Pattye Benson

Community Matters

Property Values are Falling & Real Estate Taxes are Soaring Across the US . . . What’s the answer?

Here’s an interesting read in Bloomberg Business Week – thanks to a reader for supplying the link.

The article, “Property Taxes Reach the Breaking Point . . . Local governments are raising property taxes to plug budget gaps as home values fall – and voters are getting sick of it” discusses rising property taxes and decreasing real estate values throughout the country. According to the article, because about one in four of residents mortgages are ‘under water’ across the country, many local governments and school districts are forced into increasing property taxes to meet budget deficits. However, the problem as we are acutely aware is that much of the country’s home values have fallen dramatically.

Historically, local governments have depended on property taxes as a stable revenue source. Nationally, approximately 50% of property tax revenue goes to fund school districts. How does a school district provide adequate school funding without raising property taxes beyond the scope of an individual’s ability to pay? The article looked at specific states and their property taxes – and how local governments are balancing the needs of school budgets (and deficits) with the increase in property taxes issues.

In 2010, New Jersey residents received the distinction of paying the highest average property tax in the US – an average of $7.576 (an increase of 78.7% since 1999!). Surveying all 3,100 counties in the US, residents in Hunterdon County, New Jersey paid the highest median real estate taxes per year — $8,216. As a direct result of increasing property taxes, in 2010, New Jersey capped the property tax increase by local governments at 2 percent.

Can you guess which county in Pennsylvania has the highest median real taxes paid by its residents . . . Chester County! Below is the real estate property tax information provided from Business Week for Pennsylvania:

  • Most property tax paid in Pennsylvania: Chester County
  • Median Property Taxes Paid on Homes: $4,011
  • Median Home Value: $328,900
  • Taxes as Percent of Income: 4.12%

The property tax problem is interrelated with the local school districts and includes an inequity and inadequacy inherent in real estate property taxing; and therefore filters into the problems funding public education. And today funding public education is the central problem. For years, property tax has provided the major funding source for public education but is that the solution for the 21st century?

Is a property tax capable of adequately or fairly funding the school districts, especially given the current declining real estate values? To offset Corbett’s proposed budget, which includes major funding to public education, what is going to be the answer? The bottom lines for budget deficits require school districts to either lower expenses (or rely on fund balance) or continue to raise property taxes. And as we read in the BusinessWeek article, Chester County currently has the distinction of the highest property taxes of all counties in Pennsylvania.

Discussions on the T/E School District budget will continue on Monday, March 28, 7:30 PM at Conestoga HS. The Budget Workshop will update on the current status of the 2011-12 school district budget. The meeting will focus on the budget process and discuss remaining potential budget strategies to close the budget deficit. Click here for the agenda.

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  1. I would like to point out a few questions that need to be researched by somebody in order to have a meaningful discussion on this topic. Even without answers, the questions alone will point out the complicated nature of this topic and some of the dangers inherent in jumping too quickly to conclusions.

    1) What is the actual decline in property values in our school district as opposed to the declines in other Chester County communities and across the nation?

    2) How much has property tax increased over, say, the past ten years in T/E? (Broken down between township and school district)

    3) For the school district, it would be most helpful to chart tax increases with rising enrollment to see the effect of increasing enrollment on school spending.

    4) We need to look at per student spending over time and adjust for inflation to see how much per student spending has increased, or has it stayed on par when adjusted for inflation?

    5) How much have unfunded mandates increased over the same time period?

    6) How much state funding has been provided? Has it gone up or down, adjusted for inflation, over the same period?

    7) How much of the annual tax increase was built in due to inflation? What was the annual rate of inflation during the period selected for our analysis?

    8) How much of each annual tax increase was to cover discretionary spending? Analysis of questions 1 through 7 should give us some idea.

    Having laid out the questions, I would point out a few other points for discussion:

    * You have to be careful when comparing T/E with other school districts in the county, state, and nation. T/E is unique and most of the complaints applied to other school districts DO NOT apply to T/E. How often do we hear on this blog about failing public schools, and then see an illogical connection to our schools? By every measure, T/E is an example of public education at its finest. The failure of other school systems tell us NOTHING about T/E.

    * During my time on the school board (1999-2007) inflation ran between 3 and 4%.

    * There were significant annual enrollment increases during that period also. Even assuming no changes in program and no additional unfunded mandates, the annual rate of inflation PLUS ENROLLMENT GROWTH would account for most of the annual pecentage tax increase.

    * During my time on the board, we needed to add classrooms to replace capacity lost when three elementary schools were sold in the 1980’s (before my time). The cost of construction was not discretionary since it was driven by enrollment.

    * During my last four years on the board, as a result of an aggressive cost control program, the four year average tax increase was 2.19%. Inflation during that period ran between 3.5 and 4%.

    * Per student spending is about $15,000 (again, how does that compare when adjusted for inflation for the period selected?). That is half or less than half, the cost of excellent private schools, yet the quality of the public education in T/E rivals many of the best private schools.

    * Relative “tax effort” can be researched on the PA Department of Education web site. Data on home values vs. tax rates are compiled for all school districts in Pennsylvania. T/E has consistently ranked between 470 and 480 out of 501 school districts in Pennsylvania in terms of having the lowest school property tax – i.e., #1 on that list has the highest school property taxes and #501 has the lowest.

    * T/E school taxes are around 1% of home value.

    * There are many school districts in Chester County with higher school taxes – some of these are inferior quality to boot. What’s happening in other parts of Chester County may not tell us much about T/E.

    1. Thank you Kevin for expanding the discussion on this topic. Certainly T/E is unique from many school districts in the county, state and nationally. I have often mentioned that unlike many school districts, T/E is fortunate that we have a substantial fund balance. We don’t have to look far beyond our district lines to see that is not necessarily the case in other school districts. I do think that there is value in understanding that ‘Chester County’ (not Montgomery County as I may have guessed) has the distinction of the highest property tax in the state – and what does that mean for T/E (if anything.) You are correct to point out that T/E does not have the highest taxes in Chester County — I don’t know if the Phoenixville School District has that distinction but their taxes are certainly higher than T/E.

      This post was certainly not intended to cast any negative light on T/E or our teachers. Many residents support the quality of education that TESD provides (and the teachers who provide that quality).

      1. Thanks Pattye. You are quite correct, of course. I just wanted to get some of those questions out there because I anticipated a lot of people would uncritically jump to the conclusion that all of this resulted from the alleged “out of control” school boards over the years, when that view is far too simplistic. So many factors come to bear, and I think it is important to try and be aware of all of them when evaluating what happened and more importantly – what do we do about it now?

        Thanks as always for hosting the blog and entertaining all of our points of view on these important topics.

    2. Some good questions, but you’d get very different answers depending on the time period. I think what’s relevant to most people is the realities of the “new normal” economy, not what happened in the property bubble of the early 2000’s when Mr Grewell was fortunate enough to be on the Board.

      It really doesn’t make a lot of sense to measure a recurring expenditure as a percentage of a capital value. The present value of Pattye’s cited $4,011 median property taxes over 30 years discounted at 3% (to allow for inflation) is $78,617. That’s 24% of the cited house value of $328,900, not 1%.

      Education making up a fifth to a quarter of the value of the entire housing stock, that’s why there’s a problem.

      1. Ray,

        There are a lot of things pro and con to be said about property tax. We inehrited this system. It has in the past served us well, despite its unpopularity, largely because of its stability and predicatability. But I will grant you that today the situation is very different than when I was on the board.

        In 1999, ran on reducing class size, and that cost money, in extra teachers – a percentage over and above that which was required for enrollment growth alone. Now, you could not do that today. You would have difficulty getting elected on a platform which inherently involved spending increase, and even if you got elected, you probably could not get it done once you were on the board.

        What does that mean going forward? I wish I had the answer. I just want to make sure that when we cure the disease we don’t kill the patient. A lot of people are not as thoughtful as you are, they won’t necessarily do the math or the research, and for too many of them it is “open season” on public education. Ray, I don’t perceive you as one of them – I think you are one of the more thoughtful advocates for the taxpayers who are fed up with rising property tax. I don’t always agree with you, but the point of view you come from is an important part of the discussion.

        I wish I could be so respectful of some others who routinely post on this blog. Some of them are simply on the attack, period. I don’t think some of them are thinking of the kids.

        In T/E we do have something precious, good public schools that work (despite their faults, despite the taxation and funding issues) and it would be a shame to dismantle something that works so well (at least works well here in T/E) without having something equal or better to replace it. I don’t want the kids to get lost in all of this, someone needs to advocate for them too, because they don’t have the power to stand up for themselves – children by definition need adults to advocate for them.

        I have not done the analysis lately, but I do not think $15,000 a year is too much for the incredibly important task of educating tomorrow’s leaders. I wonder how that figure compares, adjusted for inflation, with what we were spending 10, 20, 30 years ago.

        I fear that there are many politically and idealogically motivated people who are going to seize on the opportunity presented by the economy to advance an agenda which is, quite frankly anti-public education, and try to replace public schools with – what? Religious schools? Political schools? it is a war for control of the country through the hearts and minds of our young people.

        Maybe I’m being a little paranoid, but then again, maybe not. I find it quite interesting that vouchers are rearing their ugly heads once again just now. And, at the risk of being “political” (something which I try to avoid) I find it incredible that we are not going to impose a reasonable tax on oil shale production at the same time we are cutting state public education funding – all the more astonishing since Pennsylvania ranks very low among states in terms of its contribution towards funding public schools. The same government that will not tax oil production already enacted a scheme to use gambling money for schools. Is that misplaced values? You tell me.

        At the risk of getting political again – I also find it incredible that we as a county cannot seem to afford good public schools when a few days of expenditure for all of these G-Dammned wars would fund public schools for years.

        We don’t want to spend $15,000 educating a kid, but when that kid comes from a failing urban school and ends up incarcerated, we somehow seem to be able to come up with the $30,000 – $40,000 per year that it costs to keep him in prison.

        Perhaps, like Rome we are falling. Perhaps we deserve to fall . . . . . .

      2. I’ll continue building on Ray’s post.

        Common wisdom says that those residents in districts with high tax rates (Unionville) are being unfairly burdened. And those districts with low tax rates (TE) are getting an educational bargain. Not so.

        RE tax are capitalized into home prices and, thus, RE tax rates become a problematic measure of tax burden.

        Take two district with equal educational outcomes – TE and UCF. TE had a 2010 tax rate of 17.99. UCF had a tax rate of 24.26.

        A TE house with a market value of $600K and an assessed value of about $300K would require the owner to pay $5,400 in RE taxes.

        A UCF house with a market value of $600K and an assessed value of about $300K would require the owner to pay $7,300 in RE taxes – $1,900 more than TE.

        If the houses were the same then any logical home buyer would always choose the TE home with the lower tax rates – increasing demand for TE homes and increasing the price of TE homes. The results is that the same home in TE (lot size, number of rooms, etc.) costs more in TE than it does in UCF as determined by the present value of all future additional tax payments (30 years x $1,900 discounted).

        Home owners in TE are not getting a bargain in education as compared to UCF home owners as might be expected when looking only at RE tax rates.

        1. I don’t understand your point – price of homes is always driven by desirability of the community – i.e., demand. Demand is a function of how much people want to live in a given community. Young people starting families or with kids already are the buyers. Older folks ready to retire are not buying houses (in any great numbers) in T/E. They may be in other communities that are desirable for retirees (Florida, perhaps). Therefore great schools are a major factor in desirability and demand in our community. Ther are other factors too, but schools drive demand and home price in many communities, including ours. Sure it cost more to buy here, but your home also appreciates in value more because of demand, so when you (or your heirs) sell it, you (or your estate) get more money for the house.

          I don’t know what your point is. Home price is driven by demand, which in turn is driven by desirability. That’s just the way it is in ANY market.

          Of course it cost more to buy into a community with good schools as opposed to a community with poor schools. What do you want to see done about that? Make the schools less successful? Destroy their reputation? Now what? When you sell your house you get less for it. Where is the bargain in that?

          Moreover, are you saying that quality of schools makes no contribution to the quality of life in a given community?

          I suppose you could sell your over-valued T/E house at a premium, buy a house in UCF for a lot less (or get more house for the money). Then you can complain to UCF about how your taxes are higher.

        2. Mr. Grewell,

          You said, T/E has consistently ranked between 470 and 480 out of 501 school districts in Pennsylvania in terms of having the lowest school property tax – i.e., #1 on that list has the highest school property taxes and #501 has the lowest.

          I’ve heard the same message repeated many times by many posters who look at TE’s low RE tax rate as a merit badge or as an advantage TE’s residents have over other higher tax districts..

          My point was in bold above. I’ll repeat it again.

          RE tax are capitalized into home prices and, thus, RE tax rates become a problematic measure of tax burden.

          In reality, TE homeowners “bought” their low tax rate with the premium (capitalized tax difference) they paid for their homes.

          Some corollaries –

          * School districts with lower RE tax rates, like TE, are not necessarily doing a better job of controlling costs.

          *School districts with higher RE tax rates, like Phoenixville, are not necessarily doing a poor job of controlling costs.

          * Residents in districts with lower RE tax rates, like TE, are not necessarily getting a better bargain.

  2. Believe it or not, the real estate market is creating problems for school districts NOT purely because of falling values, but because of falling number of transactions. The history of property taxes as funding is enhanced (?) by transfer taxes. New buyers “ante up” for a community with some percentage of the new home purchase price (new office, new land etc.) Tredyffrin has always been wealthier than Easttown because they collect 1% (I believe only Coatesville has that number). Easttown and the school district collect 1/2%. So the purchase of that $600,000 house here or in UCF results in a 9,000 transfer tax here vs. 6,000 in UCF (or in Easttown). That is the number that has dried up, not just gone down. The transfer tax is why the boards of Mr. Grewell’s later years were able to have such modest increases…because they did not tax at the same level they were spending. At the same time, they added to the fund balance by under estimating revenues.

    The statistical “evidence” provided by CO and Ray is further proof that you can use any number to make any point.. Forgetting all these capitalized values, if I am househunting and have a budget of 600,000 to buy a house, I can spend that on a house in TE and pay less taxes than UCF. Presuming that we look at closing costs, the Tredyffrin purchase would cost more in transfer tax, but looking forward at local taxes, perhaps the tax rate of the township in UCF is higher? The decision is made based on more than one study of school quality. (Plus, to suggest they are the same districts means no one here has done much research in a UCF school itself….I’ll leave that to the non-statisticians amongst us). The market is not perfect — and CO’s observation that the demand would increase for TE houses has played out many times — which is where the notion of transfer taxes comes in — as more demand for houses has resulted in revenue that supplements the district income. It also created artificial price increases here that resulted in market values of homes increasing by double digits annually, without any true change in any variable BUT demand.

    Regardless, we can talk about any number of ways to fund schools, but absent the state taking on the burden by redistribution of wealth, local control (501 school districts in the state) will always allow the wealthier schools to get richer….and the real barometer of that translating into school quality will be where age factors in. As townships get older, the political balance between people who are saving for retirement vs. people who are educating their kids by moving here will be a clash — which is what continues to fuel demand for homes and ultimately makes moving away sensible for the tax-conscious owner. You buy my house for your kids to come to our schools. I sell it because the tax burden no longer is worth what the house is selling for ….but the new buyer will pay more for it because they are getting subsidized education.

    Not sure this will make any sense when I hit submit — blogs make brevity the soul of wit…I need to figure out how to make these complex concepts either witty or brief.

    1. You are correct that tranasfer taxes have declined because of fewer sales due to the economy. However, I would point out that the tax rates achieved in my second term on the board were the result of cost-contol initiatives we worked very hard on the first four years I was on the board. We cut everything we could that could be cut without affecting the program. The decline in transfer tax revenue came later, and really hit home after I left the board. As far as underestimating revenues, if you were to look at the report and recommendations of the Operations and Opportunity Committee (our cost-cutting initiative) you would see that some of the recommendations we implemented were aimed at reforming the ways in which revenues were estimated in order to make them more accurate, transparent, and more in line with actual revenues. We did a better job at this, and revenues were more in line with projections towards the end of my time on the board, although the process is still not perfect. (and may never be – it is more difficult than you might think to accurately project revenues and expenditures, still we tightened that up considerably compared to what it was previously).

      Also, demand does not create “artificial price increases”. There is nothing artificial about demand driving prices upwards. That’s just the way any market works. I’m not sure what is artificial about that.

  3. Mr. Grewell said, “In T/E we do have something precious, good public schools that work (despite their faults, despite the taxation and funding issues) and it would be a shame to dismantle something that works so well (at least works well here in T/E) without having something equal or better to replace it.”

    I disagree.

    TE does not have anything that is unique. TE has a high socioeconomic demographic that demands public school performance on a par with any other high socioeconomic district. To call it “precious” intimates that the system can’t be improved and any change should be opposed.

    I don’t want the kids to get lost in all of this, someone needs to advocate for them too, because they don’t have the power to stand up for themselves – children by definition need adults to advocate for them.

    I believe Mr. Grewell is mistaking many posters’ criticism of the present system to be anti-education and anti-student. In actuality, I’d like to take money from non-productive uses (small class size, compensation for longevity and degrees, boutique courses with low enrollment) and invest it into initiatives that will increase academic outcomes (pay for performance, longer school year, rigorous core courses). What should be noted is that all those non-productive uses mentioned above are favorites of the teachers union. And we all know that the teachers union is for the kids. Right?

    I have not done the analysis lately, but I do not think $15,000 a year is too much for the incredibly important task of educating tomorrow’s leaders. I wonder how that figure compares, adjusted for inflation, with what we were spending 10, 20, 30 years ago.

    Here is a quote by Jay Greene in his book Myths of the Teachers Unions

    Since the early 1970s, when the federal government launched a standardized exam called the National Assessment of Educational Progress (NAEP), it has been possible to measure student outcomes in a reliable, objective way. Over that period, inflation-adjusted spending per pupil doubled. So if more money produces better results in schools, we would expect to see significant improvements in test scores during this period. That didn’t happen. For twelfth-grade students, who represent the end product of the education system, NAEP scores in math, science, and reading have all remained flat over the past 30 years. And the high school graduation rate hasn’t budged. Increased spending did not yield more learning.

    If you don’t believe him here are the expenditures and NAEP scores from the NCES.

    1. Again, you are citing all kinds of national statisitics, but until my questions (above) are answered and we look specifically at T/E, we will not know how to evaluate the issues.

      So what if NAEP scores remained flat across the country? We’re not talking about across the country, we’re talking about here, in T/E. Our test scores are high, and have laways been high. Our graduation rates are high, our college attendance is high, and has always been. The fact that spending increased in failing schools and no imporvement was seen in test scores, graduation rates, etc., tells us nothing about T/E. That is not what happened here, and has noting to do with the issue at hand.

      Also, to fully evaluate trends in test scores, we would have to control for a lot of factors including mainstreaming, IDEA, and yes, socio-economic factors too.

      But back to my point – we are among the very top school districts in the state and rank very high nationally, and I would call that unique, since it seems to be so rare. I might even call it precious.

      And I did not say anything about how we are perfect and there sould never be any changes. I ran on change – I had a criticism of the system and I ran on a platform of changing it – specifically, class size. And by the way, small class size is not a “non productive use” of funding.

  4. Facile quotes — I believe Mr. Grewell was referencing a successful product.

    I appreciate your view of better ways to deploy resources, but perhaps you could incorporate changing demographics in your research.

    Since the 1970s, political correctness (some would call it fairness) has increasingly mandated FAPE — with the emphasis on A being determined by the user through litigation. Translated to “unfunded” mandates, the testing and the results have been reported on student populations not identified by “potential.”

    This is a link to the start of research on the fact that as the medical system has gotten better and better at saving pre-term babies, the school system is faced with every more complex responsibilities for educating a changing demographic.

    Mainstreaming, special services, and teaching to the test have changed the outcomes measured by standardized testing. The US Education system of the 70s lamented drop-outs, but testing across the board (even for SAT college prep) was simply not done. And special services were delivered in separate (and not usually equal) facilities.

    We shop at Wal-mart, where we see that we don’t make anything anymore. The cost of labor simply makes US goods too expensive. We educate with our own labor, and in the race to test well, we teach to the test, perhaps leaving behind thinking skills and the “american ingenuity” that was so highly regarded a generation ago.

    “Inflation adjusted” makes an assumption that the cost of delivery would only change based on inflation….and that simply is not the way compensation in any American industry is managed. Regardless of inflation, compensation to legal workers has increased without regard to productivity.

    So — is the education system broken? Or is living an American Dream….wanting and expecting more….bringing us all down?

    1. You make some good points here – it’s not just inflation, it is increasing costs, due inpart to increases in unfunded mandates. I mention inflation because taxpayers complaining about tax increases often do- they question “Why are taxes going up by 5% when inflation is only 3%?” The implication is that things should always stay the same, and the only excuse for a tax increase is inflation. If taxes rise faster than inflation, the taxpayer assumes it is because of some incompetence or excess on the part of the board.

      But that analysis leaves out changes in society, standards, expectations, laws, regulations, mandates, and enrollemnt growth.

  5. No elaboration necessary: John always hammers the GOP.

    His excuse: locally, they run things.

    He cannot, however, ever seem to say up-front that Dems run things in a lot of places that are a lot worse…say, Philadelphia, Coatesville, etc., etc.

    Anon2, don’t bother…he will slither out with some BS the way he always does. Or, now he will attack me, or you, or call the question dumb.

    1. Sorry, John, don’t understand how the low tax rate is a “myth,” It is what it is and, no moral relativism here just facts, it is lower than surrounding communities whose services, etc. are just as good or not as good.

      Of course, you have already said in the past that you are moving once your kids are out of school, so I guess that proves that the schools that the R’s have overseen aren’t so bad. If they were, you would have moved years ago, but here you stay.

    2. relativism? what they say vs. REALTY? (there’s a Freudian misspelling if ever there was one.)

      Reality is that the tax burden here is lower….so where is the moral relativism….

  6. So Business Week understands the tax model for PA well enough that we’ll believe people in Chester County pay the highest taxes in the state?
    Okay. hard to understand that…but if it gives John P. a chance to slam the Republicans, so be it.

    Just a snapshot:
    Lower Merion, Montco, LMSD:
    4.26 + 2.695 + 22.2895 = 29.2445

    Radnor Township, Delco, RTSD:
    3.6411+5.184+20.4085 = 29.2336

    Tredyffrin Twp, Chesco, TESD
    2.23 + 3.965 + 17.97 = 24.165

    Now, I guess I could find reasons that Chester County is higher in the Bloomberg article– perhaps Coatesville? — or perhaps just all the rural parts of the county with lower income levels (? is that true?)… Does anyone have additional insight into this conclusion that Chesco is the most expensive county to live in?

    For me, I look at the places I would choose to live based on the quality of the schools, and I’ll stick with what I’ve got as long as I have kids to send to school. And while i don’t want taxes to go up, and I do agree that lots needs to be undertaken with the teacher contract, I still see 5 full mills savings vs. these other two communities…5 full mills. That’s a whole lot of tax difference.. A WHOLE LOT.

    1. Is this how you post? This is poorly delivered, badly spelled and “devoid of reason.”

      Go find some green grass elsewhere. Radnor MS is new — TEMS is old. LMSD spend $200,000,000 to build their two new high schools. CHS spent about $30,000,000 and has had the benefits of the renovation (space and non-leaky roof) for 10 years while LMSD got around to it. The buildings are NOT busting at the seams. That small class size that CitizenOne could be changed and the elementary and middle schools would be oversized.

      It must be hard living here — everyone renovates their house which makes any house that hasn’t been renovated a rat hole. TEMS meets the educational criteria — teachers, programs, walls and floors. I am pretty sure someone said it before — are you suffering from “BUILDING ENVY?” How old is your house? When did you redo the kitchen and baths? Your kids would do better in school if they had newer computers?

      So — the race is only a snapshot when you take your picture. Move. I’m certain you could find a house in LMSD or RMSD…and you wouldn’t mind paying 5 more mills in taxes — probably get a good deal on a house.

      The point of the article was whatever — I believe it was wrong. There is no supporting data that I can find, so I gave you the rates in Radnor and LM. They are the facts. If you can find some reason for the bloomberg conclusion, besides your anger and bitterness (which is about all I can read in your post), then please contribute information.

      1. I do not see why you feel compelled to comment on someone’s writing style — “This is poorly delivered, badly spelled and “devoid of reason.” — who put you in charge? Personally, I prefer comments to stay on topic rather than pointing to an individual’s grammar, writing style or state of mind. Please . . ..

        I guess that’s right up there with your questioning the results of the Bloomberg Business Week article. If Business Week disagrees with your analysis of ‘Chester County’, why then of course Business Week must be wrong.

        Thank you Pattye for providing this forum.

    2. The state is in a bit of a mess….the country is in a bigger mess. Is it all because of the TT GOP?

      You and Michael Moore share a lot in common….lots of reasons it sucks, but no money to fix it.

  7. Kevin’s question about cost comparisons with 20-30 years ago was interesting since I just came across an annual report from my public high school in Ohio for the school year 1975-1976. Total expenses were $1,532 per student plus another $112 for interest, debt retirement, and capital outlays. The average home owner paid $350 per year in school property taxes. (Commerce and industry contributed $2 for every residential tax dollar.) Sounds great, but those weren’t really the good old days – unemployment had soared in this region and inflation/shortages had caused utility costs to climb 30% over the previous 3 years. The report cited increased expenses due to mandates from the state including vocational education and learning disabilities. (Their language.) The schools provided most services ‘in-house’ and challenged students attended as well in both ‘mainstreamed’ and specialized classes. The public school also provided many products and services to the 8 parochial schools in the city.

    The CPI from June 1975 to June 2010 increased by a factor of 4.07 times. Given that, the cost today would be $6,235 per student versus T/E’s $15,000. Obviously things have changed since then and many new/different costs have been incurred. Interestingly though, this system could be compared to T/E, it provided an excellent education and was rated in the top 10% of schools nationwide based on the number of students with successful AP results. They also brag about (and list) all the standardized testing the students did at all grade levels. (I don’t remember any standardized testing beyond AP’s and SAT’s. My teachers and classes were creative and challenging and I can’t imagine that they were ever teaching to any tests beyond the AP’s.)

    For comparison, this system had 9,100 students in 11 elementary schools, 3 junior highs and 1 high school. The elementary schools didn’t have cafeterias since those students walked home for lunch. We had amazing resources, though, including 2 swimming pools, 2 auditoriums, 1 planetarium, several art studios, 1 beauty salon, 1 fully equipped garage for car mechanics, a huge football stadium, and plenty of sports fields at the high school. (1 of the junior highs also had its own indoor pool.) We even had our own mainframe computer which handled all the scheduling for the nearly 3,000 students at the high school. The high school offered a full range of classes including AP’s, the arts and extensive vocational training. (e.g. Cosmetology, Automotives, Electronics, Machine Shop, Drafting, Business.) It offered all the after school activities of T/E and then some. We had a ‘late’ bus run so most students stayed after school to participate in sports, clubs and activities. I rarely left the school before 5:30 PM and there were always plenty of teachers around. Many clubs also met in the evenings at the school – with teachers present. (While the facilities were amazing, I believe it was the commitment of the teachers which made the system great.) My education and experience rivaled that of students from the most prestigious high schools in the country. From my class alone, the top students went to Harvard and Yale, some became professors at top universities, the top athletes made the pros and the top performance students sang at the Met, appeared on TV series and in the movies, and one even became the drummer for a major rock-n-roll band. (We also had many doctors, lawyers, nurses, mechanics, janitors, artists, and teachers.)

    This was a suburban high school in a primarily blue collar area. Most families didn’t have disposable income for extras beyond basic music lessons or the occasional summer camp. The schools provided the tools and inspiration. My kids recently graduated from Conestoga and while I think T/E offers a good education and experience, mine was just as good (if not better) and it served a more diverse population with widely varying professional interests. (Not all went on to college.)

    Interesting to note is that instructional costs represented 66% of total expenses then. Most of my teachers were excellent and had Phd’s. Those supporting families moonlighted by teaching at local colleges and then driving ice cream and diaper service trucks during the summers. Personally, I do not want any teachers requiring second jobs to make a fair living. However, I am certain that those teachers would have gladly accepted a pay freeze or paying some health insurance costs if they had the salaries and benefits of our T/E teachers given the current economic environment.

    Sorry to be so long winded but this old annual report was a fascinating read. It bragged about its system and decried the challenges they were facing – not that dissimilar to our current situation. Most T/E teachers are great, but T/E does have a huge advantage in that this is a relatively affluent area with very involved parents and the students benefit significantly from all the tutoring, coaching, lessons, and activities provided outside of the school system. (Economies of scale and attention to costs may also make T/E more cost effective than say Radnor or LM.)

    FYI, my T/E school taxes increased 39% over the 9 years between 2001 and 2010. That’s with the homestead exemption. Without it, my taxes would have increased 40.9%. That does feel high especially given the recent recession and despite the ever increasing health insurance costs.

    1. FYI, my T/E school taxes increased 39% over the 9 years between 2001 and 2010. That’s with the homestead exemption. Without it, my taxes would have increased 40.9%. That does feel high especially given the recent recession and despite the ever increasing health insurance costs.

      Gosh . . . that is a startling statistic — thanks for sharing. Also, thank you for sharing your Ohio high school information; a very interesting read!

    2. Independent Woman –

      Thanks for the excellent post. Sounds like you went to great schools in Ohio. I do have a couple of comments, however. All along the lines of making sure we are comparing “apples to apples”.

      The inflation-adjusted figure of per student expenditure for your Ohio school, $6,235, does not tell the whole story. What is it actually today? I am certain a lot of changes were made in Ohio as they were in Pennsylvania, which led to costs rising faster than the CPI.

      To evaluate this properly, again we need to know the actual figures today for the two school districts in question. How much have taxes gone up in your Ohio school district? For that matter, what is Ohio’s funding mechanism? Do they rely almost exclusively on property tax (as we do) or do they use state income tax, for example? What percentage of the cost of public education comes from the state of Ohio, and has it declined over the time period in question like it has in Pennsylvania? (50% in the late 70’s to an average of 34% today – and going even lower due to Gov. Corbett’s proposed budget)

      To make a comparison, we would need to know Ohio’s state support for its public schools over the period in question and compare that to Pennsylvania’s. Pennsylvania is very low on the list of states in terms of providing state funding for its public schools. Perhaps Ohio does better? In any event, we would need to know that.

      T/E also had after school activity busses – I’m pretty sure they had them in the 1970’s, same time frame you refer to in your example. But at some point prior to my time on the T/E board, they were cut to save money. Does your Ohio school still have them, or were they cut along the way too?

      We would need to know what other mandates were imposed in Ohio, and what program cuts were made along the way to deal with rising costs. Does your Ohio school system today still have all the wonderful things it had in the 1970’s?

      For example – what are class sizes like in your Ohio schools? Have they gone up in recent years to absorb rising costs and declining funding? Has the teaching staff turned over and has the district had to hire younger, less experienced teachers? How many of the teachers are Phd’s today, as opposed to the 1970’s?

      I can think of other questions, but you get the idea. Oh, by the way, I am certain Ohio also now “teaches to the test” since that is driven by No Child Left Behind, which is a federal law. My guess is, sadly, the system you recall so fondly probably is quite different today.

  8. Interesting history — missing one piece. In 1976. the Cincinnati teachers won the right to collectively bargain, and it was 1984 before public employees were able to collectively bargain.

    I’ll step in for Kevin G. again here by pointing out that talking about tax increases is in a vacuum without associating it with enrollment increases. 39% over 9 years doesn’t overwhelm anyone if that was your compensation improvement in that time — if you made $100,000 in 2001, I would suspect you wouldn’t be overly impressed if you made $140,000 10 years later. That’s why I made the point earlier — using US labor to provide this service is what has made education expensive. Very few services in this country that depend on labor (manufacturing) are still done here.

    FYI relating to the 1970s in this Ohio community — you aren’t far off describing this community in those days either. ONE income families in the 70s rarely had the disposable income that two-income families produce today — and look around and see who from that era had multiple cars etc. (kids!) One last anecdotal reference — Lehigh University cost $4000 in 1975. (Yale cost $2550 in 1970; $6,210 in 1980). That’s not all about inflation…’s about the cost of labor.

    1. Thanks “Lurking”! I would also add that during the 9 years when Independent Woman’s taxes went up, there was also significant annual enrollment growth in T/E. Some of the tax increase was built in to cover that. Also, because three elementary schools were taken off line in the 1980’s (two sold and one became the “ESC”) there was a lot of classroom capacity that had to be replaced during that same time frame so there was construction at both middle schools, and all of our elementary schools, and expansion and updating at the high school. The decision to get rid of the three elementary schools was a bad one, but it was way before my time (and before Andrea’s time too).

  9. Thanks Kevin for putting me into historical context :)

    Quite a lot of information going back and forth here — leave it to Mr. Peterson to provoke a discussion with one sentence? Seems to me that the figures Lurking provided about relative tax burdens addressed the primary assertion (and to me, seem to negate the notion that our tax burden is higher here). Does anyone know anything more about the article Pattye referenced?

    By standing by the claim that our tax burden is high (suggesting that facts belie the assertion to the contrary) I don’t understand JP’s statement that our community was addicted to transfer tax. Would you prefer that local authorities simply ignore that revenue and tax despite it? I think our tax increases were moderated by transfer taxes — those years of “zero tax increase” did not always mean zero expense increases (rarely did I think). Had the township or schools ignored transfer taxes in their calculations, the rainy day funds would either be excessive or there would have been no need for debt. Neither would reflect the cost of doing business.

    Enough for me on this. Not sure we are debating anything that has an answer. Reflecting on the 70s was interesting — as it very much reflects my own experience growing up here in the 60s and 70s.

    1. Thanks Andrea – I wanted to make sure you and I don’t get blamed for selling the schools – God knows we get blamed for enough on this blog.

      You are right that the transfer taxes came into play – when we did one year flat (0%) there was as usual transfer tax revenue, and we may have used some fund balance (not sure about the year – it may have been another year when we had a low tax increase). In any event, we never had a year with zero cost increase. Salaries and benfits of course are always the biggest item, with health care and pension costs being the biggest budget busters.

      Anyway, I think you are right when you say we are probably not debating anything that has an answer. (at least not a quick or easy one). Lots of big forces converging on the schools over the years from the 70’s until today.

  10. CitizenOne:
    RE tax are capitalized into home prices and, thus, RE tax rates become a problematic measure of tax burden. In reality, TE homeowners “bought” their low tax rate with the premium (capitalized tax difference) they paid for their homes. Some corollaries –

    * School districts with lower RE tax rates, like TE, are not necessarily doing a better job of controlling costs.

    *School districts with higher RE tax rates, like Phoenixville, are not necessarily doing a poor job of controlling costs.

    * Residents in districts with lower RE tax rates, like TE, are not necessarily getting a better bargain.”

    Thanks for all that — but if you want to work in economic models, then price and demand are the same line. That means the buyer makes a decision about where to live, and you believe that money either goes into taxes paid or into cost of the house.

    My conclusion.
    So what.

    No merit badges as long as you maintain some sort of status quo — following the demand curve. And I think that’s been what several have been saying — if we decide to drop the quality of the schools, perception becomes reality and keeping the taxes low will result in poorer schools, which will cause dramatic drops in demand/fall in prices, and the tax rates will have to go up to cover the same costs.

    Right now the market is making its own correction due to economic forces beyond individual district decisions, and the result is assessment appeals reducing the tax revenue per mill. So forget the merit badge notion. This is not an economic exercise — this is not a simulation. We are seeing falling prices because of all sorts of economics, and unless we are willing to sustain the revenue (until such time as the resources can be deployed in other fashions), we are changing the value (perceived or real — that’s moot) of an education in TE.

    Back to my primary point all along: services delivered by American labor are no longer competitive. I think it was you earlier that said class sizes were inefficient, and given this environment, you may be right. If we cannot reduce costs of labor, we have to improve productivity. Fewer teachers, more kids. In the 70s, kids took 5 majors with larger class sizes. Of course, in those days it was not leveling, it was tracking. You were in the front of the train from the beginning, or you never saw the front.

    These are things Bill Gates is trying to examine by funding programs. Ironically, it was Steve Jobs who criticized the way of educating in his statement that we expect to run businesses (schools) without being able to get rid of the poor performers. In the US, he means teachers. Worldwide, they also mean kids. If you don’t cut it in school in China, you don’t get to go to school.

    1. Lurking,

      I think you once again make some good points. I agree with your “so what” conclusion re Citizenone’s analysis. I also think you correctly point out that labor costs are a major (the major?) issue here, since, as I have pointed out elsewhere, over 70% of a school district’s budget goes to salary and benefit costs.

      I am by no means anti-teacher, but I have said elsewhere that given the current economic situation, some adjustments need to be made. Teachers will have to accept more of their health care costs, like the rest of American workers already do.

      However, having said all or that, I would again point out that there are many unfunded mandates which could be reduced or eliminated without affecting quality of education at all. If the state got serious about doing that, it would make the whole equation a lot more workable, without taking it all out on teachers (which will be very difficult to do, and as a practical matter may not be much of an option anyway – let’s see how it goes in Wisconsin – notice how the courts are blocking the governor?).

      Health care and pensions are the two biggest budget busters. Health care needs to get shifted more to the employee, and as for pensions, in Pennsylvania we have a state created mess, which will require reform form the legislature. I see the pension piece as one of the largest classic unfunded mandates. If Harrisburg were willing to truly reform that system, it would go a very long way towards solving our problems. Teachers can and should still be well paid, but with contributions towards health care more in line with what the rest of us have been paying for years, and a retirement system that is more realistic – how many taxpayers who foot the bill have the kind of generous defined benefit pension that public employees have? Almost none. Economically and politically that situation is no longet sustainable.

      There are other benfits that seem out of line – for example pay out of sick days. But we need to be careful here – some things make sense in a school setting which make no sense in a private business. For example, whenever a teacher is out, we need to hire a sub for the day, and there is a cost to that. You can’t have a classroom full of kids and no teacher. In private business, you can usually work around an absent worker without having to hire a per diem replacement. Payout of sick days gives teachers an incentive to avoid taking days off. The question is, does the eventual payout outweigh the upfront savings inherent in not having to hire so many substitutes? I’m not sure. Again, all matters involving public education are complex and we should not junp too quickly to any conclusions.

      As for class size – in today’s world of mainstreaming, IDEA, and strict state standards (which did not exist in the 70’s) I think class size does matter. In the old days, kids in large classes who fell through the cracks academically could go on to good manufacturing jobs and still do all right. No so today, with very little hard manufacturing being done in our country (as you point out – the labor is cheaper overseas).

      Finally, I think you made a very good point in your last paragraph – when comparing schools and performance, we need to always remember that US public schools have to educate all comers. The private schools and perhaps many foreign school systems do not. Our schools are filled with kids who have all kinds of problems, and society, largely due to laws and regulations, does a much better job of identifying and dealing with those problem kids. But that has to taken into account when comparing the performance of public schools with other types of schools. I get tired of hearing about the failure of public schools when much of the problem results from our incredibly unrealistic expectations that the publis schools can and should solve all problems.

  11. if we decide to drop the quality of the schools, perception becomes reality and keeping the taxes low will result in poorer schools, which will cause dramatic drops in demand/fall in prices, and the tax rates will have to go up to cover the same costs.

    Three points –

    1. There is no correlation between spending and quality of education. (Are Lower Merion and Radnor kids getting a better education with their 40% and 20% spending premiums?)

    2. Proposed spending cuts in the TE budget will have little or no affect on education. Johnny may be in a slightly larger classes; he may not take Spanish in 3rd grade; he may not be able to play football in 8th grade; he may pay more to drive his car to school; he won’t be able to play a violin in elementary school; he may have a longer bus ride; he may not be able to take AP Latin and he might experience a strike next year, but his parents will make sure he is focused and gets an excellent education at TE.

    3. Potential home buyers, when assessing a school district, look at test scores; not whether a district’s spending went up or down by one or two percent. TE will retain it’s reputation for excellent schools even if all the proposed cuts are made and TE’s home values will command the same premium compared to other lower performing districts (that are going through the same cost cutting exercises).

    1. Citizenone:

      It is not true that there is no correlation between spending and educational outcomes. The cuts next year may have minimal effect (but not none, as you suggest) but what about next year and the year after that, and the year after that? Eventually, cumulative effects of cuts will begin to have a serious impact on the quality – real and percieved – of education in T/E.

      And home buyers do not just look at test scores. They look at many non-academic aspects of the program too, sports, extra-curricular activites, social opportunities, guidance and psycological services and supports, special education, qualtiy of facilities, to name a few.

      Finally, I find the fact that you are comfortable with decline so long as we are relatively ahead of other public schools which decline more or faster to be appalling. Are we, as citizens, going to accept this as our future in Pennsylvania? What about the kids?

  12. Mr. Grewell,

    Eventually, cumulative effects of cuts will begin to have a serious impact on the quality – real and percieved – of education in T/E.

    The two districts I quoted, LMSD and RTSD, have had cumulative spending well in excess of TESD. Are their students better educated?

    I find the fact that you are comfortable with decline so long as we are relatively ahead of other public schools which decline more or faster to be appalling.

    I think you misread my post. I said, “spending cuts in the TE budget will have little or no affect on education”. My point is that there will be no decline in education or property values even when spending is reduced 3% contrary to those who think that a 3% decrease in spending will destroy education and property values. I have confidence that the board and administration will find a solution that will have no measurable affect on education.

  13. Citizen One — I don’t understand why you don’t take your strong opinions and participate in the process rather than blog about it. You clearly have a strong vision of how things can improve, and take issue with Kevin and Andrea whenever they try to provide “explanations” — which I agree may be more about why than why not.

    You quote RTSD and LMSD as spending more and not getting more. You ignore where they spend more and simply conclude that they don’t get different. John P earlier told us how much better he believes their technology and facilities are. I would imagine a review of the debt service between the 3 districts would disclose some of the expenditure differences. (IN fact, Radnor delayed their middle school project for a long time, blaming it on the uncertainty about where to build, when it fact they were not legally able to float a bond for the project based on legal debt ceilings.) We know from contracts the LMSD pays 20- 40% more than TE at some levels. Radnor is on their 3rd or 4th superintendent in the past decade, so I think we can see that turnover there may have distorted their costs as well.

    Regardless — John P. says “a deal is a deal” when it comes to the teacher contract, and says TESD was addicted to transfer tax. Kevin explained that transfer tax did mitigate tax increases, but I don’t see the solution being to ignore transfer tax revenue and raise taxes. A deal is a deal doesn’t apply — because this economy is changing all the rules. The only “deal” people are stuck with is that a public school has to educate everywhere at the door — has to bus those people (because we choose to) to the door, has to do a budget once a year for the year, and cannot fire people without spending legal money to do so. Even the notion that to consider demotion and furlough takes a labor lawyer develops that idea.

    So what’s the deal FOR the school district? They don’t get to fix assessments. Assessment appeals are based on numbers produced by a 3rd party, and the district budget forecasts revenue based on those numbers. Those numbers go way down — too bad.

    They don’t get to invest fund balance to maximize returns — bad rates influence earnings. That’s a good rule, by the way, but still means that absent the ability to forecast poor earnings accurately (no hedging), that revenue stream drops.

    The state budget reduces the contribution locally. that revenue stream drops.

    The economy tanks and the typical retirements do not take place, thereby distorting “average salary” numbers with extensive experience on the schedule, but also very expensive teachers “hanging around.” That expense increases.

    Those buses the district provides — fuel surcharge. Shame of them for not predicting $4 a gallon gas.

    The rules of the game in health care are that they negotiate a benefit package, and then how much the teachers will pay for it. The providers raise the costs — so that expense goes up significantly, and that doesn’t change how much the teachers pay for it….

    yadda yadda yadda

    A deal’s a deal?

    1. Lower Merion built a couple of really expensive new schools, way over a hundred million, something we chose not to do. Instead we committed to a single high school and expanded and updated it at a cost of about $30 million. That accounts for a lot of the spending difference right there.

      Radnor was over its debt limit, T/E is nowhere near its debt limit, and still has one of the lowest debt ratios of any school district. Also, the fund balances which resulted from those transfer taxes allowed us to keep a AAA bond rating, which means our bonds cost less interest than that paid by many other school districts.

      1. No, the spending difference between TESD, RTSD and LMSD is due almost entirely to teacher salaries.

        Here are the professional staff per 100 students ratio in 2008-09 (the latest available).

        LM 10.8
        RT 9.9
        TE 8.8

        Here is the average salary of the professional staff

        LM $86K
        RT $79K
        TE $73K

        Multiply those two number together and you get the cost per 100 students for the professional staff’s salary.

        LM $929K
        RT $782K
        TE $642K

        Notice that LM’s professional salary cost, which is a proxy for total compensation costs is 44% higher than TE’s.

        Notice that RT’s professional salary cost, which is a proxy for total compensation costs is 22% higher than TE’s.

        The per student spending difference between the 3 schools is largely due to labor costs. I’m preaching to choir, but to control any district’s budget the board has to control head count and salary.

        1. Hmmm – interesting. I have just one question: Is anyone going to compliment the T/E board for keeping its labor costs 22-44% cheaper than the other two comparable local school districts? CO? JP?

        2. Let’s not forget that professional salary cost = [salary for each cell in the matrix] times [number of staff in that cell]. Since the $ per cell varies by 2X, the distribution of teachers makes a huge difference in total salary cost. The relevant analysis is to put the T/E teacher distribution up against the Radnor salary matrix (new one not yet published on their web site). No 22 – 44% differences there! Also, lest anyone advocate influencing the distribution through retirement incentives, recall that it just transfers the cost from one pocket to another.

        3. The point I was trying to make in my conversation with Mr. Grewell (which I think got lost) was that there is no correlation between spending and education. If one were to plot per student spending on one axis and test scores on another axis for all 60 Philadelphia area school districts one would easily see there is no correlation.

          To make the point, here are 3 districts with comparable SAT test scores and comparable demographics (low poverty, high parental education).

          LM 1783
          RT 1726
          TE 1765

          Here are the per student spending metrics.

          LM $25,170
          RT $18,644
          TE $15,107

          Here are the teachers per 100 student metrics:

          LM 10.8
          RT 9.9
          TE 8.8

          (I agree with Mr. Grewell that he should take pride in cost containment during his tenure. He and I disagree on how to solve the current crisis)

          If spending has little or no effect on academic achievement and if spending is driven largely by teacher compensation THEN one can solve the current budget crisis by furloughing teachers without fear of academic decline.

          Want to get the union leadership’s attention? Start talking about furloughs.

          (and taxpayers in LM should be asking lots of questions)

        4. Citizenone –

          There is no “reply” button on your reply (below) but I just wanted to say thank you for the compliment. It is not often we say positive things about each other on this blog. It is nice once in a while. For my part, I am sorry if my tone has been harsh or sounded personal. You do make some good points and you pretty much stick to arguing the facts, which I appreciate very much.

          We have all beat this topic (and each other) enough. I think I will save further blogging for another day and topic. I just want to leave one final thought. As much as some of you cite some of the decisions of past school boards, and want to hold the current board responsible for doing something about it all, I would encourqage everyone to also remember the Harrisburg piece.

          There is only so much that can be done locally. I would encourage all to put as much pressure on Harrisburg as they do on the local board. This may be an opportunity, perhaps for the first time, to get the legislature to take a serious look at the whole problem.



        5. For Mr. Grewell,

          I enjoy spirited discussions and sometimes the tone turns harsh unintentionally. I know I’m guilty. Regardless, I look forward to more conversations.

          1. CO & Kevin G — I have had several people comment to me that they are learning so much from the issues discussed on Community Matters. Here’s hoping that you both continue to weigh in on on these important topics.

            I finally broke down and ordered business cards for Community Matters last week. People asking me for the blog URL and I thought it would be helpful to have some cards printed. When I was designing the business cards, I struggled with a tag line to represent Community Matters. I decided on — ‘Your Voice Counts . . . Join the Conversation!’ I truly believe that all of our voices count and I want the conversation to continue on Community Matters. And that means all voices!

      2. $100,000,000 each on those high schools.

        Debt service for TE is low for many reasons — including the fact that during the heydey of transfer tax, they paid off debt.

        Glad to see you show that Radnor is more expensive, as Ray has continued to say that Radnor’s salaries lag ours, and that didn’t jibe with my understand of the figures.

        CO — controlling the budget means controlling head count and salary. What cuts do you support? If Johnny doesn’t take AP Latin, he still will sit in a seat in a class that period. And if we take away violin, it may influence our math scores in the next 10 years. And if the class is a little more crowded, our IEPs might get more stringent in requiring special services.

        I’m asking. I don’t know.

  14. There is a lot of grousing here about the budget and the contract that is up in 2012. I would ask — “What is the reserve balances at the moment – and can they be tapped for the shortfall and answer all of the bantering that is going on at the moment.
    Also I find it raher curious that a man that has a 350,000 annual compensation package is recommending that his employees forgive a negotiated contractual increase. So does the Superintendent have the interest of the kids at heart when he slams those that he hired and are delivering the quality education to the students in T/E.

    1. Do you think that the superintendent (whose salary in his contract is $225K) does these meetings on school time? He has no tenure.
      I don’t see that Dr. Waters is asking anyone to do anything. He is paid to run the district and to find ways to meet the Board’s expectations. Where have you seen Dr. Waters SLAM anyone? He is perhaps the most caring TE employee in the mix. Check out what time he arrives on site, and what time he checks out. CEOs get paid more and are responsible for more. Stop with the whining.

      Likewise, how is this idea of foregoing a raise any different than the head of the PSEA offered just 10 days ago….suggesting a pay freeze. Keep a good job, lose a great one. I’ve heard that here before, and it makes more and more sense.

  15. Here’s some additional info regarding the school budget and taxes:
    My previous posting was in response to Kevin’s question for data. Most people have no clue as to how much their school taxes have increased. From 2001 to proposed 2011, mine increase 44.4%. I agree we should look at the increase in students over the same time (approximately 20%) and also compare with the CPI increase (26.6%). However, the school budget increased by 60%. The increased tax base (housing development and turnover) absorbed the difference between the overall 60% cost increase and residents’ 40+% tax increase.

    Going forward, the tax base is projected to be flat so the tax burden will fall on the current property owners. Using the School Board’s conservative estimates for discussion purposes – which includes no salary increases for teachers and administrators after 2011-2012 and realizes budget reduction strategies – T/E faces significant budget shortfalls of $3.6M, $7.7M, $11.8M, and $16M respectively over the next 4 years. Using the fund balance in the first year only and the projected 3.77% tax increase, we would face tax increases of approximately 8.4%, 4.2% and then 4% in each of the following years. The fund balance can help minimize the pain, but it will run out in. Again, this is a baseline estimate with no salary increases and no student enrollment increases. The main driver of the cost increase is the mandatory PSERS expenditure and followed then by the contracted benefits.

    Like many districts, T/E is in a difficult position to maintain/improve educational quality and meet taxpayer expectations of reasonable tax increases. The equitable solution is for all stakeholders to contribute – Admin, Taxpayers, Students, Employees (teachers, custodians, and TENIG)

    T/E is in a relatively good starting position to face these challenges
    – We have a strong reputation, desirable schools, good student results
    – We have a relatively well educated and affluent resident base which we can utilize
    – Our taxes are not currently the highest
    – Admin is working on additional savings opportunities
    – Custodians need to ID savings opportunities so we don’t outsource
    – Contracted workers have had very generous contracts during some very tough economic times and (theoretically) should have some flexibility to reduce costs going forward.
    (Haven’t heard from them – but they should be stepping up.)
    Let’s keep the discussions going.

  16. In response to the previous question regarding annual salary increases.

    Unfortunately, since the era of high inflation, our society expects annual pay increases as a right. Personally, I expect my salary/bonus tied to inflation and my increased value or productivity. I wouldn’t pay someone more just because he has seniority – he has to earn a raise and justify it with real value creation. I would never expect to be paid more (above inflation) for doing the same job every year.

    Applying this to teachers – I honestly don’t know how to determine their value curve. I would assume the first few years generate a strong growth in value which slows and may even diminish over the years. Perhaps more experienced teachers can take on more students, more classes, more challenging students, or mentor the newer teachers to “add value”.

    How much real value does a 14 year teacher provide versus a 10 year teacher? 20 vs. 15? Teachers should be paid a fair salary and feel valued. Yes, turnover has a cost and experience is valued – but at what cost? Annual increases above inflation without value creation are not sustainable. The current economic and political environment may make everyone rethink what we value, how to measure it, and how to compensate it.

  17. All very good points IW. I hesitate to ever share what I did when i was on the board since it’s moot, but I believed then that if we were stuck with a salary schedule, then we needed it to be 35 steps – from start to finish, and the columns should be for real degree attainment, not just credits acquired.

    The 35 steps is predicated on the notion that teachers do expect raises each and every year, and you cannot reduce anyone’s salary…but I’m good with losing the schedule altogether and looking for lots of other ways to evaluate and price the job.

    There are some years where teachers get 20% raises — but that’s because if you don’t add steps, you have a top that grows so the distance between the steps has to grow too.

    A significant issue is benefits — and several people have posited that teachers need to contribute more. I’ll steal the idea from someone earlier to expand on the idea that the teachers need to buy their own benefits. The district can make a fixed allowance available to every employee, regardless of family status or tenure, and the teacher can buy the benefit they choose to purchase. That changes the emphasis from what the district pays to what the employee buys. Right now, that’s simply not part of the discussion. Too “out of the box.”

    The PSEA believes the correct salary schedule has 10 steps – from entry to “career” earnings. That would work if you could accept only COL at the top of the schedule. Experience is rewarded, but I think that the pension plan builds in that reward by allowing you to accrue 2.5% a year for each year worked.

    Why do I say all these things when I wasn’t able to achieve them at the bargaining table? John P has told you I achieved nothing….but hypothetically, perhaps I got farther than that, and just didn’t get all the way. And perhaps the subsequent board didn’t build on what we did, but instead went a diffferent way. Each negotiation is from scratch — but in fact it’s from where you finished…Because you not only need to work with the Union leadership, you need to work with the board. You need to get ratification of the teachers and the school board. It is SO much more difficult than you can imagine, as many of those board members have children with kids in class all day, every day. There is no right answer — and no easy way through the maze. But again, these comments are helpful if you carry them to the meetings and share them with your neighbors. TESD is not broken any more than the USA is. Too many programs, not enough dollars. So where do you cut? We could cut the number of classes kids can take and eliminate a huge payroll expense. We could increase the class size and eliminate several teachers at each level. We could stop providing transportation. We could drop sports. We could cut the guidance staff. Which cuts do you support?

  18. I wish comments were done from top to bottom here — the inserts of comments are almost like interrupting subsequent comments, and I cannot follow them.

    John P. said the union did well during Kevin’s and Andrea’s time on the board, but fortunately for him he doesn’t have to cite any statistics. I have the contract from 2001, and today’s salaries look nothing like those. In fact, 3 years of the salaries are not even in that contract, but rather references to what the salaries will be based on retirements, education, health care costs and more. Not sure how that worked, but it seems that ratification didn’t depend on who made what. Kevin or Andrea might be able to explain that.

    As to the claim that Dr. Waters educated his kids etc. In 2000, Dr. Waters earned $125,000 and a flat percentage for all his benefits of 20%. The money for tuition (he has one kid) was clearly something the current board gave him. I’m guessing they didn’t realize that you cannot give someone something and then take it away, which is why after his son finished college, it got added onto his salary base. that’s on the board, NOT on Dr. Waters.

    But I’ll say again — this is $100 Million dollar company. I’m pretty okay with the CEO making $300,000.

    What I’m not okay about is this hypothetical debate we have here about cutting costs…CO is right — we have to genuinely talk furloughs. Right now, though, I think last in first out restricts the potential savings….

    I see ray stands by his belief that Radno makes more than TE. Again, we can talk about the salary schedules, but they are all dependent on where the teachers are on the schedule. Has anyone done a RTK to get that info from these other districts?

    Does anyone know the total cost of benefits for teachers in any of the districts? Those are real numbers we can work with.

  19. Do you all want furloughs and increased class sizes when the shortfall this year can be more than covered by using Reserve Balances?
    Is that not what a Reserve balance is for???

  20. If you use the reserve this year, it’s the same as kicking the can down the road. The revenue shortfall has to be addressed. If you use $3M reserve this year, then it will be $6 M too low next year. You don’t use a home equity line of credit to pay your mortgage…even though it’s based on having equity.

    1. I think that using the reserve next year if the union is not going to pitch in to help may not be too bad. Thereafter the contract is up and the game changes, especially if there has been not one meaningful helpful proposal from the union. PSERS will still be a big problem, but for that we need a concerted campaign to get Harrisburg to understand that we’re mad at being stuck with their excesses (SERS has exactly the same problem), and we’re not going to take it any more.

      Where are Kampf and Dinniman on this? And don’t tell me “vouchers” and “charter schools”.

  21. Some references to long term debt, so I found what I could:

    Each district files a PDE 2028 preliminary budget to start the discussions.

    For this year:
    LM has a fund balance of $41,718,037 with $14M undesignated. Their annual debt service payment is $27,946,575. The total long term indebtedness in their 2028 is $304,975,000

    Radnor has a fund balance of $14,878421, of which $6,784,801 is unreserved. Their debt service payment is $7,743,620 and $2,177,000 (presumably other types of debt). Their long term indebtedness is $106,991,361.

    TE has a fund balance of $28,079,732, and none of it shows as reserved on the 2028 (though I know that is not accurate as I’ve seen them break down the fund balance for PSERS reserves etc.) Their debt service payment is $5,713,928. I could not find the number for 2012, but the LTD was $49,830,000 on 6/30/11.

    Just for discussion purposes. Not sure exactly what to make of all of it.

    FYI — for the next fiscal year, LMSD’s PDE proposes 23.0270 mills ($178,311,797 local tax), Radnor 21.7003 for $67,839,930.and TESD 18.22 mills for projected revenue (TE does not have this form filed online so this is from budget materials) of $89,214,880.

    1. As might be expected LM has the highest debt service per student. Why? If you hire lots and lots of teachers they have to go somewhere so you build lots of classrooms. Likewise, the more teachers there are, the more administrators, support personnel and equipment are needed. Do a plot of number of teachers vs. total expenditures for the Philadelphia area districts and you’ll find a remarkably straight line with a slope of about $185,000 per teacher.

      Most people think an additional teacher costs $50K (novice starting salary); some think it’s $75K (average salary); some think it’s $100K (average salary + benefits), but few think it’s $185K.

      If you want to control the budget, control the …..

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