Tredyffrin Easttown Educational Association

TE School District has Multi-Million Dollar Budget Surplus … Again!

There was more to the June 17th  TE School Board meeting than the Board’s approval to cut the hours of aides and paraprofessionals.  With a 7-2 vote, the Board passed the District’s 2013-14 school year budget – Anne Crowley and Rich Brake dissented.

For another year, the District ended the year with a budget surplus – a year ago, it was a $3.9 million surplus and this year the surplus is higher, possibly as much as $5 million.  School board member Betsy Fadem defended the surplus, explaining that much of the surplus was due to one-time money situations.  Fadem’s logic may have been more convincing if it were not for the nearly $4 million surplus from the year before.

I understand that budgetary changes occur during the school year but the $8-9 million surplus of the last couple of years doesn’t balance well for me given recent Board decisions like the cutting hours of employees to avoid paying health insurance or the proposal to charge Valley Forge Elementary School neighbors a fee to use the tennis courts. How is that property-owning nonprofit organizations in our community are targets for District revenue or that taxpayers see an increase in their tax bill yet the school district has a yearly budget surplus of multi-millions?  This isn’t a few hundred thousand dollars in surplus, it’s millions!

My guess is that the teachers are paying very close attention to the District’s $8-9 million budget surplus that has occurred since  the signing of their last contract.  The TEEA contract is up June 2014, which means that contract negotiations are just around the corner.

Neal Colligan addressed the recently passed TESD budget in the latest issue of the Main Line Suburban.  Here’s his letter to the editor:

To the Editor:

Lost in last Monday night’s report on an emotional Tredyffrin/Easttown School Board Meeting was the economic news of the evening. This related to a summary of this year’s projected results and the adoption of budget for the 2013-14 school year.

As was announced the prior week at the board’s Finance Committee meeting, the district should see operating results this fiscal year that will show a surplus of $4 million to $5 million. Fiscal year 2011-12 (last year) ended with the district in a surplus position of $3.9 million. This is total surplus for the district of $8 million to $9 million in two years. It’s important to remember that the district imposed the maximum tax increases allowed in the Commonwealth (without voter referendum) in each of the last two years. These two tax increases totaled about $6.5 million in new revenue for the district. We were told that this was what was needed to educate our children in the next school year. The budgets adopted for those two fiscal years were each estimated to produce multi-million dollar deficits; even with the tax increases imposed. The reality is that there was enough revenue in each of these years to effectively operate our public schools without any tax increase. Looked at another way, our tax increases only ended up funding surpluses. This is a disturbing, and now repeating, pattern.

This year’s budget also included a tax increase. The presentation of the budget detailed, again, multi-million dollar deficits even with the now-adopted tax increase. This budget, as in the last two years, passed the board but not without dissenting votes. As it turns out, these dissenters in prior years were right voting against tax increases as they were not “needed” to educate our students. The old adage comes to mind: fool me once, shame on you; fool me twice, shame on me; fool me three times…? Let’s all hope this is not the case.

You may be asking the next logical question, what happens to these surpluses? They are accumulated in the district’s Fund Balance. This accumulation account is designated for many things; past untaken vacation days; stabilization of self-funded health insurance costs and a PSERS stabilization balance. Up until last year, the PSERS balance was the largest designated balance in Fund Balance. But it has never been used to protect the taxpayer from the increased expense of PSERS (the biggest demon the School Board uses to justify tax increases). Rather, the largest withdrawal from Fund Balance was taken last year and used to fund the Facilities operation. $10.4 million was moved from the PSERS stabilization designation and moved to a new Capital Fund. Unusual? You decide.

As with any operating entity in the public sector funded by our tax dollars, citizen diligence and attention is warranted. So let’s see what happens to this year’s projections of multi-million dollar deficits. We all hope it doesn’t play out that way but as a careful watcher of recent financial results; I’m not too concerned. The District has been widely wrong in its doom-and-gloom budgets in the recent past. Plus, they now have another funding increase in the form of your increased tax dollars. Will it be needed to educate our children or to create another surplus for the District? We’ll be watching…like a Hawk!

Neal Colligan
Wayne, PA

Facebooktwittergoogle_plusredditpinterestlinkedinmail

A look at Enrollment, Projected Staffing, Real Estate Assessment Appeals and Economic Impact in T/E School District for 2013-14 Budget

I attended last night’s TESD Budget Workshop for the development of 2013-14 budget. Sue Tiede, Director of Personnel presented enrollment history and trends, projected staffing needs and changes for the District.

In the review of staffing changes from 2008 to 2013, it was interesting to note that full-time teachers during this period has decreased by 48 teachers, compared to an enrollment increase of 355 students during the same period.  The total enrollment in 2008-09 was 6,132 increasing to 6,487 in 2012-13, which indicates a 5.8% increase or 355 students.

An enrollment history chart dating from 1975 to 2012, indicated that in 1975 the District enrollment at 6,497 students.  From that point, 37 years ago, the District’s enrollment steadily decreased for 15 years to its lowest point in 1989 of 3,990 students.  Starting in 1990, the District’s enrollment began to increase yearly to 6,487 students in 2012, which marked the highest enrollment since 1975, when there were 6,497 students.  We know that there are currently 48 teachers fewer than in 2008, but the chart did not indicate what the staffing was in 1975, when the enrollment was within 10 students of where it is today.

The projected requirement for 2013-14 indicates additional staffing needs of 7.6 educators. Included in the 7.6 staffing number is the addition of one special education, one technology and three mental health specialists.  The special education professional is for autistic support.

The District’s Business Manager Art McDonnell presented updates on property tax revenue lost from reassessments and economic impact on other local revenues (interest income, transfer tax, delinquent tax, and interim tax) and provided a revenue variance analysis and 2013-14 budget summary. In 2006-07, the annual property tax revenue lost to the District in reassessments was $256,561.

As presented by McDonnell, annually since 2006-07, residents and commercial property owners have continued to appeal their property taxes. The annual loss to the District in property tax revenue due to reassessments is as follows: 2006-07: $256,561; 2007-08: $244,236; 2008-09: $417,041; 2009-10: $975,994; 2010-11: $826,923; 2011-12: $595,072; and 2012-13: $411,051.  However, these numbers do not paint the total picture.  There is a cumulative loss as the new reassessment revenue loss is compounded each year.  The accurate property tax revenue lost to the District from assessment appeals based on the cumulative effect is as follows: 2006-07: $256,561; 2007-08: $512,000; 2008-09: $44,126; 2009-10: $1,947,142; 2010-11: $2,847,464; 2011-12: $3,536,508; and 2012-13: $3,946,559.  The District’s budget for 2012-13 is nearly $4 Million less due to property tax revenue lost from assessment appeals. And by the way, the $4 Million may go up as Vanguard’s assessment appeal remains an open issue; scheduled court date is April.

McDonnell presented the economic impact on other local revenues (interest income, transfer tax, delinquent tax and interim tax).  Although we all know that the interest income rates at the banks is nearly nonexistent these days, it is certainly evident when reviewing the District’s financials.  In 2006-07, the District earned about $3 Million in interest income versus $109K in 2011-12.  However, there was some encouraging news – the District’s interest income for 2012-13 is projected to nearly double from last year, $200K.  The transfer tax revenue is also indicating projected growth, from approx. $1.7 Million last year to projected $1.8 Million for 2012-13.  Looking at the total revenues from interest income, transfer tax, delinquent tax and interim tax, the District is projecting $3,227,647 for 2012-13, down from last year’s $3,981,314 – indicating an approx. $750K loss in revenue.  However, when you look at interest income, transfer tax, delinquent tax and interim tax in 2006-07, the total revenues to the District was $7,542,466 – approximately $4.3 million more dollars than projected for 2012.13.

McDonnell was able to provide some possible good news.  Under Governor Corbett’s 2013-14 proposed budget, the state subsidy revenue for TESD is basic education funding increase of $92,016 and special education funding decrease of $11,024 – providing a net increase of $80,992 in state subsidy revenue.  This is cautionary news as Corbett’s budget is the preliminary stage.

The impact items included in the District’s 2013-14 budget: $200K for administrator salary increases, $250K for District safety enhancements and $125K for support staff for network upgrade.  Open budget impact items under consideration including the outsourcing of TENIG staff and outsourcing of aides and paraeducators.  The President of TENIG, Dave Fillippo, read a statement in regards to outsourcing, which will be presented in a separate post.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Seeking Transparency in TESD Teacher Contract Negotiations

As a bit of history for those that are new readers to Community Matters. When I started this journey 2-1/2 years ago, it was without a personal agenda except to engage the community on important issues and to encourage greater transparency from our elected officials.

Transparency implies openness, communication, and accountability; a metaphorical extension of the meaning a “transparent” object is one that can be seen through.  In government, transparency is vital to a healthy democracy.  Public scrutiny helps ensure that government works for the people and spends their tax dollars wisely.

As far as the teacher contract negotiations are concerned, I suggest that both sides ‘open the door’ that in the past has been closed.  We have seen how in the last few days, the ‘cloaked in secrecy’ approach to the negotiations is not working and is showing signs of cracking.  Discussion is turning to conjecture, as in the ‘he said, she said’ world; which is never good.  Letting the sunlight shine in on the negotiations, would help the parents, taxpayers (and employees) better understand the process and the District’s priorities.

My assumption is that if negotiations were public and everyone could see the negotiations, it would help us (the taxpayers) to further understand the positions of the teachers and the District.  If all that the community hears is a partial or half-truth from either side, the misinformation is perpetuated and the line between fact and fiction becomes blurred.  The teachers’ contract accounts for a significant part of the budget and strongly influences the bottom line of the District’s financial picture.  The negotiating period is the only time when informed public opinion can have any possible effect on the decisions of elected officials, but how can the public reasonably weigh in on the proposals without having all the facts.  A mandatory public comment period on the yearly budget seems a bit like an empty exercise if we do not have updated contract negotiation information.

The early disclosure of each side’s proposed contract terms would reduce the incentive to open negotiations with extreme proposals made merely for bargaining purposes.  Extreme proposals from TEEA or the school board are bound to create hard feelings as we have recently seen and the potential to prolong negotiation, thereby making compromise more difficult.  Conversely, an open and public process (transparency) would lead to proposals that are more realistic from both sides and narrow the range of disagreement in the process.

In the last few days, we heard from several teachers who alluded to a less than satisfactory proposal from the school district in regards to insurance and reduced salary.  Add the possibility of demotion for economic reasons to the plate of the teachers, and it is no surprise that they are concerned.  Do we have the entire story from TEEA on the subject of benefits and salary, probably not?  On the other hand, what have the teachers proposed to the District and what was the school board’s response.  Don’t know; the public doesn’t have any of those answers.

How about the negotiating parties work to make the process transparent for the public – posting the bargaining framework, their proposals and counter-proposals on the TESD website, as they become available. This kind of transparency would help the TESD parents and community members understand how children will be taught and how the tax dollars will be invested.  The relationship between teachers and school administrators is an important element in what shapes public schools.  There is no better way to understand this relationship than to observe the contract process.  The teachers are public employees, so why shouldn’t the union negotiations be public.

As a community, we should call on our elected school board members and teachers union to put the needs of students and families first and honor the public investment of taxpayers.  I ask for both sides to be more open about the negotiation process – talk truths to each other and to the public.  It’s time to turn on the lights, open the windows and the doors.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Demotion of Professional Staff in T/E School District Remains Budget Option

Monday night was the Board of Supervisors Meeting and TESD Budget meeting.  I attended the BOS meeting and will offer a few thoughts in a later post.  Ray Clarke attended the school district meeting and offered his opinion on the evening which I provide below.

In reviewing Ray’s notes, I was pleased that it appears the elementary and middle school music programs are safe (at least at this time) from the budget ax.  Although certainly not a perfect solution, increasing class size of students by one or two students may be something that the parents (and teachers?) can live with versus some of the alternatives presented such as elimination of music programs.

However, the ‘demotion of professional staff for economic reasons’ could have potential to go in many different directions. Apparently there was discussion at the budget meeting which suggested the idea of ‘demoting’ higher paid full-time staff to part-time. Ray wonders if they are referring to PhD employees.

It may be legally possible but is it realistic to think that the school board would demote teachers with the longest service (and presumably highest salary)?   If we assume that the teachers with the longest service are the highest paid, surely the TEEA would step in and fight to protect those full-time positions. At the last finance committee meeting, there was discussion that perhaps there were individuals (for personal reasons) who would like to work part-time rather than full-time and might take advantage of this opportunity.  It was my understanding that the teachers union had mentioned this option to its members.

Ray’s notes reference the statement from the teachers union in regards to using the school district’s fund balance towards budget shortfall.  For the full statement from TEEA, click here.  An excerpt reads as follows:

The Tredyffrin Easttown School District maintains a $32 million fund balance, which equates to 26% of revenue. Most other school districts maintain a fund balance of 8% to 10%. The Pennsylvania School Boards Association recommends a fund balance no greater than 5%. We ask the question and we believe the taxpayers and parents should ask the question, ‘Why is this fund balance not being used to save programs and preserve the great, award-winning T/E School District?’ Why are District officials insisting they do not have the resources to protect these programs?

Ray Clarke’s remarks from last night’s budget meeting:

Some notes on the TESD budget meeting from my perspective …..

The TESD meeting was notable for airing out some new projections for 2012/13 (previously discussed in committees), but we are still some way from numbers that can be trusted, and even when we have them, it seems that they’ll still show a deficit.
Some highlights I noted:
– The current enrollment figures show a 3% decrease over the current year, but the expectation seems to be that the final figures will be higher, but smaller than projected back in October 2011. The net result being 3 fewer FTEs now needed in 2012/13, reducing the expense increase by $225,000. Some more detail of the assumptions on this would have helped.

– To recap on professional staff: Average years of service continues upward – now 11.7 years – and so does average salary – by year-end approx. $86,000. TTRC member Barbara Morosse tried to get the Board to own up to the fact that the approx 30% increase in average salary (my number) over the last four years is in fact a major contributor to the current budget problem, but of course we continued to get the litany (best articulated last night by Kris Graham) that lists all the issues outside the Board’s control. There was no update on contract negotiations, but Art O’Donnell read a list of corrections to a recent TEEA commentary.

– A few expense analysis comments:
a) Next year has a $1.65 million increase in teacher salaries deferred from this year, and this makes up most of the salary line increase; presumably the cost of increased FTEs are offset by a mix change due to 17 retirements.
b) It looks like the current prescription plan can be funded with no increase, rather than the 10% previously budgeted (saving $500,000).
c) It was announced that the transportation company waived their contracted 2% increase this year, but it looks like the budget assumes next year’s increase will make that up.
d) There is a $725,000 increase in interest expense next year, and apparently no opportunity to use the Fund Balance to pay down debt and save interest expense until 2015.
e) The administration has benchmarked legal and architectural rates and found them to be competitive.

– There’s an good-sounding budget strategy to replace special education services purchased from the CCIU with our own staff and save $200,000.
– Of course, strategies to address the remaining budget gap (after a projected 3.4% tax increase, let’s not forget) are now getting contentious.
Betsy Fadem came out strongly for tabling any consideration of:
a) reducing EDRs (although new hires are already paid less) (saving forgone $220,000)
b) eliminating ES and MS music lessons (savings forgone $375,000)

She [Fadem] carried the day on those. On the other hand, the Board did vote to further consider:
a) demoting higher paid staff (PhDs??) from FT to PT (saving $640,000)
b) increasing the class size by one (or maybe two??) (saving maybe $500,000, but the numbers not at all clear on this).

The first of these seems completely insane to me, but maybe they are trying to make points to the TEEA and to the community about their willingness to undertake the limited options allowed by state law. There was a very confusing discussion about the overlap of the retirements and the demotion strategy, so maybe I’m missing something. So it looks like they are still at least $1 million short of a balanced budget, and facing a TEEA that wants to get further compensation increases paid out of the Fund Balance, while it lasts. Dr Motel called for a thorough review of all non-mandated programs: art, music, kindergarten, transportation, etc.

Not a pretty picture.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Bragging Rights: PSSA Results Rank Tredyffrin Easttown School District Third in the State

2012 School Guide logo

Last week, the Pittsburgh Business Times published their 2012 Guide of Western Pennsylvania Schools, which lists the school district rankings for the Pittsburgh area and the entire state of Pennsylvania. The newspaper analyzed all the school districts’ performance based on the Pennsylvania System of School Assessment (PSSA) Exam results. According to their website, the formula for the ranking takes into account three years of PSSA test scores in math, reading, writing and science. They look at three years of scores, with the current year given the most weight.

In the Top 15 school districts category in Pennsylvania, Allegheny County was the number one county with six school districts represented followed by Chester County with three school districts (Unionville-Chadds Ford, T/E and Great Valley), Delaware County with two school districts (Radnor and Wallingford-Swarthmore) and Montgomery County with two school districts (Lower Merion and Lower Moreland).

For 2012 rankings, Upper St. Clair School Districts holds onto its first place title for the eighth year in a row, with Tredyffrin Easttown Township School District dropping to third place and Unionville-Chadds Ford School District taking second place. Radnor Township School District stays in fourth place, Lower Merion drops down a level to eighth and Great Valley School District drops from 13th to 14th place. Looking at other area school district rankings, Downingtown School District moved from 28th to 25th and Phoenixville School District dropped from 85th place to 98th on the rankings list.

To see the ranking for all 500 Pennsylvania school districts, click here.

Pennsylvania School District Rankings
Statewide       Statewide
Rank 2012       Rank 2011       School District (County)
1                      1                      Upper St. Clair School District (Allegheny)
2                      3                      Unionville-Chadds Ford School District (Chester)
3                      2                      Tredyffrin-Easttown School District (Chester)
4                      4                      Radnor Township School District (Delaware)
5                      6                      Mt. Lebanon School District (Allegheny)
6                      5                      North Allegheny School District        (Allegheny)
7                      9                      Hampton Township School District (Allegheny)
8                      7                      Lower Merion School District (Montgomery)
9                      8                      Central Bucks School District (Bucks)
10                    12                    South Fayette Township School District (Allegheny)
11                    10                    Peters Township School District       (Washington)
12                    11                    Fox Chapel Area School District        (Allegheny)
13                    15                    Wallingford-Swarthmore School District      (Delaware)
14                    13                    Great Valley School District (Chester)
15                    14                    Lower Moreland Township (Montgomery)

A Pennsylvania school district that places in the top 15 or 20 out of 500 districts statewide based on the PSSA exams is an achievement for which  students, parents, teachers and administrators can all be proud.   PSSA scores is viewed by many as a reliable predictor of future success.  As a tool for student assessment, the PSSA exam helps measure and provide useful information of what students are learning. The PSSAs measure the performance of the entire class and give us the truest measure of how an overall class is performing.

In the Unionville-Chadds Ford School District, the teachers union used their District’s high PSSA and SAT scores as a contract negotiating tool.  I wrote a post on January 11, 2012, Do Higher Teacher Salaries in Philadelphia Area School Districts Equate to Higher PSSA & SAT Scores?’ that included a report by Keith Knauss, a school board member from Unionville Chadds Ford School Board. Knauss looked at 61 Philadelphia area school districts for factors that might explain the wide variation in academic achievement on PSSA and SAT tests.

In his analysis of the data, Knauss concluded that “only two factors are significant – Parental Education and Poverty and those two factors alone can explain the bulk of the differences in academic achievement.”  Recognizing that “those two factors are beyond the control of the District”, Knauss notes, “all other factors, where the District does have control over are not significant, including per student spending, class size, teacher salary, teacher experience, teacher education.”

While most of us might assume that the more experienced teachers, or those with the most education and the highest salaries would be factors associated with higher test results, Knauss research data does not support that theory, at least not in the 61 school districts in the Philadelphia area that he researched.  Knauss concludes, “contrary to popular belief, there is no evidence from the 61 districts that spending or the number of teachers has a measurable effect on academic achievement.” Click here to read Keith’s Spending Trends Presentation TE research study.

Bottom line … if we accept that school district rankings, based on PSSA performance, have an importance, do we give credit to the District teachers for the results?  If you believe that the teachers play a role in the student’s performance on the PSSA exams, should the results be a factor in the current teacher contract negotiations?  Should the TEEA use the PSSA exam results as a tool in their contract negotiations?

TESD is facing tighter budgets and difficult choices are the options that remain for the school board.  In all likelihood, the 2012-13 school year will see a $50 fee charged to students to play sports, perform in the marching band and participate in clubs.  The District’s Education Committee is exploring many ways to reduce costs to help the budget.  Last year we saw the elimination of foreign language in the elementary program and German and Latin in the middle school.  Now we see that there is discussion of eliminating string lessons in the third grade or possibly eliminating elementary and middle school music lessons.

Another couple of budget strategies in discussion —  (1) the demotion of professional staff for economic reasons and (2) increasing class size to help the 2012-13 budget.   Here’s a question — wonder if there is any research to suggest that increasing class size could result in lower PSSA exam results for TESD.

Click here for details of Education Committee suggestions for 2012-13 budget strategies.

 

Facebooktwittergoogle_plusredditpinterestlinkedinmail

T/E School District and Teacher Union Contract Negotiation Honeymoon Period Over

The contract negotiations between the T/E School District and the T/E Teachers Union (TEEA) started in early January.  What is the saying about the ‘calm before the storm’ – I had been thinking that the teacher contract negotiations must have been going well as everything was quiet.

In a Community Matters post, Expert Negotiators Named as TESD Teacher Contracts Talks Begin, dated January 28, 2012, I wrote the following:

“ … With a cooperative tone, both sides have issued their preliminary statements – the school board recognizing the quality and standard of the District’s teachers but reinforcing the severity of our economic times.  And the teachers union proudly applauding the school district as one of the best in the state and stating their desire to work together through the contract negotiations…”

This week in the Tredyffrin-Easttown School District would suggest that I might have spoken too quickly.  First, the T/E School Board publicly stated in a contract negotiation update on the school district’s website that ‘TEEA Negotiator Refuses to Discuss Healthcare Options”.  The school district’s negotiator, Jeffrey Sultanik claims that TEEA “does not want any changes to the existing plan or premium share increases for the employee”.  Sultanik suggests that the negotiator for the teachers union, Ruthann Waldie, refuses to budge on the healthcare issue.  The school board has made it clear from the start that the teacher contract needs to focus on reducing healthcare costs.  Having attended a number of finance committee meetings of the school district, the teacher’s benefits are routinely discussed, especially healthcare.

When the school districts’ negotiating team was named (Dan Waters, Sue Tiede and Art McDonnell in addition to Jeffrey Sultanik), I shared TEEA’s concern that there was no school board director serving on the negotiating team.  The residents of TESD elected the school board members to serve them and at least one of them should be ‘at the negotiating table’.  One of the school board directors, Kevin Buraks, is an attorney who specializes in the collection of unpaid real estate taxes in municipalities and school districts in Pennsylvania.  Certainly, given his background, Buraks would have been qualified at the very least to participate as a contract negotiation ‘observer’.  As far as I know (please correct me if I’m wrong) no prior contract negotiations in T/E school district ever occurred absent school board directors.

Soon after the school district posted the contract negotiations update on their website, TEEA fired back with a response that suggested the school district’s update is “a collection of factual inaccuracies, misinformation, mischaracterizations and personal attacks”.  The response from the teacher’s union suggests a willingness and desire to negotiate issues … but at the bargaining table, not through press releases and websites, as the path that TEEA believes the school district has chosen.

Because there is no representation by the school board at the negotiation table, it is a bit like ‘whisper down the lane’.  The information and updates that the school board receives are not through first hand attendance at the meetings, it is from one of the four members of the negotiating team.  That’s not to suggest that the school district is intentionally misleading the public through its updates, but I would suggest that some of the nuances that occur in a meeting can be missed in the translation.

According to TEEA, the teachers union has presented a comprehensive set of proposals to the school district and are willing to discuss “the district’s finances, staffing levels, school calendar, health insurance, wages and all other important issues …”

As a taxpayer in this school district, I want to know that the contract negotiation updates are completely accurate … can the school board members provide that reassurance to the public.  On the other hand, having attended a number of school district finance committee meetings, I also know that the current teacher healthcare benefits exceed much of what most of the residents of this school district receive themselves.

We are fortunate to live in one of the best school districts in the state and preserving that school system should be a priority to the residents, school district and the teachers.  The new teacher’s contract needs to be line with our current economic reality. However, the negotiation process should be accomplished with a spirit of collaboration.

According to TEEA and the school district, there is no next negotiation session scheduled.  I make a motion to move the contract negotiation process forward; do I hear a second?

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Reserve Funds Exceeding $3 Billion in PA Schools . . . But how Long Can School Districts Depend on Reserves to Balance Budgets?

There is an interesting report out this week about Pennsylvania schools, which states that schools across the state are holding more than $3 billion in reserve funds. 

There is an ongoing debate about drawing from fund balances to balance school budgets, particularly in light of the current economic crisis.  We have seen in the past 6 months of budget discussions that T/E School District is no different. 

However, striking a balance between holding onto a buffer in the school district fund balance and increasing taxes doesn’t make for easy school board decisions.  Some taxpayers have argued in the past, that the district fund balance in T/E is too large and that it represents past overtaxing of residents.

When looking at Gov. Corbett’s state education funding cuts and the rising costs to maintain teacher pensions, TESD finds itself in an enviable position — a school district that has a positive fund balance.  Of course, when you look at the 5-year plan and pension costs, it is evident how quickly the funding buffer will disappear.  So although TESD has a substantial fund balance, the pension contributions going forward will deplete the fund unless there is help from the state. 

Question, should school districts be forced to use their fund balances to help make up the funding deficit from the state?  Should the state be required to help school districts with the pension crisis or face the bankruptcy of school districts that cannot afford their contributions?

There are some interesting fund balance statistics from school districts around the state – here is the article in case you missed it.

Schools hold more than $3 billion in reserve funds — At least $1.7 billion may be set aside for pensions, bond ratings
By Darwyyn Deyo | PA Independent

HARRISBURG — Schools across Pennsylvania hold more than $2.8 billion in reserve funds, but legislators and school boards disagree about whether the money can be spent to buffer against proposed state government cuts this year.

The reserve funds are divided into two categories — designated and undesignated. The undesignated funds are not committed to any planned project. Designated funds and any other funds, such as capital reserves, are allocated to specific projects, such as new buildings.

School districts are required by state law to keep 5 percent of their annual spending in the undesignated reserve funds to preserve bond ratings. The Pennsylvania School Board Association, or PSBA, an association of school boards in the state, said that as recently as 2008-2009, 345 of the state’s 500 school districts had more than 10 percent of their spending in their reserve funds — more than double the expected amount.

Of those 345 districts, 223 districts held in excess of 15 percent. Out of the 500 school districts, 259 school districts saw their undesignated reserve funds increase in 2009-2010.

While many districts are holding plenty of cash in reserve, the number of districts with drained reserve funds is increasing. In 2008-2009, 14 school districts held a negative fund balance. The districts had overdrawn the undesignated funds for other purposes and had not repaid the money. In 2009-10, the number of overdrawn schools districts increased to 37.

The negative funds ranged from $64,217 at Farrell Area School District in Mercer County to more than $32.7 million at Philadelphia School District.

In undesignated reserve funds, the school districts – not including charter schools or other special programs – held more than $1.7 billion, which theoretically could be used for everything. In 2008-2009, school districts held $1.64 billion in undesignated reserve funds.

The data, said David Davare, director of research for the PSBA, is from this past year’s balance sheets, so there is no indication yet on whether school districts dipped into the reserve this year and further depleted the savings. “That number that was just released … was based on the school year that ended last June 30,” said Davare. “In 2008-2009, 156 districts consumed some portion of their fund balance as part of the school operations … so I don’t know how many districts planned on consuming (their) fund balance based on the current year.”

Blackhawk School District in Beaver County holds the least amount in undesignated reserve funds with $28,799. Delaware School District in Pike County held the most with more than $9 million.

State Rep. Paul Clymer, R-Bucks, chairman of the House Education Committee, said he would be open to school districts using undesignated reserve funds to help restore some of the funds that have been trimmed from the state’s education budget for the 2011-12 fiscal year. The state is proposing spending $10.19 billion on education, compared to the $10.77 billion it spent for fiscal year 2010-11.

“Yes, I would use it cautiously,” said Clymer. “Going to the limit — these dollars have to be held in reserve. Those that can do it and not risk the surplus they have accrued over the years, I would support that. It can only go so far and they will hit the required level as required by the school codes” for bond ratings.

State Rep. James Roebuck, D-Philadelphia, minority chairman of the House Education Committee, took the opposite view and argued that the state government still has to provide a “thorough and efficient” public education system, as outlined in the state constitution.

Using reserve funds “shouldn’t necessarily be predicated upon the individual districts coming up with money to do what the state is supposed to do,” said Roebuck. “The state has reduced, substantially, its commitment to public education and done away with significant initiatives that underwrite things like full-day kindergarten, dual enrollment to transition from basic to higher education,” he said.

Beth Winters, director of legislative services for the PSBA, pointed to the upcoming pension spike as a reason not to spend the reserve fund dollars now. By 2028, school districts face paying $30.6 million into the Public School Employees Retirement System, a contribution that will increase to $36 million by 2032.

“If you actually take a look at the public pension and special education costs, those fund balances will be depleted,” said Winters. “School districts are looking at this from a long-term basis, and if you look at the pension numbers, we’re going to have 20 years of double digit pension contributions (that) employers are going to make. … Those fund balances are to cover those costs.”

Erik Arneson, spokesman for Senate Republicans, said “school districts’ undesignated reserve funds will receive a good deal of focus during the ongoing budget discussions.”

The state Senate has opposed the education cuts proposed budget.

Facebooktwittergoogle_plusredditpinterestlinkedinmail
Community Matters © 2017 Frontier Theme