Rick Brake

T/E School Board Passes 3.3% Tax Increase; Highest Percent Increase in the Area

The T/E School Board meeting on Thursday night was rather anticlimactic.  Most of us who have been following the budget process were not surprised by the 3.3% tax increase (1.7% Act 1 Index, 1.6% referendum exceptions) for the 2012-13 school year.  Based on the District’s average residential assessment of $252,601, this translates to an average increase of $155 per homeowner in their tax bill.

The Act 1 Index increase will produce projected revenue of $1.5 million and the exceptions increase projected revenue of $1,498,916. The total revenue produced by the 3.3% tax increase is $2,998,916.  The 2012-13 tax will be levied at the rate of 19.2628 mills, on the assessed valuation at a rate of $19.2628 per $1,000 assessment; an increase of .6154 mills from the 2011-12 tax rate.

How does TESD tax increase of 3.3% increase for 2012-13 school year stack up against neighboring school districts?  The following local school districts have approved their budgets for 2012-13 and  needed to include the following tax increases:

  • Radnor School District: 3.21% tax increase
  • Great Valley School District: 3% tax increase
  • Haverford School District: 2.73% tax increase
  • Lower Merion School District: 1.99% tax increase
  • West Chester School District: 1.7% tax increase
  • Downingtown Area School District: 1.7% tax increase
  • Phoenixville School District: 1.66% tax increase
  • Unionville-Chadds Ford School District: proposed 2.65% tax increase in Chester County and a 1.74% decrease in Delaware County (the difference comes changes in the gross property valuation of the two counties) to be approved at UCFSD meeting on Monday, June 18.

Following the final budget summary, discussion and resident commentary, the school board members were presented the opportunity to weigh-in on why they were voted for or against the 2012-13 budget.  The 2012-13 budget passed 7-2 with school board members Liz Mercogliano and Rich Brake providing the dissenting votes.  Brake provided a lengthy 30-minute oration, which offered historical details of what brings the District to this point and his reasoning for voting against the 2012-13 budget.

Ray Clarke also attended the school board meeting and offers his thoughts on last night’s School Board meeting. Thanks Ray!

Comments from Ray Clarke … 

1.  Karen Cruickshank reported that the tone in the TEEA negotiations is “increasingly positive”.  One small signal of this is the memorandum of understanding that removes the requirement for the district to pay for “advanced studies assistance”, in return for dropping the demotion idea for 2012/13.  Amazingly, this saves $360,000 – and it’s not even all the tuition that is paid!  (Payments are continuing for those on the lowest Bachelors steps).

 2.  The General Fund Balance debacle continues.  At its root is the fact that the Board treats this as a completely discretionary slush fund, with absolutely no rules about how it is to be used.  I believe that it is completely unacceptable for $30 million of taxpayer money be be treated so cavalierly.  Just one example: last year the “commitment” for PSERS “stabilization” was $15.4 million, this year it’s $3.6 million.  It’s not that the difference has been used to stabilize PSERS, it’s just that the number is a plug for when other things have been accounted for.  Ridiculous.  Why even have that item in the first place – we plan to raise taxes for it anyway.

Having said that, the changes in this year’s commitments do move us in the right direction.  $10.4 million will be moved into the Capital Fund, where it will be used for the one time expenses that we’ve discussed here are the appropriate uses for the Fund Balance.

Also worthy of mention is the commitment for the liability for vested employee services.  This went up by $0.8 million.  The actual payment was $0.3 million;  It’s interesting that the actual employment expense was therefore $0.5 million higher than was recognized in the operating statement, another problem deferred for future taxpayers.

3.  Which gets me to Dr Brake.  He treated us to a half hour analysis of the school district’s finances and the changes over the last decade or so, with desktop slides.  I encourage all to look for the video.  He voted against the tax increase, and argued for “an entirely new status quo” for the school employees.  Here are some notes I took with my commentary:

– The drop in revenues from assessment appeals offsets the increase from increasing the tax rate for the exceptions.  He used this to suggest we have reached taxing capacity.

– Special education is a “ticking time bomb” and the increased costs of autism “threaten public education”.  Relatedly, we heard in the Policy Committee how parents of non-residents, shopping for schools, want the right to come into classrooms to observe TE”s special education programs.

– All entities (governments/households, US/Europe, etc) have a “pathological addiction to spending beyond our means”.  [An OT comment: In a long run he’s right that this is unsustainable, but in the short run, national governments able to determine monetary policy can have a stabilizing role when consumers all of a sudden come to that unsustainable realization.  The problem in the US is that the political actors cannot agree on the long run plan to get the house in order, and in Europe, they have a completely crazy monetary union without a fiscal union].

– For TE routinely taxing to the max is unsustainable and not the solution.  I note that the agreed 3.3% tax increase this year, and the subsequent annual 3% increases in the 4 year projection model accumulate to an increased tax bill of $600 per year for the average residential assessment.  And there’s still a $4 million deficit in 2016/16.

– He is now going to pay more attention to the Fund Balance.  Good!

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