Tredyffrin Easttown School District

The Wheels on the Bus … are Late!

We all understand that it’s the first week of school and that there are bound to be glitches.  But some of the stories I am hearing from parents about the bus situation in T/E are unacceptable and scary!

Part of the problem with transportation issues may have to do with the changes in school start times. Back in April the school board approved the change in start times as a result of adolescent sleep needs. The changes are as follows:

High School: 7:50 AM – 2:50 PM (previously 7:20 AM – 2:20 PM)
Middle Schools: 8:27 AM – 3:10 PM (previously 7:50 AM – 2:33 PM) Elementary Schools: 9:10 AM – 3:45 PM (previously 8:45 AM – 3:20 PM)

For some working parents, the later start times created schedule issues but they had four months to make necessary adjustments. The transportation department of the District also had four months’ notice to adequately adjust the bus schedules and routes as needed.  Not sure exactly what happened during the summer months but  there seems a huge disconnect between the  Krapf Bus Company and its drivers, the District’s administration and transportation department and the parents and their children. 

I want to be clear that no parent who contacted me was expecting the system to work perfectly the first week but they sure deserved better than what some received!

Unsettling information about the District’s bus transportation includes late buses, repeated changes in schedules (one mother reported three schedule changes occurred last week), poor or non-existent communication from the transportation department and/or administration, unanswered phone calls and emails. Where is the accountability to the District’s parents?

As an example, here’s one disturbing story – bus #32 in the Glenhardie area was scheduled to pick children up at Valley Forge Elementary School at 3:45 PM. For those that don’t know, VFES is located on Walker Road, extremely close to the homes of the students. The VFES students on bus #32 did not arrive home until 6 PM, after spending hours on the bus!

One of the parents of children on bus #32 reported that the driver was lost in the neighborhood and that the older children on the bus were attempting to direct the driver – with the younger children upset and crying. It was reported that the driver actually became stressed herself and told the children that she was lost and didn’t know where she was going.  Eventually the bus driver made her way back to Valley Forge Middle School with the children – yep, took the kids to the middle school! The children sat on the bus without air conditioning while they waited for a Kraft Bus Company ‘trainer’ to arrive and transport the children home. Isn’t there a dry run of bus routes before school starts – this should not be an “on the job training” position!

With safety a high priority in schools (remember we have all our schools fenced in!) one can only imagine how distraught the parents and children became as the hours dragged on. But the worse part – the District apparently invested in a new software system, TE All-Call, which was to notify the parents of bus delays. The parents received NO notification from All-Call and NO notification from the District. Parents had no idea where their children were for hours! The problems with #32 route continue with the driver picking up students at incorrect stops, late arrivals, etc. Parents described feelings of disappointment towards the lack of communication regarding when their children would be home –  there has been no follow-up apology or explanation from the District.

I want to be clear, the problems with bus #32 and its driver is not an isolated transportation situation in the school district this week. I had another parent mention that none of the blinking bus caution signs were turned on in the District. This becomes important when children who walk to schools are crossing busy roads and drivers need notification that schools are open.  It was also reported that the Krapf driver of bus #29 at New Eagle Elementary School had similar problems as bus #32 driver with getting the children home late due to confusion with the bus route.

At Monday’s school board meeting, a parent from Paoli commented that their bus stop location had changed and now requires the children to stand in a busy road to wait for the bus. She reported having contacted the District’s transportation department but there was no response.

Again – we all get that this is the first week of school but some of these reports were avoidable! Why do Krapf bus drivers not know their routes? Why isn’t the TE All-Call system notifying the parents of bus delays? Why are the blinking school lights not turned on? And why isn’t the school district responding and/or communicating to the parents?

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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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T/E School District Ties for Second for Highest School Tax Increase in Philly Region & Delivered 37% School Tax Increase to Residents in Last Decade! Is This Sustainable?

Last week I was contacted by Laura McCrystal, a writer with the Philadelphia Inquirer asking about TESD’s recently approved tax increase of 3.9%.  Although she was very aware of our District’s ongoing saga over the $1.2 million accounting error, Laura was clear that the article she was working on was specific to greater Philadelphia area school districts and a comparative analysis of school taxes.

For the record, the $1.2 million accounting error caused by the District’s delayed payment of a special ed invoices remains an open issue. Although the school board acknowledged and voted to correct the error with the PA Department of Education, as of the last school board meeting it had not yet been done.

The Philadelphia Inquirer published its article, “How much are your school taxes increasing? Here’s a district-by-district look at the Philly region” which is a fascinating read — and analysis of tax increases in the region. Although the T/E School District generally like to come in at first place, on the tax increase list we tied for second highest increase! Yes, our District received the distinction of the second highest tax increase (3.9%) in the greater Philadelphia region – second only to Morrisville School District in Bucks County with a 6.7% tax increase.  (If you recall, the T/E School Board had originally passed the proposed final budget (5-4 vote) in late April with a 6% tax increase which was later reduced to 3.9% in June.).  Below shows the highest tax increase school districts:

In discussion with the Philadelphia writer, I was asked about the impact of rising taxes on the community. As was stated in the article, I worry “ about a lack of scrutiny on the school budget and its rising taxes because so many residents move to the district so that they can send their children to its high-performing schools. “There are some who are inclined not to be concerned about the taxes that are being paid because they feel like the value they get offsets that,” she said. “But I think part of the problem is that as a result of people moving here for the school district … the budget process is not scrutinized as much as it would be.”

I expressed concern that our school district tax increase is not an isolated one year increase – but that we should look at our tax increases year after year. As was stated in the article, I have been tracking the tax increases in T/E School District for the last 15 years and you need to go all the way back to the 2004-05 year for the last zero tax increase! Looking at the chart above, you see that our District has had an 18% tax increase over the last 5 years and a whopping 37% during the last 10 years.

I excerpted neighboring school districts Unionville-Chadds Ford, Upper Merion, Phoenixville, Great Valley and Downingtown from the Philadelphia Inquirer chart.

Looking at nearby Great Valley School District, they are keeping taxes significantly lower than T/E with a 1.2% tax increase for 2019-20 school year, 8% increase for 5 years and 18% increase for 10 years. Great Valley is another high achieving school district with similar performing students, special ed needs, rising pension costs, etc. so what accounts for the dramatic tax difference between GVSD and T/E?

But look at Downingtown Area School District! According to Niche, Downingtown Area School District has 12,656 students in grades K-12 with a student-teacher ratio of 15 – 1 and according to state test scores, 69% of students are at least proficient in math and 85% in reading.

Some will argue that Downingtown Area School District is not in the highest performing echelon of area school districts (like T/E, Unionville-Chadds Ford, Lower Merion or Great Valley) but they operate ten elementary schools, three middle schools and three high schools and somehow manage to have a ZERO tax increase for 2019-20, ZERO tax increase for the last 5 years and only 7% tax increase for the last 10 years.

Downingtown is operating a large school district that has rising pension costs and increased special ed expenses like all the other school districts, yet successfully delivers zero tax increases to their residents year after year.

I’m not suggesting that we all move to Downingtown School District but there should be some kind of balance — why is it that as residents of the T/E School District we are faced with significant tax increases year after year?

Families move to the T/E community for the school district and are generally satisfied as long as the high test scores are maintained. As a result, there is a certain complacency when it comes to the District’s budget and our ever-increasing taxes. Guess the question becomes, how long are these yearly tax increases sustainable by the District’s taxpayers?

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T/E School District News: 3.91% Tax Increase, District to Correct $1.2M Accounting Error & School Board Member Resigns

The five-hour marathon school board meeting last night lasted until 12:30 AM, albeit the audience was kept waiting with a 30-minute late start.  For those community members who stayed the course until the end of the school board meeting, thank you!

Although I was unable to attend the meeting, I received multiple updates throughout the evening followed up with several phone calls today. The significant takeaways from the evening included the (1) 2019-20 tax increase decision of 3.91%, (2) the Board vote for the District to take responsibility for the accounting error and to correct the Annual Financial Reports (AFR) with PA Department of Education (although sadly all Board members were not in favor of “doing what’s right”) and (3) the announcement of the resignation of a school board member.

Luckily, we have Ray Clarke providing comments on the school board meeting until he left at 11 PM (following the 3.91% tax increase vote). At that point, Mike Heaberg picks up the commentary until the meeting finally ended at 12:35 AM.  See their remarks below — thank you both!

From Ray Clarke:

– Dramatically larger attendance than a typical meeting, which multiplied the persistent disregard for the community’s time when the meeting started half an hour late

– A long plea from the rugby club for Varsity status, but notably none stayed for the Budget discussion which might have suggested funding limitations

– The Board based its discussion around just the 3.91% tax increase, not all the other options (2.8% or 4.33%)

– The Board agreed to amend the 3.91% budget motion with an investment in the new elementary reading program as a $300,000 one-time “below-the-line” expense, contingent on a number of conditions. This did not satisfy parents who are advocating for parent involvement in selection of any new program

– The amended motion passed 7-2, with Kate Murphy and Ed Sweeney allied for a lower number. Todd Kantorczyk and Roberta Hotinski reluctantly went along with a lower number than they would prefer, the former (correctly) noting that budget and actual deficits cannot continue, while the latter continues (inexplicably) to want to move the following year’s – potential – exception forward into the coming Budget year.

All Board members seemed to agree that the Budget process is broken.  Board President Scott Dorsey wants to separate the budget from the routine Finance process. He spoke forcefully about his outrage at this and the $700,000 expense surprise revealed at the last meeting.  He warned of “someone paying the price” for any similar issues in the future.

– The District’s Solicitor (reportedly with financial experience, not Ken Roos but from the same law firm, Wisler Pearlstine) advised the Board that Annual Financial Reports to the state CAN be corrected, provided that there are new audited statements and if certified by a new auditing firm or individual.  The Business Manager reported logistical, cost, PDE and outcome risk issues with this, although to the audience it seemed that those were grossly over-stated.

– A wide cross-section of community members spoke compellingly in favor of the District basing its decisions on the correct financials, about the pattern of behavior that has got us to this point, and about the need for process and personnel changes

– Unfortunately many had to leave at 11pm after the budget vote, but the AFR revision discussion continued.

Mike Heaberg picks up the commentary on the school board meeting at this point, including the Board’s acknowledgement of the administration’s accounting error and subsequent vote to correct the District audits, the Annual Financial Reports (AFR) and resubmit.  Thanks so much Mike!

From Mike Heaberg:

– After the Board acted on the consent agenda, other action items, and “final” public comments, Ed Sweeney made a motion to begin the process of correcting the District audits and Annual Financial Reports for 2016-17 and 2017-18.  Kate Murphy seconded it.

A long Board discussion ensued including input from the District’s Solicitor, Business Manager, Superintendent and the public. At one point, Todd Kantorczyk made a motion to table action until a future meeting – the next scheduled is August 26. On a roll call vote, his motion failed 5-4.  After more discussion, the vote was held via roll call. It won 6-3.  Voting in favor of correcting the audits and AFRs were Ed Sweeney, Kate Murphy, Scott Dorsey, Michele Burger, Heather Ward, and Tina Whitlow.   Todd Kantorczyk, Roberta Hotinski, and Kyle Boyer voted against correcting the audits and AFRs.

– At the very end, about 12:15 AM, Heather Ward announced she is moving out of the District and resigning from the Board effective 6/16/19.  The Board has not sorted out the replacement process. Heather made gracious comments and her colleagues offered thanks and praise for her service to the District.

The 2019-20 budget process was one for the books with final changes and decisions coming in at the eleventh hour (or in this case 12:30 AM!).  I am appreciative that in the end, school board member Ed Sweeney had the resolve and courage to push forward for correction of the District audits and Annual Financial Reports.  I thank him and the other five Board members (Kate Murphy, Scott Dorsey, Michele Burger, Heather Ward and Tina Whitlow) for “doing what’s right” and voting to correct the District audits and AFRs but simply do not understand why the other three Board members opposed the action.

Over many months, much time and energy was expended by the public in urging the Board to do “what’s right” — I’m left wondering why it took months of meetings, emails and phone calls (many by resident financial experts) plus an official letter of complaint to the PA Dept. of Education to finally achieve this goal.

In my opinion, there is an imbalance in power and control in the school district administration. All roads lead back to (or through) Art McDonnell, the Business Manager and the 2019-20 budget process debacle was a direct  result of his actions.  The Board (and the District’s taxpayers!) are ill-served by this business manager and we deserve better!  When is enough, enough?

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Clock is Ticking Down for T/E School District Final Budget — Vote on Tax Increase Monday Night!

The clock is ticking down for the school board and 2019-20 budget decisions. The school board will vote on the final budget on Monday, June 10, 7:30 PM at Conestoga High School. (Click here for the agenda).

In mid-December, the District first presented the 2019/20 budget with its proposed 6.1% tax increase — much has happened in the intervening six months.

Ongoing questions from the public about the $1.2 million accounting error have remained unanswered or denied, even in the face of legal action.

The individual Board members continue to be at odds about the proposed tax increase although the “whisper down the lane” message for months was that the tax increase would not be 6.1%.

The public is now told that the District tax increase “under consideration” is one in a pick list of 2.8%, 3.91% or 4.33%. The exact tax increase number becomes dependent on which school board member that you ask, with some keen on the lowest increase – some the highest and the others in the middle! Although the specific proposed tax increase should have been firmed up months ago, the public will have to wait for the final vote from the Board tomorrow night.

In case you are interested, below is the updated T/E School District tax increase chart for the last 15 years. Although I have no say (or sway!) my vote is for a 2.8% tax increase for the 2019-20 budget year versus one of the suggested higher increases. But to be clear, I’d like to roll back to the 2004-05 school year, the last time we saw no tax increase!

2019-20: 4.33%, 3.91% or 2.8%?
2018-19: 2.42%
2017-18: 3.2%
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

In advance of the meeting tomorrow night, I want to thank school board members Roberta Hotinski and Ed Sweeney for weighing in with comments on Community Matters regarding the budget.  (Their fellow Board members are always welcomed to do likewise).  And thank you to those in the community who have presented their thoughtful comments on the proposed budget, both here and privately in emails and phone calls — much appreciated!

And a special thank you to my friend Ray Clarke – faced with a 338-page agenda for the Board meeting tomorrow, I am grateful for his review and commentary on the agenda and final budget (see below).

TESD has published the Agenda for Monday’s meeting.  The Final Budget is to be approved, but three possible tax increases are still on the table, as are a number of “Budget Impact Strategies”, both quantified previously and also – alarmingly –  “Other items to Consider”, that includes “2019/20 Budget Assumptions”.  What a way to run a railroad – or a school district.

The main issue has been beaten to death here, of course, and remains: How can any tax increase greater than 3.91% be approved?  What are the implications of accepting that number?

A couple of other things caught my eye:

– The average of both Administration and Supervisor salary increases are more than the 2.3% Act 1 Index, and more than the contractual 1.7%.  Where is that extra money to come from – the Special Education Exception?

– On the other hand, the compensation for aides and paras (the few not outsourced) increases just 1.7%.  These folks earn less than a quarter of the average Admin.

– There is the proposed appointment of a School Safety Coordinator at a salary that with benefits would imply the originally budgeted $180K expense, yet the budget materials include a $50,000 saving.  Has that been explained or is it just another Consent Agenda item?

– Once more this year, the materials include a listing of service provider rates, with no context – such as: comparison with last year, total spend, total $ and % increase, issues if any

– 21 retirements celebrated and an unknown number of resignations during the year; what’s the budget impact of lower compensated replacements (“breakage”)?  No idea!

– More Special Education Agreements that boggle the mind: $452,000 for seven students for a year; $209,000 for one student for two years.  The accounting cover up has stolen two years from any possible effort to understand and manage this expense category.

So, as the Board considers next year’s Budget, do they have any idea at all of what’s going on?  Any frame of reference with current best estimate numbers: this year vs last year (and last three years), revenues and expenses by actionable category, backed by their underlying assumptions?  Any confidence?  Any trust?

Seems like it’s the proverbial rainy day for which that $30 million Fund Balance is needed.  As someone who has paid into it for 20 years. I’m happy to see it dwindle.  That’s only good for so long, though.

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T/E School District Tax Increase — Will it be 2.8%, 3.91% or 4.33%? “To Be Continued”

On the eve of June 1st and days away from the end of school year, the school board still does not have an agreed up tax increase number for the budget! How is that possible? What we do know is that the tax increase will be less than the 6% that we have heard since the middle of December and the increase was approved in the draft final budget.  However, we are left with three numbers — 2.8%, 3.91% and 4.33%.  Exactly how did the Board come up with these various numbers? What are the numbers based on? And how does the incorrect accounting of the Special Ed expenses factor into the tax increase?

Although I was unable to attend the school board meeting this week because it was the same night as the digital billboard appeal, Doug Anestad attended and offer his remarks below. Plus the video of the May 29 school board meeting is now available on the District’s website, click here to view.

After reading Doug’s comments, my first takeaway is that maybe the TESD 2019-20 budget process should be renamed, “To Be Continued …”!  

The school board met Wednesday night. The agenda was very light.

What was interesting was that no new budget discussions happened. It is very late in the game not to come to a final tax rate increase. Therefore, the 2.8%, 3.91%, and 4.33% tax increases are all still on the table.

The board proposed changes to Regulation 2110: Job Responsibilities for Superintendent of School. The proposed change says that if one or more invoices from the same vendor above $200k is accounted for in the wrong fiscal year, the Superintendent must be notified and the Superintendent must inform the school board.

Of course, this proposed change in regulation came about because the administration didn’t tell the the school board about $1.2M in special education expenditures from 2016-2017 that were wrongly recorded against 2017-2018. I spoke about the regulation and said that if you have to tell the administration when $1.2M is misstated they should notify the board, it is not a policy issue, it is a personnel issue and they should treat it as such. Kyle Boyer also had concerns about it being a personnel and not a policy issue. The vote was 8-1 on the regulation change.

When the administration started discussing the launch of updating the Strategic Plan at a cost of $50k, some of the board members raised concerns. This is highly unusual as this item is not even normally voted on as a separate item. Multiple board members said that they thought that the district was not in a position to deal with a Strategic Plan. The final vote was 5-4 with Michele Burger, Kate Murphy, Ed Sweeney, and Heather Ward all voting against the motion. I believe that this close vote demonstrates that multiple board members are not happy with the current situation and the administration.

Major kudos to Ed Sweeney for bringing up the issue of revising the finance numbers for the prior years to be the actual numbers. He asked, and the board agreed, to look into the financial and legal ramifications of fixing the numbers to be the real numbers.  They seem to be most concerned about double dipping next year since they already got a higher taxing authorization from the state based on the wrong numbers.

I am not sure why so many on the school board continue to be so hesitant to figure out the truth. Why have they still not asked the auditors when Art McDonnell informed the auditors about the $1.2M account error? Why haven’t they already figured out what the process is to correct the numbers? Why haven’t they asked the state how revising the financial statements to be the real numbers will impact their taxing authority?

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T/E Finance Committee Meeting w/no decision on tax increase – School Board Meeting Tonight at 7:30 PM, Conestoga High School … A School Board Divided

Unfortunately for T/E taxpayers, the District’s Finance Committee meetings are not videotaped. With the open budget issues, looming June 10th deadline, in addition to unresolved $1.2 million accounting errors related to Special Ed expenses, the public really needs to know what’s going on in the process – especially in advance of the important School Board meeting tonight!

I was unable to attend the Finance Committee meeting and will miss the School Board meeting tonight as it conflicts with the special Tredyffrin Township Zoning Hearing Board.  At 7 PM at the township building, Catalyst Outdoor Advertising will present its appeal on the township’s denial of their application for the digital billboard in Paoli.  My BAN the Digital Billboard campaign has been 9 months in the making so need to attend the ZHB meeting.  However, also important is the School Board meeting tonight (7:30 PM, Conestoga High School) – the proposed tax increase, the accounting errors and how the business manager (Art McDonnell) factors into the situation.

After speaking with several residents in attendance at the Finance Committee meeting, an update would be useful. (Remember, the meetings are not videotaped and I was unable to attend). Resident Doug Anestad did attend the Finance Committee meeting and offers his personal commentary below.

Reading Doug’s remarks, it sure sounds like the Finance Committee and its Chair Todd Kantorcyzk are a ‘school board divided’. And just when you thought ALL the numbers are in for the proposed budget, the administration announces that “ … special education expenses were going to be an additional $700k this year with $500k of that as a recurring expense” as reported by Doug.  My question is WHY is this information coming in at the eleventh hour of the budget process!

Last night’s Finance Committee meeting was a late one ending after 10:30 pm.

At the beginning of the meeting, an undated letter from the auditor was distributed to the audience. The Business Manager, Art McDonnell, stated that he asked the auditor after the last finance meeting to make the letter after the community questioned the $1.2M in special education spending that was incorrectly applied to the wrong school year and in order to respond to the complaint directed to the Pennsylvania Department of Education.

Neal Colligan pointed out that the letter clearly stated “Management made all decisions regarding how and when these transactions were recorded.” I pointed out that the email chain for the document clearly stated that it was sent on May 10 – three days before the last finance meeting, not after it as stated by Art. The letter also mentions the question of the $1.2M being raised in April 2019. Was that when the auditors were first made aware of the misstated $1.2M? We still don’t know the answer to this or other questions because the auditor did not show up to yet another meeting even though school board members have requested that they show up repeatedly for quite some time. It seems that Art does not feel the board members are entitled to talk to their auditor.

The administration then did their presentation on the current status of the budget process. This is when the Director of Individualized Student Services, Chris Groppe, stated that special education expenses were going to be an additional $700k this year with $500k of that as a recurring expense. As this is a recurring expense, the administration then suggested that the $500k be added to next years budget.

This was followed by a long conversation on where the board members stood in regards to the budget. The school board members then went around and stated where they were in terms of tax increases. Even though the Finance Chair, Todd Kantorczyk, wanted to have the school board members express what they were comfortable with in regards to a projected deficit, most of the board members seemed to want to express where they were in regards to a percentage tax increase.

Here is a summary of where the board members were:

2.8% – Kate Murphy, Edward Sweeney

3.91% – Heather Ward, Michele Burger, Tina Whitlow, Scott Dorsey

4.33% – Roberta Hotinski, Kyle Boyer, Todd Kantorczyk

Kyle Boyer stated he was willing to go down to 3.91% and offered to do so in order to have five votes for the 3.91% to move the process along. Todd Kantorczyk did not take him up on his offer so all three options will be presented at the board meeting tonight.

Many of the school board members showed their displeasure with administration during their comments. Words like frustrated, distressed, pissed off, and trust were used by board members. They really did not like $700k in expenses being added to this year with $500k of that as recurring expenses for next year being dropped on top of them at the last minute.

It would appear that many of the school board members are starting to see the manipulation the administration uses with the school board and don’t like what they are seeing.

The committee then approved the following strategies for deficit reduction. Reducing the budgeted amount for the school safety coordinator position between $50k to $70k. Remove the elementary mental health specialist for $96,000. Delay new reading program $300,000.

The meeting ended with one last appeal for the school board by former Tredyffrin Township Supervisor Mike Heaberg. Mike made the case that by not fixing the incorrect financial numbers, the district might lose some of the trust of the community and that the school board should do so at the meeting tonight.

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T/E School District’s $1.3 Million Accounting Error/Act 1 Violation discussion continues – Taxpayers facing large tax increase with less than 30 days until School Board’s final vote!

In addition to other residents, I attended the T/E School Board Finance Committee meeting last night. The meeting lasted nearly three hours but we stayed; hopeful for resolution on the District’s $1.3 million Act 1 accounting error and its impact on the proposed 6% tax increase. Sadly, the evening ended no closer to a solution than when it began.

With less than 30 days before the Board must take a vote on the final budget, much of the meeting was spent discussing budget strategies to reduce the District’s spending and increase revenue. Possible budget strategies ranged from increasing student parking and activity fees to delaying the new reading program.  All the discussion about cost-cutting measures was a bit like getting the cart before the horse since the large “elephant in the room” was the $1.3 million accounting error and its impact on the current budget process and the proposed tax increase.

Residents who had attended the finance committee meeting in April (including myself) expected answers from the auditor. School board member Tina Whitlow had asked Art McDonnell, the District’s business manager to have the auditor attend last night’s meeting but (according to McDonnell) he was not available. Actually the absence of the auditor was no surprise; as his responses to taxpayer questions would probably not have bolstered the business manager’s position on the District’s serious accounting mistake.

The most disturbing part of the meeting was the response by Todd Kantorczyk, the finance committee chair, to residents Doug Anestad and Mike Heaberg regarding the District’s erroneous accounting of $1.3 million Special Ed invoices to the Pennsylvania State Board of Education.

Both Doug and Mike cited the “Manual of Accounting and Financial Reporting for Pennsylvania Local Educational Agencies (LEAs)”, Principle 9 – Measurement Focus and Basis of Accounting in the Basic Financial Statements (pg. 15), which states, in part that “Revenues should be recognized in the accounting period in which they become available and measurable. Expenditures should be recognized in the accounting period in which the fund liability is incurred …” (Clearly, this means that the $1.3 million Special Ed invoices need to be accurately reported in the year in which the expenses occurred.)

Kantorczyk dismissed the state’s accounting practices as referenced by Doug and Mike, as if to suggest that somehow the T/E School District was exempt from these regulations!  A remarkable moment – he remained unmoved by the follow-up comments questioning the Board’s actual taxing authority, possible Act 1 violation, the prospect of legal action and pleas to “just do the right thing”.

The evening ended with a discussion by Board members about the proposed tax increase which; to be clear, is still 6%.  Certain Board members stated that they needed counsel by the District solicitor Ken Roos, regarding the accounting error and possible legal ramifications, before finalizing their thoughts on the proposed budget. Finance committee member Kate Murphy was particularly thoughtful; sharing her concerns and need for further information. Likewise, Heather Ward, also a member of the finance committee, shared those concerns.

Resident Neal Colligan attended the meeting and offers his notes on the Board members ideas regarding the final tax increase:

  • Todd Kantorczyk indicated that he was comfortable with the District’s taxing authority at 6% but did not want to see the entire amount imposed in one year; he did not offer another number but seemed inclined to a tax increase short of 5%.

  • Michelle Burger wanted to sleep on the discussion points but was quick to point out that “she heard what the community said in their comments”.

  • Kate Murphy acknowledged that there’s “too much noise” surrounding the Special Education Exception. She can only, at this point support a 2.32% tax increase (Act 1 allowance and the Special Exception for PSERS cost increases).  In the sanest approach of the evening (my opinion); she related that if she can’t explain it to the constituents she meets at the Acme; she’s not voting for it.

  • Heather Ward echoed those thoughts and again asked for a meeting with the District’s auditor (that Tina Whitlow requested a month ago). She seemed willing to possibly accept a 3.91% tax increase…maybe (this would be the full taxing authority of the District IF they had submitted correct Special Education spending amounts to the Department of Education).

  • Tina Whitlow again raised questions of the District’s taxing authority particularly related to the Special Education Exception and again mentioned in her comments a 3.91% possible tax increase.

  • Roberta Hotinski is in favor of a 4.72% tax increase; this number would include the 3.91% mentioned above AND .81% increase derived from a calculation of what Last Year’s Special Education exception would have been if the numbers submitted to the State were correct.

  • Scott Dorsey, ever the Board Member balancing the fairness of a tax increase vs. the needs of the schools, favors an increase of 3.91%…his position has not changed in some time.

  • Ed Sweeney leans towards the 2.3-2.5% tax increase range. He did point out that the Budget process is in dire need of change as only now, with a month to go, are we “getting into the brass tacks”.  He also mentioned that a Board needs to trust the numbers it is given when considering a budget … it is clear he has doubts.

  • Kyle Boyer was the last to weigh in … his support level is around the 3.91% range but may be convinced to go a little higher. He mentioned that he keeps a District tax increase chart on his phone and that in 2008 the District raised taxes at the highest level in the last 15 years … and he’d like to stay below that 4.3% figure.

The Top Answer to tax increase percentage was 3.91%.  At this level; the potential Final Budget would have an imbalance of a $2.662 MM of deficit that will need to be filled by Fund Balance Commitment.  No Budget Strategies have been offered that could fill that imbalance.  Board Members left the “hard analysis” behind and expressed their “feel” for the correct tax increase. The normal Budget process which could have looked delved into the need for a 5.5% spending increase OR at why the District habitually under-states revenues and over-states expenses in the Budget process has been hijacked by the Accounting Timing Error fiasco.  On this point, Ed Sweeney is clearly correct.  With a month to go … it’s going to be a bumpy ride.

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T/E taxpayers Facing 6% Tax Increase, $1.2 million Accounting Error Remains Uncorrected & Concerned Citizens contact PA Department of Education

I attended the school board meeting on Monday night and waited until 9:30 PM for the budget discussion to begin.The majority of the meeting to that point was spent on the discussion and subsequent vote (7-2) for delayed school start times for 2019-20 school years. The approved plan moves the high school start time to 7:50 AM, middle school to 8:30 AM and elementary school to 9:10 AM. The financial cost to the District for the change in school start times is $610K (and not contained in the proposed final budget).

School start times is an important issue for many parents but with taxpayers facing the largest tax increase in decades, I was left wondering how does the District find the additional $610K in the 2019-20 budget which contains a projected operating deficit of almost $11 million.

The proposed final budget was approved (5-4) with a 6% tax increase; the public was told again that there is time to adjust that number. But the school board is running out of time – it’s the end of April and the 6% number has not moved since first announced in December.

The review and discussion of the budget was confusing to say the least. Remember folks, there is still the open issue about the $1.2 million accounting error caused by the delayed payment of a special ed invoice(s). This District’s accounting error has been discussed at two school board meetings, a finance committee meeting and a budget workshop over the course of 6 weeks yet the financial “can” continues to be kicked down the road with no resolution.

Residents and some school board members have repeatedly asked the business manager Art McDonnell for data on how correcting the accounting error impacts the budget … but he has yet to supply the corrected numbers.

The school district’s $1.2 million accounting error and lack of answers caused a group of concerned citizens (Ray Clarke, Neal Colligan, Mike Heaberg and myself) to send a formal complaint to the Pennsylvania Department of Education (PDE). For the record, the T/E School Board and Superintendent Gusick were copied on the letter. (Click on “formal complaint” link to read letter).

Although Art McDonnell maintains that the District’s accounting error is not a legal problem, apparently PDE does not agree with his assessment … as a result of our complaint, the matter is now under legal review at the Department of Education. The business manager also stated that the annual financial reports cannot be changed once submitted – again, not true. Art McDonnell, there is a “do-over” button! According to PDE, all you need to do is hit the revision button on their website to make the corrections!

It is absurd that citizens are now going to the Board of Education to get resolution — folks, this is not an insignificant problem. Where do we go from here?

I share with you Ray Clarke’s comments from the school board meeting:

Monday’s budget discussion and vote was a good illustration of the challenge facing even the most diligent of School Board members.  They learned more than a year after the fact that not only was there an error in the numbers submitted to the Department of Education (PDE) to authorize the allowable tax increase for next year, but also that the error could have been corrected in time for consideration of this year’s tax rate.  The arithmetic and PDE processes are a little complicated, so the most concerned of them request a full analysis from the Business Office.  After six weeks and two meetings they finally tease out that the maximum accurate increase for the coming year is 3.9%, and that the district forwent an opportunity for a 0.8% additional increase for the current year.  None of this is documented, and the Board and public have to wait until May 13th for whatever comes next.  In the meantime, the Proposed Final Budget contains the 6% tax increase and the Board has given the Administration no mandate to come up with any concrete plans to balance the budget with a lower tax increase.

Because the Board can not, for some reason, accept the fundamental argument that our School District should base its taxing decisions on calculations that are materially correct, they are left with a problem.  There are no experts in school district finances on the Board, so they tend (to a greater or lesser extent) to accept what is told them.  They are told that the auditor said the error was not material and the audit was “clean”, but we know the audit is unrelated to the Annual Financial Reports (AFRs) from which the tax increase is authorized by PDE.  They were told on Monday that the District does not complete a worksheet for the Exception, but we know that it does complete the AFRs which generate that worksheet.  They were told on Monday that the calculation is “locked down by PDE, you can’t change it, it is what it is”, when we know from PDE that there is in fact a “Start New Revision” Button on the on line AFR system!

The community members who have asked PDE to look into this are not experts in school district finances either, so how do we know what the Board does not?  We do know that there’s a problem with submitting incorrect numbers to the state and a problem with allowing the situation to fester, and we also know that it’s a good idea to get counsel from folks who do have the needed expertise and are not central to the problem themselves.

So I think it is past time for the Board to commission an independent review.  Completely independent unaffiliated with the Administration.  A good candidate for this would be the lawyer that has advised the Board in the past on financially complex contract matters, Jeffrey Sultanik of Fox Rothschild.  In the meantime, I guess the public has to wait for May 13th, take some comfort in the four No votes on the Budget and rely on our neighbors on the Board to eventually come to terms with the fact that a 6% tax increase based on inflated numbers is just not tenable.

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T/E Finance/Budget Workshop Results: 6% Tax Increase Continues & re District Accounting Error, the School Board Dismisses Community Financial Experts to Support Business Manager … Good Governance?

This post continues to follow the T/E School Board’s proposed 6% tax increase and what some in the community believe is a significant accounting error in the District.  I attended the Finance Committee meeting this week which was scheduled for 7 PM with the Budget Workshop to follow at 7:30 PM.

First off, let me say that this is not the post I want to write nor had hoped would be necessary!  The scheduled half-hour Finance Committee went on for two hours, with the first opportunity for the public to ask questions not coming until 9 PM. The Budget Workshop started at 9:30 PM and went until midnight.

At the end of the 5 hour meeting, the public knew no more than when the meeting started. The tax increase remains at 6% and for many school board members, there is reluctance for “doing what’s right” regarding the accounting error. Instead, there is a preference to “stand by our man” Art McDonnell, the District’s Business Manager.

I don’t claim to be a CPA or have a lengthy financial career but fortunate for us, there are many in this community that do – including residents Neal Colligan, Mike Heaberg and Ray Clarke.  Each attended the Finance Committee meeting and Mike and Ray stayed until midnight for the Budget Workshop.  In my world, you should always “play to your strengths”; it would have been extremely valuable to the public if the school board really listened to these community members, rather than choosing to negate, dismiss and at times insult them.

It was obvious from the first comment period following the Finance Committee meeting that this was not going to go well, when the chair interrupted my comments to say he didn’t like my “tone”.  Mind you, that is after the public had waited TWO HOURS to comment!

I found it incredulous that since the last school board meeting two weeks ago, the Business Manager had not found time to review the impact of the accounting error on this year’s tax increase!  But more shocking was that School Board director Heather Ward stated she had asked McDonnell several times for the information and the Board still had not received it. McDonnell’s response as to when he would have the information – by next Finance Committee meeting a month away!! It should be noted that Ray Clarke, Mike Heaberg and Neal Colligan have already done the analysis caused by this accounting error yet the business manager doesn’t have the time.

The public was told at the March 23 School Board meeting to come to the Finance Committee meeting for answers! The only answer that we now know is that the District’s accounting error occurred in Oct/Nov 2016 and that the School Board was not told about the situation until January 2019 – 14 months later. I actually told the school board that I felt sorry for them in this regard – guess the Administration didn’t think that a $1.2 million accounting error was all that important. I also stated that we elected them (the School Board) for District oversight, not Art McDonnell, the business manager.

The continuing to “kick the can” on the accounting error by the school board is not just frustrating but shows a lack of leadership and ability to govern even as some in the public make suggestions of possible legal action.

Although the Finance Committee meeting was not televised and it becomes a “he said, she said”, the public can see the video of the Budget Workshop.  You don’t have to watch the entire video but I beg you to PLEASE review the comments which starts at time stamp 1:34:45.  Click here for the video.

It is extremely important that you hear the comments of Mike Heaberg, former member and chair of Tredyffrin Township Board of Supervisors and a financial management executive. After waiting over four hours to make his remarks regarding the District’s serious accounting error, perceived impact on the tax increase, possible legal action, etc., Mike’s comments were thoughtful and important. After the public comments, continue to watch and hear the responses from the school board, in particular the Finance Committee chair’s response to Mr. Heaberg. Truly unbelievable and this from the man who told me hours earlier that he didn’t like my tone!

The public needs to wake up (although one School Board member would have you believe that those in the audience don’t represent the community!) Let me repeat, Mike Heaberg, Ray Clarke and Neal Colligan are financial experts and have done the accounting analysis (even though the District business manager has not found time!) All three come out at the same place with regards to the impact of the accounting error on the proposed 6% tax increase. Who on this School Board comes close to their financial backgrounds and depth of understanding?  However, for many on the school board, the choice is to dismiss the comments/suggestions of the community financial experts in favor of the business manager – even as the trust in their ability to govern is questioned.

The end result of five hours of Finance Committee/Budget Workshop meetings and where the public expected answers – there were none. The tax increase remains at 6% and with suggestions of legal action afloat regarding the District’s accounting error, many on the school board remain committed to Art McDonnell. Not my brand of governance or leadership!

Because I left following the Finance Committee meeting (I did however watch the Budget Workshop), Ray Clarke provides his remarks and commentary for us – and we thank him!

The combined Finance Committee/Budget Workshop on Monday was a five hour marathon, ending past midnight.  Unfortunately the audience, and possibly a few of the Board, came away as perplexed as before.

We heard a high level outline of the source and timeline of the error, pinned to a clerical mistake in the Department of Specialized Student Services that resulted in the CCIU invoices being recognized after the 2016-17 audit was complete in November 2017.  The auditor signed off on the incorrect financials for 2016-17 which then were submitted to the state.  A year later the auditor also signed off on the 2017-18 financials, and the two incorrect state reports then became the basis for the district-authorized Exception request to the state for next year’s Budget.  It appears that the Board learned of this sometime in 2019.

The Chair of the Finance Committee relied almost exclusively on the auditor approval to support his conclusion that the issue is not material.  Others felt that even though the numbers are incorrect, that’s OK because in their view moving the expense from one year to another just changes when the Exception can be taken.  (Partially but not totally true: packing expenses into one year increases the amount that is above the Index; and even if an Exception were allowed last year, the Board might not have taken it – as they claim they so often do not!).  There were no numbers presented in support of this, although Ms Ward said that she had requested the information two weeks ago.  She obtained a commitment from Mr. McDonnell that the analysis (which in essence has already been seen here on Community Matters) would be presented at the next meeting in four weeks’ time.

In the Workshop, the Board spent a lot of useful time debating the merits of individual programs that could be used to balance the budget in the event of a lower than 6% tax increase, which seems to be the universal desire.  There are strongly diverging views on the merits of selective fee increases that increase the cost to families (who choose to move to T/E “for the school district”, remember) versus elimination of headcount additions for, say, security.  There are certainly opportunities not yet baked into the Budget – areas like staff retirements and use of up-to-date assessment information (here, as Ms. Ward said of the tax issue: “show your work“).  However the Board did not come close to meeting President Dorsey’s goal, and the Admin request, to set parameters for the tax increase and deficit.  The best we got was his own preference for a 3.8% tax increase (which would be roughly the rate with the right Exception), and general discussion that implied that a $1 to 1.5 million deficit would be livable.  On the latter, it’s important to note that District Policy does not allow Fund Balance to be used for operations, so it will be important to identify programs like the $300,000 cost of setting up a new reading program that are legitimately one-time expenses – IF the expense is taken out of future year’s budgets.

Those of us in the audience were chastised by Mr. Boyer for not actually representing the community. My own sense from the people in my orbit about this is very simple:

– Regardless of the impact, the Board should not endorse incorrect state reporting

– If the district is to be managed effectively going forward, correct numbers must be used to analyze trends and cost drivers

– The District should limit the 2019/20 tax increase to the allowable maximum

– There’s a real trust problem when:

    — A Board does not learn of an issue that impacts taxation for over a year

    — A Board member has to ask the Business Manager to “show your work”

     — That request for information is not complied with

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