we’ve talked about in the T/E Finance Committee meeting for years BUT now there’s a new finding from the Courts.

Come to your own conclusions…the facts are pretty easy to find.

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Global Warming: Important Meeting on Tuesday, April 19, 7:30 PM

Global warming graphic

You are Invited to Attend:

Open Land Conservancy of Chester Counthy Annual Meeting
Guest Speaker: Climate Change Expert Richard Whiteford
Tuesday, April 19, 7:30 PM
Great Valley Presbyterian Church, 2026 Swedesford Road, Malvern

The Open Land Conservancy has scheduled ‘Global Warming’’ as the important topic for its Annual Meeting on Tuesday, April 19, 7:30 PM at Great Valley Presbyterian Church, 2025 Swedesford Road, Malvern, PA.  Light refreshments will be served.

Following a brief business meeting, internationally acclaimed climate expert Richard Whiteford will present the keynote presentation on global warming and lead the discussion. This meeting is an opportunity for the public to learn more about global warming and what it means to us here in Southeastern Pennsylvania and you are encouraged to attend.

How will global warning impact our streams, trees and pasture?  How will global warming affect our way of life, our health systems, and our grandchildren? Should I be worried about climate change, will it affect me personally?

Have these and other questions answered by an expert. Richard Whiteford has experience and a broad background in the field of environmental climate change.  Advocating for stronger environmental protection, Whiteford is involved at the local, state and federal levels. He has worked for the Sierra Club, Highlands Coalition, Wilderness Society, National Wildlife Federation and Defenders of Wildlife. Serving as a environmental; consultant to universities, high school and environmental education centers, he has also appeared on BBC and Korean television, NPR, AccuWeather, and Northern Deutsch Radio. Whiteford wrote a three-year series about endangered special for the Philadelphia Inquirer and in 2006 wrote the book “Wild Pennsylvania”.  In addition, Whiteford has served as an advisor on the White House Interagency Climate Adaption Task Force and was a founding board member of the PA Biodiversity and a consultant to PA 21st Century Environmental Commission.

We are grateful to Open Land Conservancy of Chester County (OLC) for inviting the public to attend this meaningful presentation on global warming. For those that may not know, OLC is the oldest Land Trust in the US. Established in 1939, OLC now protects 493 acres of open space, most of which is located in Tredyffrin Township – 375 owned acres in 8 nature preserves that are open to the public and 118 acres of private property under conservation easements.  OLC is the largest non-government landowner in the township.

Completed volunteer supported and managed* , OLC is a registered 501c3 nonprofit organization. The Conservancy has acquired its properties through gifts and through state and country grants.  Volunteers provide the ongoing maintenance with some contracted services.   OLC is leading the effort to preserve the local community’s remaining open space, by caring for hundreds of acres of protected land.

To find out more about the OLC, becoming a member and volunteer needs, visit their website:  http://www.openlandconservancy.org/

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TESD: Proposed Tax Increase of 4.3% Drops to $3.875% — School Board to leave $20 in taxpayer pockets

Tax-increaseFor the 13th year in a row, it looks like the TE School Board will vote to increase taxes to its residents.

At the District’s budget workshop last night, the public learned that the proposed 2016/17 tax increase has decreased – the tax increase has reduced from the 4.3% contained in the preliminary budget approved in January.  The proposed tax increase is now 3.875%.  This ‘decrease in the increase’ means homeowners will keep roughly $20 of the proposed tax increase in their pockets.

T/E School District has one of the largest fund balances in the state – in 1996/97, the District had a fund balance of $4,333,661 and in the last decade we saw the fund balance increase to more than $28 million.  The total fund balance as of June 2015 was $32,381,047 – that’s $32.4 million in taxpayer dollars. Continuing to grow the fund balance, the District shows a budget surplus for the fifth year in a row yet residents continue to feel the sting of an annual tax increase.

Ray Clarke and Neal Colligan were in attendance at the budget workshop and their comments from the meeting are appreciated.  Thank you both.

If residents care about the proposed ‘thirteen years in a row’ tax increase, they should plan to attend the TE School Board meeting of April 25 and voice their opinion.

Budget Workshop Notes from Ray Clarke:

Three hours of discussion at last night’s TESD Budget Workshop culminated in some good news for taxpayers – although you’d need a microscope to see it.  The Board will vote at its April 25th meeting for a “Preliminary Final Budget” that includes a tax increase of 3.875% – down from the maximum allowable by a token 0.4% (worth about $20 for the average taxpayer, who is still faced with an increase of more than $200).

Notwithstanding well-articulated positions from members Dorsey, Sweeney, Burger and Hotinski (and from the audience) for a lower rate, more considerate of the increased fees to families and the fixed, inflation-linked incomes of retirees, the outcome seemed pre-ordained, driven by the same majority that voted for the senseless VFMS fences.  That majority seems pre-occupied by risk and unable to appreciate that every number they are given by the Administration is conservative.  For example:

–  Half of the adjustments to the Preliminary Budget could arguably be higher – most notable being the use of approved rather realistic estimates to budget the impact of staff retirements.

–  There was much lamentation of the possible impact of the next union contracts (due in 2017/18), without recognition that the projections already include 7-10% increases in the benefits costs (worth 1-2% in total compensation).

–  Revenue projections are especially murky.  This year’s transfer tax is already $1 million over Budget, as are even base real estate revenues – the most predictable of all line items!  It’s not at all clear if next year’s Budget, developed months ago, considers these developments.

Years of operating outcomes favorable to Budget show that the Administration is skilled at managing its resources.  Superintendent Gusick read a scripted plea for the Board to set the District’s tax parameters and pledged to implement a process next Fall to conduct the oft-advertised “deep dive” into expense strategies that would address any apparent operating deficit that resulted.

The April 25th Board vote is not final, but is nevertheless significant.  Anyone that believes that our School District should be managed more like the County Intermediate Unit, which also last night presented its Budget and a commitment to live within the Act 1 2.4% Inflation Index, should come out in support of our Board members who are trying to hold the line here in TE

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Budget Workshop Notes from Neal Colligan:

-Current Year operating projections now show an estimated $984,000 Surplus for the District for the 2015-16 fiscal year (this year).  Current year’s budget was passed with an anticipated deficit of $1.654 MM.  It’s a miracle…a $2.5 MM swing!

-This “miracle” of Deficit Budget morphing into an Actual Surplus has now happened in EACH of the last five years.

-As a result of these Surpluses; the District has added almost $12 MM to its Fund Balance over the last 5 years…that’s a pretty profitable operation!!!

-With over $32 MM in Fund Balance (about to be over $33 MM with this year’s Surplus); at what point is that adequate?

-The growth of the Surplus is remarkable as we always seem to be “up against the wall” when it comes time to set a new tax rate.  Possibly this pattern is a result of the budget forecasting methods employed when looking at the next year’s budget.  On average (10 years); the District collects a bit over 100% of budgeted revenue and spends about 95.5% of budgeted expenses.  Perhaps this speaks more to the budget estimates used at tax setting time than actual operational changes employed during a given fiscal year.

-At 3.875%; the tax increase this year will be higher than the 3.84% increase imposed on the community for this year.  Not sure the new Board Members ran to increase taxes.

-Perhaps it is time to look at using a small amount of our Surplus (88% funded by local sources) to dampen current tax increases?  One could certainly argue that the Fund Balance is now super-adequate and it is taxpayer money that they were told would go to education….!!!???

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Easttown Republican school board members leading the TE School District

We learned last week at the TE School Board meeting that Easttown resident Doug Carlson (R) was elected board president and Tredyffrin resident Scott Dorsey (D) the vice president.  On Tuesday, the newly seated school board held their first Finance Committee meeting – Virginia Lastner (R) will continue her role as chair.  Although I was unable to attend the Finance Committee meeting, Ray Clarke attended and kindly provides his notes/comments to Community Matters (see below).

Late today, the District posted the committee assignments on their website.  After serving as Facilities Chair for many years, it was interesting who would fill the vacated seat of Pete Motel. In addition to chairing the Finance Committee, we learned that Virginia Lastner will chair Facilities in addition to Finance. The two most important school board committee meetings (at least when it comes to tax dollars) is Finance and Facilities committees … and both will be chaired by Easttown resident Virginia Lastner.

With Carlson as Board president and Lastner in charge of the District’s Finance and Facilities committees, it looks like the Easttown Republicans are taking charge of the TE School District!  How’s this possible … for the first time in the District’s history, five of the nine school board members are Tredyffrin Democrats!

Beyond the ongoing construction of the District’s maintenance building, looms the final report from the safety consultant on the Valley Forge Middle School fencing project which is due by the end in the next few weeks. Looking at the makeup of the Facilities Committee, it’s unclear if consensus will be reached easily– newly elected school board members Michele Burger (D) and Ed Sweeney (R) publicly campaigned against the VFMS fencing project.  Will their opposition to the proposed fencing be sufficient to sway the other two members of Facilities, Lastner and Todd Kantorczyk (D)? The Valley Forge Middle School fencing project will likely be back on the Facilities agenda in early 2016.

It was good to see that the Public Information Committee is listed albeit as ‘Ad Hoc’; meetings held “when needed”.  In my opinion, there is always a need for public information.  Glad to see that Scott Dorsey is the committee’s chair – hopefully with Rev. Dorsey at the helm, we can look forward to increased transparency and public engagement from the Board.

With all the madness going on in the world, it was disturbing to see there the Diversity Committee was not listed.  Former school board member Liz Mercogliano previously chaired the Diversity Committee and would update the public at Board meetings on their important ongoing discussions.  Now, more than ever, we all must work together to ensure that we appropriately value the diversity within and among our schools. Promoting and encouraging respect for ethnic and cultural diversity within the school population, staff and community deserves to continue. Suggest that Diversity find a place on the calendar with the other committee assignments.

Here’s the complete list of school board committee assignments:

Facilities Committee

  • Virginia Lastner, Chair
  • Michele Burger
  • Todd Kantorczyk
  • Ed Sweeney

Education Committee

  • Scott Dorsey, Chair
  • Kevin Buraks
  • Roberta Hotinski
  • Kate Murphy

Finance Committee

  • Virginia Lastner, Chair
  • Kevin Buraks
  • Roberta Hotinski
  • Todd Kantorczyk

Legislative Committee

  • Doug Carlson, Chair
  • Michele Burger
  • Kate Murphy
  • Ed Sweeney

Policy Committee

  • Kevin Buraks, chair
  • Todd Kantorczyk
  • Kate Murphy
  • Ed Sweeney

Public Information – Ad Hoc

  • Scott Dorsey, Chair
  • Michele Burger
  • Roberta Hotinski
  • Kate Murphy

I appreciate the following comments/notes from the Finance Committee meeting as provided by Ray Clarke. Ray’s budget point #3 caught my attention – “assumptions about employee out-sourcing”. What?

In a follow-up call, Ray confirmed that there was no details or explanation offered by the Finance chair or the administration regarding this out-sourcing comment.  So, the public is left wondering which employees are they talking about — is it the few remaining aides and paras who remain as District employees? Or is the Finance committee and administration thinking ahead to other potential outsourcing opportunities  – TENIG’s contract is up in 18 months, so could it be that the District’s kitchen staff, secretaries and custodians will once again find their jobs in jeopardy?

Last night was the first meeting of the new Finance Committee (although the full Board was in attendance).  The group seems short on financial management experience, so there will need to be a steep learning curve. Exemplified by the fact that the Committee recommended that the Board vote in January to apply for all eligible Exceptions, totaling a 4.3% tax increase.  This is based on just eight numbers from the Administration, two of which are given from the mandated PSERS rate.  Two more are the same as the current year (State and Federal subsidies).  The bottom line is a scare-inducing $4.65 million deficit.

The four remaining budget lines:

  1.  Local Revenues:  Is the Board OK with projected revenues just $800,000 more than this year’s budget when this year’s real estate taxes, transfer taxes and interim taxes are already running $1,000,000 better to budget than last year’s rate?
  2.  Salaries:  Do they understand why salaries are flat despite a contracted TEEA step increase worth maybe 2%, a 5.7 FTE teacher increase, 1.7% salary increases for Admin, etc.?   We discovered last night that has something to do with assumptions about employee out-sourcing, but no detail was provided.  Nor of course, any detail about the expected staffing increase.
  3.  Benefits:  Apparently the consultant advised the District to project a 5% healthcare premium cost increase, and the total budgeted benefits increase vs 2015/16 is 5.1%.  But the TEEA, for example, is contracted to pay an extra percentage of the premium and there will be fewer employees apparently.  How does the math work?
  4.  “Other”: This is up nearly $3 million over the current year projection.  Presumably the out-sourcing projections have something to do with this, but no explanation was provided.

A couple of other noteworthy points:

– The arithmetic for the Special Ed calculation leads to a $900,000 tax increase, yet this year’s expense increase is less than $400,000 and there was no data on the slides supporting an expense projection for 2016/17.

– The projection for this year is that expenses will be $1.3 million less than Budget.

The response to this will say a lot about our new Board.  We were told over and over last night that the tax increase recommendation was just to “preserve our flexibility”, but we know too well how markers like that tend to get cemented in.  Are they prepared to lay down that marker with such minimal information provided by the Administration?

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Update on TE School District Finances and Tredyffrin Township declares State of Emergency for Pope’s visit

 

Tuesday night marked TE School District’s first Finance Committee meeting of the new school year.  Although I was unable to attend the meeting, my friend Ray Clarke did attend the meeting and shared the following notes from the meeting.  Thanks Ray!

The TESD Finance Committee opened the 2015/16 season with a relaxed session on Tuesday night.  The meeting was attended by candidates Berger, Colligan, Kling, Hotinski and Kantorczyk.  A few highlights from my perspective:

Budget Process

– Finance committee approval of the Preliminary Budget is due in just three months.  After some discussion about teeing up review of opportunities in the district’s self insurance of its health plan and potentially of some special education risks, Doug Carlson requested that the Administration present the Committee with full district budget scenarios that start with expenses managed to revenues with no tax increase.  Hopefully we’ll get more than the standard operating procedure showing a $6 million deficit.

– By the way, somehow in an environment of last 12 months US inflation of 0.2%, the Act 1 index is 2.4%.  Half of the index is the increase in the Federal school employment cost index, showing how contract awards get baked into future taxes.

Current Financials

– August YTD expenses/encumbrances are up across the board, total up 12% versus last year, driven by special ed instruction up 32% (over $3 million) YTD.  I don’t recall the explanation for this but I didn’t hear any immediate concern that the overall 5% budgeted expense increase would be exceeded.  One number that does stand out for the full year budget is the $770,799 (11%) increase in the Administration budget.

– For those of use that liked to do a quick scan of the month’s check register from high to low, the task has been made harder by a switch to reporting the check register by pay period in alphabetical order.  This seems arbitrary; when asked why, no reason was provided.

– The actual results for last year are still months away, awaiting the external audit.  The Business Office is working through the encumbrances and deciding what should be released; an interesting exercise, no doubt.

Department of Unintended Consequences

– Restricting part-time employees to 27.5 hours has caused a significant shortfall in the number of teachers/aides available to support the after-school homework clubs, and this is becoming a real problem with the clubs usually starting up in October.  Part of the program is funded by FLITE, which is not able to contract with employees of our out-sourcing company, CCRES.  The District is looking to advertise specifically to hire homework club leader and assistant positions at $28 and $17/hour, which FLITE would apparently be able to continue to fund.

Other

– Kris Graham brought up the need to fully air condition all of the elementary and middle school buildings in the light of the current heat wave.  She did not offer a cost estimate for this.

Residents also learned on Tuesday that the Tredyffrin  supervisors voted to declare the township a state of emergency for the upcoming Pope’s visit, citing expected traffic and congestion. According to Police Supt. Giamio, there will be over 16,000 train riders during the pope’s visit and that the highest number are expected to use the Paoli station!  Yikes!  As an aside, I am glad about my decision to move the annual historic house tour up a week to Saturday, Sept. 19 (www.tredyffrinhistory.org) to accommodate the Pope’s visit.

We should plan around the Pope’s visit as if the weather people were predicting a blizzard — get to the grocery store and don’t forget your medication before the storm hits (or rather, the Pope lands).

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