tax increase

Downingtown Area School District Approves Zero Tax Increase for 4th Year in a Row – TE School District Set to Approve 3.6% Increase (12th consecutive year of tax increase)

Tax-increase 2016

At tonight’s TE School District meeting (7:30 PM, Conestoga High School), the school board will vote on the 2016-17 final budget and property tax rate.

In January, the board had adopted the preliminary budget which contained a 4.3% tax increase – they approved the budget with the Act 1 Index of 2.4% and allowable Act 1 Exceptions of 1.9%.  At the April 25, 2016 regular school board meeting, the proposed final budget reduced the property tax rate from January, from 4.3% down to 3.875%.

According to the meeting agenda and budget materials (click here) the board will vote on the District’s 2016-17 final budget with an Act 1 Index of 2.4% and Referendum Exceptions of 1.2% for a 3.6% tax increase to the taxpayers.

The following chart shows TESD tax increases over the last twelve years.   2004-05 was the last zero tax increase year.

  • 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

The TE School District residents can take solace that they are not alone in their tax increase. According to Adam Farence’s Daily Local article, 11 out of the 12 school districts in Chester County contain 2016-17 budgets with tax increases.

The only Chester County school district without a 2016-17 tax increase is Downingtown Area School District.  DASD recently approved their 2016-17 budget with no tax increase but what is more fascinating is that this is the fourth year in a row without a tax increase!

Looking at TESD tax increase chart above for the last four years, you have to wonder how it is that DASD delivered zero tax increases to its residents during the same time period. According to the Daily Local article, the DASD chief financial officer Rich Fazio “attributes the four-year streak of not raising taxes to the foresight of prior school boards.”  Fazio states that, “We were fortunate to prudently allocate funds and accumulate savings. Because of that we have not had a tax increase for four years.” He further indicated that DASD “will strive to duplicate a zero increase in taxes for as long as possible.”  

The total operating budget for Downingtown Areas School District is $210 million versus TE School District operating budget of approximately $129 million. DASD has a fund balance of approx. $24.5 million versus approx.  $32 million in TESD indicating that both districts understand the importance of saving for the future.

Someone is going to have to help me understand how these two Chester County school districts can operate so differently financially – and yes, I understand that TESD is ranked academically higher than DASD.

TE School District has always been an academic powerhouse, so other than 20 miles of separation between the two Chester County school districts, how is it possible that DASD repeatedly holds the zero tax increase to its residents and TESD has had 12 consecutive years of tax increases? Perhaps TESD business manager Art McDonnell could have coffee with DASD chief finaicial officer Rich Fazio to compare notes and discuss financial strategies!

DASD proudly displays the following 2015-16 tax increase chart on their website:

Tax Increase vs Act 1 Index Chart

According to the agenda budget materials for tonight’s TE School Board meeting, there were spending cuts before, during and after budget approval to reduce expenditures in the 2016-17 budget.  An explanation of those specific reductions would be helpful to taxpayers.

Back in January, school board members Ed Sweeney and Scott Dorsey spoke out against the preliminary tax increase of 4.3% as unacceptable … will they now be OK with 3.6% tax increase?  Instead of a typical roll call vote on the TESD 2016-17 final budget, I encourage board members to be accountable and offer the public an explanation of their vote.

Many of the newly school board members used fiscal responsibility and accountability as a campaign platform – now is the time to deliver on those promises.

Update on TE School District’s Finance Meeting

school-financeMy friend Ray Clarke attended the TESD Finance Meeting last night and kindly provides us with the following notes. Thanks Ray! Others in the community attended the meeting; I encourage you to offer your comments.
Some brief and arbitrary personal notes from last night’s TESD Finance Committee. There was fair community attendance and engagement, so hopefully others can supplement.
 
The attendance may have been encouraged by the prospect of “drilling down” into the expense Budget that requires the 4.3% tax increase, but once again we were left flat on our backs as Lucy pulled the football away.  For example, we learned that Special Education purchased services are slated to increase by $0.9 million, but have no idea why, beyond “unfunded mandates”.  Maybe someone can point out any new mandates, and indeed offer a quantitative analysis of how the $20+ million a year Special Education enterprise spends that money, where the increase is going next year, and why exactly the projection model has the expense increasing at 10% a year for the full five year length of the model.  Committee Chair Lastner again held out the prospect of sharing more with the public in future meetings.
 

The community is also struggling to understand the trajectory of health care costs.  Since the district went to the current self-funding model, experience has fluctuated considerably, $1 million or more ahead or less than budget.  Analysis of this is left to the insurance broker/administrator, so we have not seen the thinking that supports next year’s budget projection of a 5% increase and subsequent 8% annual increases.  If taxpayers are to be comfortable accepting perpetual tax increases to cover this benefit for our employees, it would be nice to see some “drilling down” here, too.  Let’s look at the five year trend, understand what’s driving that trend, including any change in the demographics of the covered population and the employee contribution, budget to that long term trend and use the $5 or $6 million of taxpayer money tucked away in the Fund Balance to systematically smooth out the inevitable fluctuations.

A comparison of budget to actual for the last three years was notable for one factor: in every year, actual employee compensation costs have been better than budget by at least $1 million and in 2013/14 more than $2 million to the good – because the impact of retirements and unpaid leaves of absence (both of which bring replacement with lower cost staff).  And a similar outcome is projected for the current year.  But we were told that this over-budgeting – which leads every year to a higher than needed tax increase – can not be budgeted for because the district only officially learns of retirements after the budget is completed.  Somehow we can estimate cost increases (eg: healthcare), but can not manage to deal with decreases?

More information to come re the laptop plan (hardware choice, roll-out timing, cost-sharing, etc.).  I gather the Education Committee approved the educational rationale, so maybe a good start for communicating that rationale to those of us who bought their own log tables and slide rules would be to provide a white paper documenting how educational outcomes will be improved.

Since the passage of the District’s preliminary budget last month which contains a 4.3% tax increase, it is not good news to read that there’s been no movement in the direction to decrease.  At the time the preliminary budget was passed, I recall that the Finance Committee Chair Virginia Lastner told the public that this only to “keep the options open”. Lastner stated that all expenses would be reviewed ‘line by line’. Maybe that discussion will happen at the budget workshops.

On Thursday, February 18. the Facilities Committee (with Virginia Lastner, chair) will return to the discussion of the fencing project at Valley Forge Middle School and the consultant’s report.  Interestingly, a review of the meeting agenda indicates a strict time schedule — public comment is from 5 PM – 5:05 PM. Five total minutes for public comment — what is that about?

T/E Taxpayers Draw Short Straw: School Board Approves $4.5 million maintenance building & 3.81% tax increase

Last night’s TE School Board meeting did not mark a good night for the District’s taxpayers!  Many of us left the meeting disheartened and feeling like the warm summer evening would have been better spent with a glass of Chardonnay.  Here are the highlights, or rather low-lights of the meeting.

New Maintenance & Storage Building:   $4.5 million, approved 8-1 (Liz Mercogliano dissenting vote)

The District’s Business Manager Art McDonnell and the architect Tom Daley from Daley & Jalboot presented a lengthy presentation on the proposed $4.5 million maintenance & storage building. Helping to convince that the project was necessary, photos of current overcrowded storage facilities, closets, etc. accompanied the presentation.  Taxpayers did not question that something needed to be done to improve the situation but did question the project’s escalating costs, the Old Lancaster Road location and the treatment of the neighbors. The fantasy architectural drawings indicate a tree-lined boulevard, not the realty of Old Lancaster Road … a narrow residential street of small homes sitting below grade to this new, large maintenance building.

2015-16 Budget: Approved deficit budget with a 3.81% tax increase, 8-1 (Liz Mercogliano dissenting vote).

The 3.81% tax increase marks the eleventh straight year that the TE School Board has raised taxes. According to the Philadelphia Inquirer from Sunday, June 14, the 3.81% tax increase for 2015-16 marks the largest tax increase in Chester County.

The last year the TESD saw no tax increase was 2004-05 as seen below:

• 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

Discretionary compensation increases above the 1.7% contract for Supervisors and Administrators:  Approved 7-2 (Liz Mercogliano and Scott Dorsey dissenting votes)

Valley Forge Middle School Fencing:  Board agreed to further discussion of hiring of a fencing safety consultant at the next Facilities Committee meeting.  An RFP for safety expert to be sent in the Fall.

TE School District Redistricting:  Based on the distribution of voters in the school district, there is under representation of elected officials in Tredyffrin, District 2.  It was suggested that the Board’s Legislative Committee would review the redistricting issue at their next meeting, in September. Disenfranchised voters are discussing a grassroots effort of their own re redistricting.

Reflecting on last night’s school board meeting, had me wondering why should I or other citizens bother to show up?  As some have often stated on Community Matters, the Board seemingly makes its decisions in advance and then delivers those decisions as a united front. Questions from the public are only marginally answered, if at all.  The Board views comments from residents as criticism and/or annoyances.

Election Day is November 3, 2015.  Five seats on the TE School Board are on the November ballot – Vote for Change!

TESD Facility Meeting to discuss school fencing project and mega-million dollar maintenance building

The proposed middle school and high school fencing project and the mega-million dollar Maintenance Building are two of the agenda items for the District’s Facilities Meeting tomorrow, Friday, June 12 at 12 Noon.

The school fencing project, specifically at Valley Forge Middle School, has seen a lot of attention in recent months. The school property abuts the property of some of the Green Hills properties in Chesterbrook. and initially the plan had the fencing going directly behind the Green Hills homes. It now appears that the District has agreed to move the proposed fencing away from the homeowner’s back doors but unanswered questions remain.

Discussion (debate?) continues on the placement of the interior fencing, the height of the fence (4 ft, 5 ft. or 6 ft.), the type of fencing material, signage, etc. The five District elementary schools received chain link fencing but the Chesterbrook residents are asking for a material upgrade to white vinyl fencing to match existing fencing in the planned community.  There appears to be an agreement that any upgrade materials fee from chain link to white vinyl will be split between Chesterbrook residents and the District’s taxpayers.  The white vinyl fencing is to run along the side of VFMS property on Valley Forge Road (Rt. 252).  This upgrade fencing option would only ‘mark’ the District’s property and cannot be viewed as a safety feature.

The construction start date for school fencing at Valley Forge Middle, TE Middle and Conestoga is June 24 with a scheduled completion date of August 14.  Since there is a change order for the originally approved fencing at VFMS, the Facilities Committee will need to decide the next step – will it need to go back to the full Board on Monday, June 15?

Although the District has been unwilling to publically state how many residents have contacted the Board regarding the proposed fencing – I know that the number continues to rise.  Many residents have copied me on their correspondence with the District and then complained when they have received no response. To be clear, there may be residents who support the fencing project, but I have personally not received copies of any such correspondence.

Below is a copy of a recent email to the school board from Mr. Gary Wolf, a Chesterbrook resident.  This email is included below with his approval.

Dear School Board,

Our tax dollars are irresponsibly and continually misused by the T/E School Board.  One of my choices to address this concern, besides moving out of our Tredyffrin home that my wife and I have lived in for 27 years, was to exercise my right to vote … which I did.  I chose not to vote for Kris Graham on May 19th.  While my vote is only one in many, I’m fed up with our taxes being increased and our school board acting as though this district is a “money pit.”  Specifically, we don’t need fences at our schools to the tune of almost a quarter million dollars.

My wife worked at VFES for 19 years, and saw the waste and misdirected funding of the T/E administration.  For example, the kids had a paltry allocation of $1.00/year/student for their first aid care while the principal bought new office furniture essentially every year, applying the “use or lose his budget” mentality.  If I managed my department for my employer in that manner, I’d be out of work.  And … we continue to pay for Dan Waters’ amenities and life style that even us reasonably blessed professionals will never realize.   Spend it on the kids!!  Enough is enough!

Gary C. Wolf

Another of the major discussion items on the agenda is agenda items is the new Maintenance & Storage Building.  As we learned at Monday’s Finance Committee meeting, the bids for this project were due in this week on June 9.  The project bid will not include any of the costs leading up to this point – the legal and architectural fees, traffic studies, township permits, eco soil testing, etc.

When the Business Manager was asked about a total of those pre-construction costs, Art McDonnell stated that he would provide a total of those costs as well as the construction bid costs at the Facilities Meeting. At this point, the District has already invested a lot of money on the maintenance building project. Because this project has greatly exceeded initial estimates, it would be fiscally responsible for the Board to thoroughly analyze the costs, and review all available options, before granting final approval. According to the District, the construction start date for the maintenance building is August 17, 2015 with a scheduled completion date of June 29, 2016.

Regarding this week’s Finance Meeting, the proposed tax increase has now edged up to 3.81% for the 2015-16 school year. Should this tax increase be approved, it will mark the eleventh year in a row that residents have seen their taxes go up — you would have to go back a decade to 2004-05 to find the last time that there was no real estate tax increase. Is this really the best time to spend $4-5 million for a maintenance & storage building?

There were a number of school board candidates at the Finance Meeting, it would be interesting to know their thoughts about the proposed budget. There was a brief mention about the District’s food service budget and something about a $400K loss but … that the department really didn’t have a loss but actually had a profit! I have no idea what this is about — is the District practicing a form of ‘new math’?  Perhaps my friend Ray Clarke can enlighten us!

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Update: Neal Colligan sent the following email to the T/E School Board Thursday evening regarding the District’s proposed Maintenance & Storage Building and provided a copy for posting on Community Matters.

Dear School Board,

Apologizes for not being able to join you at the Facilities Meeting tomorrow. I did want to take this opportunity to give you some thoughts on your maintenance building that you will be discussing tomorrow.

Much has been said on that project and I see know need to go into its history… You’ll already have reviews all that.  The choice you may make tomorrow is to recommend a contract for the construction of this 14,000 SF facility that has been in the planning stage for so long. At the last Facilities meeting, the revised estimate for the construction of the building is almost $4 MM. After you add the cost of land acquisition, planning and architects, legal, and other sunk costs… This facility could well coat almost $5 MM. On a price per square foot basis, this gets pretty close to $300/SF.

I work financing commercial real estate and I’d like to share some insights.  In a commercial loan scenario, a lender would give you only a portion of the value of a piece of real estate (typically 65-75%). This discipline is adhered to for obvious reasons..,. The lender would like to get paid back.  If they don’t get paid back frontmen owner, they’d like to see their way to get their money back through taking the real estate back and selling it. Why is the germane?  You’re a not for profit building for your own needs. Here’s why the above is important:  you are borrower inc the money. Further you’re borrowing it on the back of the taxpayers. You just completed a large bond offering.  You have a AAA rating based primarily on the ability of the citizens of our community to pay taxes. Indeed, WE; the taxpayer, are the security for this loan.

As THE security for your bond issue, I would appreciate it if you would apply the same discipline that you would see from a normal commercial real estate deal. If you had that building appraised… You would find out it’s worth about $1 MM. Don’t believe that?  Find out…have it appraised OR ask Tripp Lukens on the Planning Board…. He’s a commercial appraiser and would be happy to speak on value, likely for no charge. At least investigate it…please don’t pay 4x value for a non-strategic asset (one where no learning takes place).

I know you’ve spent considerable time on THIS plan but now it’s costs have far out-stripped it’s utility/value….my opinion. And my opinion should matter; I guaranteed the bond issue by being a citizen of this community. You should not pay anywhere near the amounts recently released by Facility for this asset. There ARE other alternatives….lease/buy an older building/etc. At $4-$5 MM of money borrowed on the credit of this community; you must go look at new alternatives.

Thank you-and I apologize for any miss-spellings; writing on my handheld without glasses.

Neal Colligan

T/E Proposed Final Budget indicates 3.2% tax increase plus — the new Superintendent search gets underway

At the T/E School Board meeting last night, the Board approved the 2014-15 proposed final budget as follows – The Proposed Final Budget for the 2014-2015 school year is in the amount of $117,254,089 revenue, 2,671,891 fund balance transfers and $119,925,980 for appropriations on a tentative basis.

As presented, the ‘Budget Development Summary’ slide below indicates that the projected expenditures of $117,069,428 exceed the projected revenue of $113,962,589 = projected budget deficit of $3,106,839.   With a tax increase of 3.2% (Act 1, 2.1% and exception, 1.1%) plus a net revenue increase of $211,370 and a net expenditure increase of $1,356,552, the revised budget has a remaining deficit of approximately $1.8 M.  It is proposed that the $1.8 M will be satisfied with a fund balance contribution.  The final budget is to be approved in June.

TESD  2014-15 Preliminary Budget

Once the revenue and expenditures projections for the 2013-14 school year are in, it will be interesting to see if the District ‘finds’ surplus dollars.  If you recall, the District has found mega-millions in surplus the last two years in a row.  Unfortunately, for taxpayers, each year the money has been ‘found’ until after the next year’s budget was passed (with a tax increase).

The budget surplus was $3.9 million for the 2011-12 school year and nearly $5 million for 2012-13 school year.  It’s never been entirely clear what caused the budget surplus these last two years although I do recall that “lower than anticipated insurance costs” was used to explain a portion of the surplus.  I have to believe that the Board would not approve a 3.2% increase for the taxpayers only to discover a budget surplus for the third year in a row.  Not sure that there could be a valid explanation if that were to happen.

Another couple of notes from last night’s meeting. In the update from the Public Information committee meeting, Scott Dorsey announced that the process by which the public asks questions at School Board meetings and the Board responds has moved to the Policy Committee for further discussion. The next Policy Committee meeting is Friday May 9 at 12:45 PM at TEAO.

School Board President Kevin Buraks formally announced that Supt. Dan Waters will retire at the end of his current contract which ends June 30, 2015.   Regardless of how people personally feel about Waters, his time remaining on the job is winding down – a little over a year left on his contract.  As announced by Buraks, there is discussion underway about the process/search to hire his replacement. It appears that the Board will be utilizing the experiences of Jeanne Pocalyko, the new Personnel Direct, in conducting the search.

Ray Clarke sent the following note about last night’s meeting —

A note on the TESD Superintendent search from last night’s Board meeting.  A Board Search Committee has been appointed. Members I think: Graham, Cruickshank, Bruce, Carlson but I could have missed someone over the general hubbub at the beginning of the meeting.  There will be a survey to get public input sometime in May.

I wonder if they will ask meaningful questions:  eg:  From inside or outside the district? Re the above, definitely or preferably? Experience as a Superintendent?  Rank a given set of possible selection criteria in order of importance?  (Or, rate importance of the criteria, but all could be 10 out of 10).  Criteria such as: experience in  a high performing district; track record of improving educational results; track record of meeting budget; demonstrated public communication expertise; employee satisfaction results, and so on.

In her prior position at  Dallastown Area School District (DASD,  Pocalyko and the Superintendent search committee took a ‘community engagement’ approach and included administrators, teachers, parents, support staff, students, community and committee members in the effort.  Although ultimately the final determination and selection of the new Superintendent remained the responsibility of the DASD Board, the decision process included the compilation of stakeholder feedback, interview results and comments from each interview round, reference checks and the school board’s consideration of district needs and input from the Committee.

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