Pattye Benson

Community Matters

TESD Budget

TESD Finance Committee Meeting . . . Raise School Taxes vs Eliminating School Buses or Support for Athletics? Notes from Ray Clarke

December 14, 2010
47 Comments

In the midst of packing to leave for a family holiday, Ray Clarke was still able to attend last night’s School Board’s Finance Committee meeting. We are all grateful that Ray attends the meetings and then kindly supplies his notes. Thank you my friend and happy travel! Below are Ray’s notes and I think you find them interesting! With the looming deficit, we are not surprised at the direction of our school taxes . . . but tax increase vs. elimination of school buses or support for athletics? Don’t think those options are likely to be approved.

There was a well-attended meeting of the TESD Finance Committee on Monday night. There was much material to cover, though, and not much time for input from the 30 or so community members present. Since the size of the problem and contentiousness-level (sorry!) of some of the ideas is off the charts, all the Finance Committee could really do was kick the can down the road.

No surprise, the Committee voted to recommend that the full board vote on January 3rd to apply to the state for Exceptions to be able to increase property taxes by 2.8% on top of the Act 1 increase of 1.4% – total 4.2% increase. This would also involve publishing a preliminary budget at that time that shows a budget deficit (after the tax increases) of somewhere in the $4-5 million range (depending on whether any expense reductions are included).

Important to note: this recommendation keeps options open. On the revenue front, the Board could 1) still ask for a higher tax increase through a voter referendum (but could not now ask for an EIT), 2) ask voters to approve any tax increase beyond 1.4% (and not apply for Exceptions), 3) hold the increase to zero or 1.4%. On expenses, there seem to be $1-2 million of “Level 1” and other strategies that could reasonably be implemented for 2011/12. The gap between revenues and expenses that results from the final choices on the above dimensions would be met from the fund balance. Kevin Mahoney and Debbie Bookstaber seemed to be favoring revenue option (2).

A few numbers that caught my eye:

1. This year’s operating statement is being strongly fortified by delinquent tax collections and by reduced PSERS contributions that are each projected to be ~$750,000 favorable to budget, resulting (with other puts and takes) in a reduction of the expected contribution from the fund balance from $1.5 to $2 million.

2. The district is finally publishing and using figures that reflect TEEA increases closer to the effect of the actual salary matrix. The aggregate salary increase for 2011/12 is projected to be 7.33%, and may go higher with more movement across the matrix.

3. The projections use historical rates of increase for medical and prescription costs (10-15% per year); it seems possible that current experience will turn out to be more favorable.

4. The “base case” used for starting points includes the Act 1 tax increase of 1.4%. This is different from other years when the base case is the current tax rate. With no tax increase and no additional expense reductions, next year’s gap would be $8.8 million. This includes $470,000 add back of “one-time” strategies used last year.

5. Options to close the close the gap with no tax increase include things like: elimination of school buses ($2 million) and of support for athletics ($1.5 million), outsourcing custodial services ($0.95 million), further reducing aides ($0.8 million). There was no indication that the Board would seriously consider these, although there was commentary about transportation inefficiencies observed by some Board members. Interesting that the option to hold administration salaries flat (impact $150,000) was included with these “Level 2” strategies. There is also a set of strategies to eliminate teaching positions that if approved by the Education Committee/Board and if staff attrition occurs would eventually save $3 million/year ($525,000 of this will be up for approval at the 1/32011 Board meeting).

6. Going forward, the problem compounds – even with a model that includes no TEEA compensation increases (none!). The issues are flat assessed values, healthcare costs, and PSERS (no, Harrisburg didn’t fix it!). One audience member cited research that predicts that property values and employment don’t reset and resume growth until 2016. That ~$5 million in earned income taxes paid to other jurisdictions seems pretty important, as do healthcare benefit cost-sharing programs and index-linked compensation in future union contracts. Maybe we will continue to look to the state for PSERS help, but there is clearly a lot that can be done at the local level.

There was much talk of the educational value delivered by the T/E program. Dan Waters compared Lower Merion expenditures and Kevin Buraks asked for comparisons of tax rates of neighboring districts (but this blog knows we need to look at rate times assessed value too).

Finally, there was an interesting aside that the Great Valley School district has asked for support for a County-wide property reassessment. Not sure what that means, except at the least a correction of imbalances that have built up over the years.

Hopefully, there were other CM readers at the meeting who can amplify and raise things I’ve missed here.

Tredyffrin Easttown School Board Meeting . . . Notes from Ray Clarke

November 23, 2010
1 Comment

We are very fortunate to have Ray Clarke not only attending the Tredyffrin Easttown School Board meetings but so generously willing to share his notes and thoughts with all us. Last night was no exception — and below are Ray’s notes from the meeting.

I am curious about the IT upgrade proposal. The School Board accepted the proposal from Teranet Consulting Services for Phase I – Part 1 of the IT upgrade, not to exceed $11,625. According to the information on the TESD website, “The consulting services are to survey the network, develop a project plan and establish specs for support and services needed to implement the upgrades recommended by the administration.”

Last week the 4 page proposal from Teranet Consulting Services was part of the agenda package but after last night’s school board meeting the proposal letter is no longer available online. I wish the proposal letter from regarding Teranet was not removed, as I was trying to track down the company ‘Teranet’ and could not find it — only a company out of Chicago. No conspiracy theory on my part, . . . just trying to get further information on this consulting group. If someone from the School Board is reading Community Matters, perhaps they could provide a link to the proposal or a copy of the proposal to me at tredyffrincommunitymatters@gmail.com . Thank you.

Here are some items that caught my eye and ear in Monday’s School Board meeting.

1. The administration reported on proposed changes to the high school schedule and staffing, to implement a 42 period cap for students and to increase teaching classes for teachers.

The cap would be subject to a few exceptions; for example, for co-curricular classes like orchestra and chorus that also meet outside the school day, and for academic support. Much discussion by the Board of whether studio art classes should also be exempt, although these seem to be just like music classes which would be in the cap. Reportedly the cap is highly favored by students. The middle school “advisory period” has proved really popular.

Eliminating the “professional period” for teachers would bring the number of teaching periods for T/E in line with neighboring districts, at the expense of activities that teachers elect to undertake, like “office hours”, club oversight, mentoring, etc.

Note that both these changes will in the long run bring financial benefit to the district, but only after the staff has reduced through attrition.

2. The high school musical will be Phantom of the Opera, for which the rights have just been released to schools. If this comes close to matching the stunning Les Miserables production of five or so years ago, tickets will be hard to come by. Big vocal and technical demands, though, especially for the radio-controlled boat….

3. Under Education, there was discussion of increasing the Highway Safety class size to 60 – maybe not so bad – and teaching AP World History in 9th Grade – a big stretch, it seems to me. Also the changes in World Languages look to be enabling deeper immersion in core languages like Spanish and French. A good development.

4. Under Facilities, the Board was presented with, and approved, only the first part of the consultant proposal for work on the data network upgrade. To me, this constraint is a step in the right direction. It would be nice to see an IT project that is actually driven by user/education requirements and a real business case rather than by the technical/facilities people! We should watch future Facilities Committee meetings closely for the justification of the likely multi-million dollar expenditure.

5. And the Committee to be watched most closely, of course, is the Finance Committee. Kevin Mahoney previewed the December 13th meeting, which will set the stage for the Board’s big tax decision on January 3rd. That next meeting will unveil near term projections including:

  • Updated PSERS costs from Harrisburg’s parting “gift” of HB2497, (a slight reduction over the expected increase for 2011/12 and much bigger benefit for the following few years, as discussed here previously)
  • New estimates for key budget variables (eg interest rates, price increases, compensation increases)
  • Presumably some guess at the attrition-enabled impact of the Education programs
  • Any other budget strategies

An important date for anyone concerned with tax increases.

Tredyffrin’s 2011 Budget Unveiled – No Tax Increase! TESD Finance Comittee News Not as Positive

November 9, 2010
19 Comments

Due to last night’s Board of Supervisors meeting change (due to Election Day), I was unable to attend. However, I have received an update about the township’s proposed 2011 budget. (Here is a link to the proposed 2011 budget). It is my understanding that the proposed budget includes (1) no increase in taxes; (2) no reduction in township services or personnel; and (3) restoring of fire company contributions to 2009 levels. Considering that Lower Merion’s residents are facing a 12.7% tax increase in their 2011 budget, last night’s news is particularly good for Tredyffrin residents!

Having not see the proposed budget and having not attended last night’s supervisors meeting, I do have a question for anyone who did attend — how was the township building’s HVAC capital expense factored in to the 2011 budget? If you recall, there has been much discussion about valve and duct work replacement in the HVAC system and the associated costs. Does anyone have information how the needed HVAC work was treated in the proposed 2011 budget?

Although last night’s supervisors meeting was over by 8:15 PM, it seems that there was more discussion at TESD’s Finance Committee meeting. I counted on my friend, Ray Clarke to provide notes from the meeting and as usual, his detailed notes did not let me down. Thank you Ray!

TESD Finance Committee Notes from Ray Clarke —

Monday’s TESD Finance Committee meeting was largely devoting to laying the groundwork for property tax increases.

This year’s revenues and expenses are largely in balance, with the shortfall in transfer taxes offset by Harrisburg’s deferral of PSERS costs and many smaller ups (eg salaries) and downs (eg FTEs). The projection for next year remains for the moment at a $6.9 million deficit, but a detailed review of the assumptions in the model revealed another $1 million of overly optimistic assumptions: a 1% increase in assessed value and a 2% return on investments. (The $1 million over-generous (in today’s times) transfer tax formula was not discussed). The model will be re-worked with new assumptions (a 0.26% assessment decline and a 1% investment return, not done at the meeting), but it seems clear to me that the deficit is going to be north of $8 million, as discussed here last month.

Leftover 2010/11 budget strategies likely to be implemented in 2011/12 could be worth a benefit of $0.8 million, although they would have to be phased in only as attrition allows.

The Board then reviewed the timetable for the processes required to a) define and request available exceptions to the increase property taxes beyond the Act 1 limit ($1.2 million) and b) prepare a referendum question for a property tax increase beyond the probable [Act 1 + Exception] limit ($2.8 million).

What this means is that the proposed preliminary budget must be discussed at the next Finance Committee meeting on December 13th if the School Board is to vote on requesting exceptions at its January 24th meeting.

If there is any intent to raise taxes above the Act 1 limit, the 2011/12 budget must be adopted by mid-February.

So, the pressure is on in the next couple of months. If the Board voted against even considering whether to ask the community to implement an EIT that 40% are already paying, can they really ask for a referendum to increase property taxes by a greater amount? The alternative is likely to be raiding the General Fund for the $5 million shortfall (bringing it down to $23 million), and thus pushing off the problem until 2012/13, . Likely still OK for the bond rating.

In that year, of course, the PSERS problem will hit hard under the current formula – a $5 – 6 million net cost increase. Plus of course another 4.5% TENIG increase and a new TEEA contract. A deficit, after more property tax increases, of $10 million, say. That would take the fiund balance into tricky territory. There was much discussion of the need for a state fix to PSERS and the spectre of School District bankruptcies (not TESD!) was raised.

Maybe it will actually take defaults and bond-holder restructuring to force the kind of constitutional changes needed to reform current pension plans. Dealing with the problem by squeezing new hires may solve long run accounting, but will there be enough cash to get through the short term, and if we do, how will we be able to attract a next generation of teachers of the needed caliber?

There’s probably more to comment on, but I’ll stop with the interesting sidebar that the average wage cost of a teacher used in calculation of budget strategy savings was raised from $73,000 to $80,000 – a 9.6% increase. This recognizes the actual individual year-on-year salary increase built in to the current contract and hidden in the 5% numbers much publicized officially.

TESD School Board Member Kevin Mahoney Says District Budget Could be 15% Over Budget in 2 Years if Pension Contribution Rates Don’t Change

September 1, 2010
42 Comments

Interesting article in Daily Local newspaper by Dan Kristie (see below). TESD School Board Member Kevin Mahoney says the school budget could be 15% over budget in 2 years if the pension contributions rates don’t change. According to Mahoney, the only way to deal with the increasing pensions costs is to pass a large real estate tax increase! Comments . . .

Retirement System’s Cost to Rise Dramatically Soon

By DAN KRISTIE, Staff Writer

This is a dramatic increase, considering the district’s 2010-11 budget was $203 million and 60 to 70 percent of the district’s expenses are dedicated to salaries and benefits — a percentage that, because of contractual obligations, is difficult to reduce or change.

Schools across the state are facing similar increases in their retirement system contributions, and their budgets are similarly constrained.

School officials in Chester County expect the state Legislature will — somehow — adjust the retirement system so the increases will be less dramatic. But even if reforms are implemented, the retirement system remains dramatically underfunded. Local officials doubt any state-level solution to the PSERS crisis will save their own school districts from all the retirement system-related pain.

Officials are reluctant to speculate about what will be on the chopping block once the increased retirement system contributions come into effect. The consensus, however, is that if the increases are anywhere near as large as projected, educational programs will be affected.

Kevin Mahoney, the chairman of the Tredyffrin/Easttown School Board finance committee, said that if required PSERS contribution rates do not change, his school district in two years will be 15 percent over budget.

This will be the case, Mahoney said, even if Tredyffrin/Easttown sees no other cost increases except for a small increase in the cost of benefits. Mahoney added that the district is required by law to pass a balanced budget.

“You can only do that by increasing class size or eliminating curriculum choice,” Mahoney said. The other way for districts like Tredyffrin/Easttown to deal with the increased PSERS rates would be to pass a large real estate tax increase.

Act 1 is the state law that limits how much school districts can raise property taxes. Act 1, however, allows districts to exceed the limit in order to cover mandated pension contributions. Act 1 also allows districts to hold referendums if they seek to raise taxes beyond the limit.

Local school officials said Act 1 taxpayer referendums are extremely unlikely to pass in Chester County, given the economic climate and the mood of the electorate here. And, officials said, school districts would be unlikely to try to use Act 1 exemptions to pass the PSERS increase off to taxpayers.

“[The West Chester Area School] board has made it pretty clear we’re not taking exceptions,” said Jim Davison, the chairman of that school board’s finance committee. He added that the electorate in West Chester Area would never go for a referendum.

“I have no confidence in a referendum passing in this district,” Davison said. Davison, like Mahoney, said he believes his district’s educational programs could be in jeopardy if the state doesn’t reform the retirement system. He said, however, that West Chester Area will try to make other types of cuts — to facilities budgets and energy use, for example — and hope for the best from the state-level retirement system reform effort.

“But I don’t know if we can make enough of those types of cuts so we don’t impact the classroom,” Davison said. “That’s the million-dollar question. We may end up impacting the classroom — increasing class size, getting rid of programs.”

Bill Fagan, the chairman of the Downingtown Area School District finance committee, used the metaphor of a series of concentric circles to describe how the retirement system crisis might affect his district. “When you look at the concentric circle with the children in the middle, the farther out you get from that circle, those are the types of programs … more likely to be cut,” Fagan said.

Fagan said he was unwilling to speculate about precisely what type of programs would fall on the outer circles. But, he said, he hoped Downingtown Area could deal with the PSERS crisis without negatively impacting the classroom.

The state legislature in July voted to reduce the 2010-11 retirement system employer contribution rate from 8.22 percent to 5.64 percent, meaning school districts will be required to contribute less than expected this year to the fund.

Local officials said that, in the absence of other action, this only delays the retirement system crisis. “The state has been unwilling to change the benefit program,” Mahoney said. “We keep seeing this ski slope curve in front of us, and whenever we get close to it the state has changed the discount rate, which just makes the curb steeper but farther away.”

Ray Clarke Provides Notes from TESD School Board Meeting & Budget Approval Process

June 15, 2010
14 Comments

My friend, Ray Clarke once again has not let us down with his detailed notes and commentary from the TESD School Board meeting. Posting the agenda from last night’s meeting, I noted its 101 pages so I have a feeling that last night was long and tedious. Which makes me all the more grateful that Ray attended, took notes and then provides us with his thoughtful remarks. Thanks Ray!

I was particularly interested to know that PSERS was discussed at the meeting. The large white elephant in the room, we’d all like to hope that PSERS goes away or somehow just self-corrects but we know that’s just wishful thinking. PA House Appropriations Chair Dwight Evan’s proposed legislation addresses PSERS, but appears to be a delay tactic where the major liability to the taxpayers remains. But I suppose one could say his bill is better than nothing . . . which is where we currently are on the subject.

At the end of Ray’s notes he asks for State House candidates Drucker and Kampf to weigh in, but my experience says that will be doubtful. Unfortunately, my discussions with politicians anymore seem to be laced with an ‘it’s off the record’ remark . . . but maybe these candidates will surprise us!

Read over Ray’s comments from the meeting and please provide your thoughts. Any other readers attend the meeting, if so, please weigh in with your comments.

The School Board passed:

  • The 2010/11 budget with a 2.9% property tax increase, as developed and communicated over the past six months
  • Issuance of $23.6 million of bonds at “record low interest rates” – but which will still cost $36.7 million to repay over the next 15 years. Part will be used to advance refund existing bonds, which will save $170,000 next year and have a total net present value savings of $377,000 over the next dozen years. Note that the savings are front-loaded, extra costs come in the out years (see later, re PSERS……)
  • A bid to demolish the ESC, leading to a total project cost of $450,000 – about half the working estimates, which is very good news. The work to take place at the end of the calendar year.
  • Modifications to the K-6 class sizing practice that will save three teaching positions next year and more later, while remaining in accordance with current staffing policy. The implementation enabled by more recent resignations than expected.
  • A bid for printing services to replace the print shop currently housed in the ESC. Important to note that the budget strategy to save $84,000 did not explicitly articulate the $52,000 cost for the outsourced services, although apparently that cost is included in the budget. There was an agonizing 15 minute discussion while the Board and Administration talked all around this without facing up to it.

Interesting update about PSERS: PA House Appropriations Chair Dwight Evans has introduced a bill to implement a Rendell plan to delay the increase in employer (= taxpayer) contributions to teacher and state employee pension plans. Basically this limits the rate of increase of contributions via “collars” on the percentage of payroll that the taxpayer would have to contribute. Here’s an analysis:
http://www.paindependent.com/todays_news/detail/alternate-state-pension-plan-would-cost-8-billion
From some of the numbers floated, I guess this would provide TESD with at least a $5 million annual expense saving (vs the current forecast) in the problem years coming up.

But of course, the liabilities are still out there, so, to quote another website:
http://www.pennsylvaniavotes.org/forum/forums/p/149/300.aspx#300:
“An actuarial note attached to the bill by PERC (the PA Public Employee Retirement Commission) estimates that the higher costs in later year will far outweigh the contribution reductions in earlier years – to the tune of an astonishing $52 billion over 30 years. That is an additional $52 billion that taxpayers – through higher state and school property taxes – will have to fork over to pay off the pension obligations, and this assumes an 8% annual return on investment.”

This bill is being compared to refinancing a mortgage, which is not a bad analogy. Continuing with that: the plan does of course completely fail to address the fact that the principal (the public sector pension liability) vastly exceeds the market value (= pensions valued at private sector levels). Not a thought being given to writing down that liability!

For how long will voters put up with the union stranglehold on the legislature? At some point the economic pain will become overwhelming. What do our current and would-be representatives think about this?

Adoption of Tredyffrin Easttown School District’s 2010-11 Budget Set for Tomorrow Night

June 13, 2010
2 Comments

Tomorrow night, Monday, June 14, the school board will deliver the 2010-11 budget for final approval. The meeting is scheduled for 7:30 PM at Conestoga High School – here is the meeting agenda (word of warning – the agenda is 101 pages so suggest reviewing it online rather than printing!). I don’t think that there are any anticipated surprises to the budget. The school board has done a great job of keeping the public informed during this tedious budget process; I’m sure that there will be a collective sigh of relief from school board member after tomorrow night’s budget vote. I have a conflict with another board meeting tomorrow, but I hope that many residents will attend, and then share their thoughts.

Knowing that tomorrow was closing a chapter on the school district budget, I was interested in an Associated Press education article that was picked up in various newspapers this weekend. The article is about teacher tenure reform and how the Colorado legislature has made a rather bold statement against the teacher union in their state. Colorado is changing the way their teachers retain their jobs; using annual reviews and student performance statistics to make tenure decisions. In case you did not see the article, an excerpt is below.

In bold move, Colorado alters teacher tenure rules

By COLLEEN SLEVIN, Associated Press Writer Colleen Slevin

DENVER – Colorado is changing the rules for how teachers earn and keep the sweeping job protections known as tenure, long considered a political sacred cow around the country. Many education reform advocates consider tenure to be one of the biggest obstacles to improving America’s schools because it makes removing mediocre or even incompetent teachers difficult. Teacher unions, meanwhile, have steadfastly defended tenure for decades.

Colorado’s legislature changed tenure rules despite opposition from the state’s largest teacher’s union, a longtime ally of majority Democrats. Gov. Bill Ritter, also a Democrat, signed the bill into law last month. After the bill survived a filibuster attempt and passed a key House vote, Democratic Rep. Nancy Todd, a 25-year teacher who opposed the measure, broke into tears. “I don’t question your motives,” an emotional Todd said to the bill’s proponents. “But I do want you to hear my heart because my heart is speaking for over 40,000 teachers in the state of Colorado who have been given the message that it is all up to them.”

While other states have tried to modify tenure, Colorado’s law was the boldest education reform in recent memory, according to Kate Walsh, the president of the Washington-based National Council on Teacher Quality, which promotes changing the way teachers are recruited and retained, including holding tenured teachers accountable with annual reviews. The new law requires teachers to be evaluated annually, with at least half of their rating based on whether their students progressed during the school year. Beginning teachers will have to show they’ve boosted student achievement for three straight years to earn tenure.

Teachers could lose tenure if their students don’t show progress for two consecutive years. That won’t be a possibility until 2015, however, because lawmakers slowed down the process under political pressure from the teachers’ union. Teachers can appeal dismissal all the way to the state Supreme Court, and school districts have the burden of proving why they should be terminated.

Under the old system, teachers simply had to work for three years to gain tenure, the typical wait around the country.

Every state but Wisconsin has some form of tenure. The protections were intended to protect teachers from being fired because of their politics, religion or other arbitrary reasons. On average, school districts across the country dismiss 2.1 percent of teachers annually, generally for bad conduct rather than performance.

Colorado’s measure is a tribute to the tenacity of freshman Democratic state Sen. Michael Johnston, a former Teach for America teacher, principal and Obama education adviser. The 35-year-old Harvard- and Yale-trained lawyer was appointed to represent a largely minority Denver district that has seen an influx of more white residents because of redevelopment of the city’s former airport. He successfully fought changes to the bill that would have eased expectations for teachers with traditionally low performing students.

Although various states have responded to the lure of federal money by moving to tie teacher evaluations to student performance, no other state specifically changed its tenure laws as Colorado did.

Many teachers and some education experts argue that tenure reform is unnecessary. Margaret Bobb, an earth science teacher at Denver’s East High School, said bad teachers are often quietly coached out of their jobs by administrators, avoiding the protracted tenure dismissal process. She contends tenure is still needed to prevent good teachers from being dismissed for running afoul of administrators and to prevent experienced — and more expensive — teachers from being let go by cash-strapped districts.

“Education is not just you and your class. It’s not an individual activity. If you’re doing your best, it’s a system you’re a part of,” Bobb said.

Brandywine Conservancy Easement on Hawkins Property Cannot be ‘Undone’

June 3, 2010
16 Comments

I continue to receive interesting information on the Agnes Irwin’s proposed land development plan in of playing fields on the Hawkins property in Berwyn. As I have previously explained, Berwyn neighbors to the Hawkins property have received anonymous emails and letters from supporters of Irwin’s proposed playing fields. Some of the communication makes claims of other possible buyers, including the Tredyffrin Easttown School District. Much discussion has circled around the Brandywine Conservancy easement and the suggestion by some that the conservancy easement could be broken to allow for other usage of the land.

This may help to set the record straight. I have received a copy of a letter dated March 22, 2010 from Sherri Evans-Stanton, Director of Brandywine Conservancy to the Board of Supervisors, Easttown Township. In reading the letter, there should be no misunderstanding on the issue of the easement protection of the Hawkins property – see excerpt below:

A conservation easement is a restrictive covenant voluntarily placed on land which allows a legally qualified conservation organization (in this case, the Brandywine Conservancy) to enforce it. Conservation easements usually run with the land in perpetuity, as does the Hawkins easement. For many years, conservation easements have been recognized and enforced by the Pennsylvania courts as valid property restrictions, and the Pennsylvania legislature codified these legal principles in 2001 in the Pennsylvania Conservation and Preservation Easements Act (Act 29 of 2001).

The Brandywine Conservancy has over forty years of experience upholding and defending the conservation easements it holds and will continue to do so. It is simply not true (as we have been hearing) that the easement can simply be ignored or “undone” and a housing development, large or small, built on the property.

On the subject of Tredyffrin Easttown School District’s interest in the Hawkins property, I received some new information. I was told that this information is widely known; however it was news to me. Apparently the T/E School Board passed on buying the Hawkins property because they did not want to challenge the open space easements. (In order to build a school would have required the School Board to challenge the conservancy easement). I had previously suggested that the current school budget situation would not have been financially possible at this time. Apparently I stand corrected. I have been told that the School Board could afford to purchase the Hawkins property as the District has a AAA bond rating, but it was determined that the land was not suitable for a school (due to the restrictions associated with the property).

If the T/E School District did not think that T/E could change the easements on the Hawkins property, . . . how is that Agnes Irwin School thinks it has any better chance? Also, remember that our School Board has the ability to condemn property for government need whereas Agnes Irwin’s does not enjoy that same ability.

Proposed 2010-11 School District Budget . . . Ray Clarke’s Comments on School Board Meeting

May 11, 2010
10 Comments

Last night was TESD School Board meeting with discussion of the proposed 2010-11 district budget as the major agenda item. I was attending a DuPortail House Board meeting and as always, I thank my friend Ray Clarke for attending the School Board meeting and then for sharing his notes with us. For Ray and any other who attended – I am curious what was the resident turnout like last night? Staff, teachers, parents in attendance? Many comments from the audience members?

It looks like the unfunded pension program (PSERS) problem is looming ever closer on the horizon . . . wonder if there is time before the Primary next week to have a statement from the local candidates on their proposed solution to the problem? If not before the Primary Election, I do think that we need to have public dialogue before the November General Election and know where the candidates stand on this important economic issue facing the Commonwealth.

Update from the School Board meeting budget discussion

First, a quick appreciation for District Business Manager Art McDonnell. His presentation tonight was very clear. He always seems to be on top of the details, and the budget process has chewed through a lot of those details.

The proposed budget passed with one change: removal of the $80,000 of revenue estimate for the Activity Fee. The consensus being that there is not enough time to sort through and socialize all the details for the upcoming year, but that such a fee should be considered for 2011/12. The lost $80,000 will come from the fund balance.

Board members Brake and Bookstaber proposed amendments that would slightly lower the non-contract compensation increase (to 2%) and the property tax increase (to 2.5%), but received no other votes. I’m not sure that I buy the arguments against the former, but I can see how the $7 million deficit for 2011/12 would weigh on the decision to tax at the Act 1 index. That shows how important it was for the Board to vote not to apply for exceptions back in January, forcing the expense reductions.

The good news is that Moodys affirmed the district’s AAA rating, even considering the dire financial outlook for 2011/12 and especially beyond. Now seems to be a good time to borrow what we can to assure funding to keep the facilities going, while the District tries to figure out how to offset the remaining contracted salary increases and benefits entitlements. Beyond that, hopefully new contracts will reflect the community’s own compensation experience and ability to pay. The notion of above-inflation compounded annual salary level and tenure increases is – to use a word popularized at the meeting – unsustainable.

Those actions will not address the retirement plan problem, though – a net $6 million contribution increase in 2012/13 and another $3 million on top of that in 2013/14 – by which time the fund balance would be wiped out, even with inflation-linked tax increases.

This leads to one of the most critical questions for our prospective state representatives: what – specifically – would you propose to address the unfunded pension liability? What changes in benefits? What changes in contributions, employer and employee? What aid to school districts, and from what source? Let’s hear from them.

Reminder: School Board to Vote on 2010-11 Proposed Final Budget on Monday, May 10

May 8, 2010
7 Comments

This is a reminder that the T/E School Board will be voting on the 2010-11 proposed final budget at its regular meeting this Monday, May 10 at 7:30 PM, Conestoga HS; here is the agenda. The T/E School Board Finance Committee met on May 3 to discuss the 2010-11 budget. After discussing the tax rate and selected budget strategies, the Committee recommended a preliminary budget that included a tax increase of 2.9%, which results in $2.5 million in revenue, $5.3 million in expense reductions and $1.3 million in fund balance contribution to address the $9.25 million gap between revenues and expenditures. This meeting is one of the few remaining opportunities for the public to weigh in on the mix of program cuts, tax increase, expense increases and reductions, user fee increases and fund balance use that are being proposed to balance the 2010-11 budget. The proposed tax increase is 0.5 mills, and cost the homeowner an average of $128. The final adoption of the budget will be on June 14.

I hate to be repetitive, but much like Tredyffrin Township’s 2010 budget, the 2010-11 TESD budget will squeak by, with minimal effect to the taxpayer. The greater, more significant problem will occur with the township’s 2011 budget and the school district’s 2011-12 budget. During the next 6 months, it is doubtful that the economic climate in the country will dramatically improve, so hard decisions await.

Final Countdown to TESD’s Proposed School Year 2010-11 Budget . . . Notes from Ray Clarke

May 4, 2010
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Much appreciation to Ray Clarke for attending last night’s TESD Finance Committee and also for his thoughtful and well-written notes. I see that the EIT discussion continues . . . and also I’m glad to see that the Board is looking beyond the 2010-11 school year in their budget discussions. Here are Ray’s notes:

The TESD Finance Committee was a smooth affair tonight. Bottom line: the proposed 2010/11 budget to be taken to the full Board next Monday will call for a 2.9%, $2.5 million, property tax increase, $5.3 million of expense cuts/revenue programs, $1.4 million of fund balance contribution, plus a Contingency (which would if needed come from the Fund Balance) of $1.8 million. At $29 million, the year-end fund balance will be in good shape to support this.

The full board was present, but only the Finance Committee voted on the few issues teed up for debate. Debbie Bookstaber continued to be the greatest advocate for fiscal restraint, supporting a lower tax increase and no administration pay increases (the vote was for an increase of 2.9%), and also supporting administration proposals judged to improve the Special Education offering at lower cost – a point she won when the $300,000 cost was recommended only as an addition to the Contingency.

There was lively discussion on the pros and cons of activity fees. Kevin Buraks was a vocal supporter, citing as a benchmark the cost of non-school travel and other sports programs. I liked Ann Crowley’s idea of a all-student “Activity Fee”, along the lines of college activity fees. Participation in quality extra-curriculars is important, and a small fee which is spread across the student body can generate meaningful revenue, with no debate about what activities to include and with no direct link that would discourage participation, while users of the services will bear a small part of the cost. In the end, the administration was charged with coming up with $80,000 in fees, probably from the 1500 Middle and High Schoolers that participate in at least one sport, while perhaps the Crowley idea may be studied for future years..

I was pleased to see that there was full acknowledgment that this budget solves only the coming year’s problem. In the following year, the gap is back up to $7 million. Revenues will be flat – an assumed 1% assessed value increase offset by a decline in federal stimulus funds. So cost increases go straight to the deficit. $3 million in salaries, $2 million in benefits (net PSERS, and healthcare up 10-15%), $1 million (~5%) increases in other expenses and ~$1 million in property expense and fund balance transfers that I guess restore one time cuts from 2010/11. And that $7 million deficit is after an assumed $400,000 increase in investment earnings but no increase in debt service (capitalized interest?).

We might expect a similar plan of attack on the $7 million next year – program cuts, fund balance and taxes. Administration has proposed $2.7 million of program changes which are being studied under the Education Committee. As for taxes, maybe property owners will not be the only well to draw on. (I think I heard a comment that the Act 1 index will allow a property tax increase of only $1.7 million (2%) for 2011/12 (absent Exceptions)). The Committee handed out a draft timeline for discussion of an EIT that could reclaim taxes already paid and going outside T/E. On that, the first step for a July 2011 implementation would be a September 13, 2010 Finance Committee meeting.

All in all, it seems the Administration and Board are working diligently to maximize the value from the mix of cards in their hand and on the table

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