Pattye Benson

Community Matters

Chester County Intermediate Unit

Proposed 6% Tax Increase in T/E School District – the Largest in Decades! Is It Possible that an Accounting “Timing” Error Could Change the Outcome for Homeowners?

Did you know that as T/E School District homeowners we are in line for the largest yearly tax increase for decades!

As it now stands, our school board has targeted us for a 6% tax increase! In December, as the preliminary budget for 2019-20 was in the early stages of preparation, the discussion indicated a possible tax increase of 6.1% but the Board assured us that they would work to bring down the increase. Three plus months later, the projected tax increase remains at 6% although at last night’s school board meeting, we were again told that the board is working to bring the number down.

The question is “why” the proposed staggering increase; the largest in decades! And to be clear, the proposed tax increase is not based on the Conestoga HS expansion plan – that capital project will be funded separately through new bond initiatives. Which brings me back to the question, WHY this looming large tax increase?

As we learned from Ray Clarke at the school board meeting last night, there appears to be an explanation (and suggested solution) for the proposed tax increase. And should the school board act on Mr. Clarke’s findings, it could reduce the proposed increase significantly. Taxpayers could see the proposed tax increase lowered by as much as 50%.

Mr. Clarke opened his remarks with the following:

  • There is ample public evidence that the allowable 6% tax increase presented in the preliminary budget is in error due to an accounting timing issue
  • The actual allowable tax increase is, most likely, much less
  • It would be in the best interests of the public, the Board and the Administration to address this issue in a prompt, transparent manner

( Click here to read complete Ray Clarke Special Ed statement)

According to information received at the District’s Finance Committee meeting of March 11, the accounting problem stems from unpaid invoice(s) of $1 million+ that were received in the 2016-17 year. The invoice(s) from the Chester County Intermediate Unit (CCIU) were paid, and more importantly accounted for, during the 2017-18 year.

The Special Ed exception for tax purposes is based on increases in annual expenditures; so getting the year correct is extremely important. By moving the Special Ed expense from 2016-17 to the following year (albeit by error/accident) causes a false reading by inaccurately inflating the expenses in 2017-18.

After Mr. Clarke read his statement, Neal Culligan continued with remarks imploring the board to seek further review before imposing a 6% tax increase. I struggled to understand how the District can “miss” paying over a million dollars in invoice(s) and asked the Board for an explanation – how did this happen, whom was responsible and when did they find out? My questions were unanswered.

Mr. Clarke contacted Pennsylvania Department of Education and received copies of the District’s 2019-20 “Special Ed Expenditures” and signed “Summary of Referendum Expenditures filings. And although the District has known about the accounting “timing” issue since sometime before the March 11th Finance Committee meeting, the State has not been notified or the filings correctly updated.

As I stated at the meeting, we all make mistakes – but it’s all about owning your mistake when it’s identified, correcting it and moving on. Shouldn’t that apply to the School Board and the Administration – they knew there was an accounting “timing” issue; an error that could impact the proposed tax increase. Who is responsible and where is the accountability? Why don’t they do something?

Sadly, the takeaway from some School Board members re the accounting “timing” issue was simply to push back, become defensive and claim that they have been completely transparent. What’s that line from Hamlet, “The lady doth protest too much, methinks”?

So what does the man with the District’s oversight of the financials, Business Manager Art McDonnell, have to say on this accounting matter? Remarkably, he disregards the analysis by Mr. Clarke, indicating that the “timing” of the Special Ed expenses and subsequent payment was inconsequential and; therefore, making no difference in the end result.

When called upon to comment, McDonnell further stated that if anything, the taxpayers would simply have paid a larger tax increase last year if the Special Ed expense and payment had not been delayed to CCIU.

This is crazy talk – and certainly doesn’t sound like sound accounting practice! It seems to me that if the District erroneously missed Special Ed expenses and a million dollar plus payment to CCIU one year, plays catch up the next year, that this practice skews the resulting financials of those effected years and for future years.

As a very wise former school board director stated, “The legislature passed Act 1 of 2006 specifically to limit a school board’s power to tax the electorate unchecked.” Our school board knew about this accounting error at the March 11th Finance Committee meeting and residents questioned them about the issue at last night’s School Board meeting – are they not required to do the right thing? At a minimum, this should require immediate financial review from an independent source and then take necessary action as required, including notifying the Pennsylvania Department of Education..

We elected our school board directors to provide oversight; with independent thought and transparency.

2016 brings new leadership to Tredyffrin Twp, 4.3% tax increase in preliminary TESD budget and a Chester County Substitute Teacher Job Fair

Belated Happy New Year! Waking up to 23 degree temperatures today reminds us that we are not going to escape the winter after all. Having recently returned from holidays spent in South Carolina with balmy, sunny 83 temperatures makes the arctic cold even harder to take!

Since the start of the New Year, here are a couple of noteworthy items. The 2016 reorganization of Tredyffrin Township’s Board of Supervisors came with two surprises – recently elected at-large supervisors Trip Lukens and Sean Moir were elected chair and vice chair, respectively of the board. Except for, also recently elected, supervisor Heather Greenberg, all other currently serving supervisors had served on the BOS longer than these two newly elected supervisors. But Lukens isn’t new to leadership roles in the township, having served previously as a member and chair of Tredyffrin’s Planning Commission. Congratulations to Lukens and Moir on the vote of confidence from their fellow supervisors and best wishes in their new positions!

The TE School District held their first school board meeting of 2016 last week.The Board unanimously adopted the 2016-17 preliminary budget which contains a 4.3% tax increase. The Board decided to “keep their options open” by approving a preliminary budget with the Act 1 index of 2.4% and allowable exceptions to Act 1 of 1.9% to close the project budget deficit of $4.75 million. It should be noted that Tredyffrin Township recently passed their 2016 budget with a zero percent tax increase.

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

• 2015-16: 3.81%
• 2014-15: 3.4%
• 2013-14: 1.7%
• 2012-13: 3.3%
• 2011-12: 3.77%
• 2010-11: 2.9%
• 2009-10: 2.95%
• 2008-09: 4.37%
• 2007-08: 3.37%
• 2006-07: 3.90%
• 2005-06: 1.40%
• 2004-05: Zero Tax Increase

Although the adoption of the 2016-17 preliminary budget does not commit the Board to a tax increase, I cannot remember the last time the Board passed a preliminary budget with a tax increase and then decreased the tax increase in the final approved budget. Because the District does not allow the archive of meeting minutes on the website beyond the current year, there is no way to access this type of information, short of a ‘right-to-know’ request. (Here’s a suggestion/request for the Public Information committee – please keep the minutes for all school board meetings on the District website; a RTK should not be a requirement to access public information.)

I want to note that although the Board voted 9-0 to accept the preliminary budget, both Scott Dorsey (D) and Ed Sweeney (R) voiced their objection to the tax increase and do not want to see a 4.3% tax increase in the final budget. It was refreshing that newly elected Board member Robert Hotinski (D) spoke up about the way the budget information is presented — asking for more details on the line items from the District’s business manager Art McDonnell. Finance and Facilities Chair Virginia Lastner (R) encouraged the public to attend upcoming finance meetings and budget workshops and to look for solutions together with the District. 2016 is a new year and maybe the tides are turning …

I received a request from the staff of the Chester County Intermediate Unit to advertise the Chester County Substitute Teacher Job Fair, Thursday, January 14, 4-7 PM. The Job Fair will be held at the CCIU office, 455 Boot Road, Downingtown, PA. Representatives for all the public school districts in Chester County will be on hand to discuss current substitute teacher job openings and to accept applications and resumes. The CCIU press release states, “… According to the PA Department of Education, the current supply of available teachers, including substitutes, is not keeping up with the growing demand.”

Walk-ins are welcome at the job fair, but interested individuals are invited to preregister for the event online:

Although the Chester County Substitute Teacher Job Fair is for candidates seeking positions in all the Chester County public school districts, I post this notice in hopes of helping some of the experienced and educated aides and paraeducators whose jobs were outsourced by Tredyffrin Easttown School District.

Chester County Substitute Teacher Job Fair flyer

A Perfect Storm for Chester County’s 2010-11 School District Budgets

On the eve of TESD’s important Finance Committee Meeting, I found this timely article by Mary Jean Curley, PR director for the Chester County Intermediate Unit particularly apropos. We are focused on our District’s budget; can we take solace in knowing that we are not alone?

In the past, readers have taken issue with my reference to the current school budget situation as a crisis, but I believe this is just the beginning. Read Mary Jean’s article and look at the statistics . . . at a minimum, we are on the brink of a crisis. Dramatic cuts were required to balance the township budget for 2010; and I think tomorrow night we will see the school district forced to likewise make some difficult decisions on programming cuts. Whether it is the township budget or the school district budget, as difficult as this year has been for budgets and necessary cuts, it’s going to be 2011-12 budget situation that is going to challenge all of us. Creative suggestions and visionary ideas will be required from both the township and school boards.

Chesco schools struggling to balance budgets with needs

By Mary Jeanne Curley is public relations director for the Chester County Intermediate Unit.

From Avon Grove to West Chester and everywhere in between, Chester County school districts are struggling to balance students’ needs and state mandates with taxpayers’ pocketbooks.

“There are a number of factors that are contributing to the shortfall in school budgets across the county and, in fact, the state,” said Joseph P. Lubitsky, director of administrative services for the Chester County Intermediate Unit. “The economy is a major factor; both interest revenue and tax revenue are down as a result of the recession and the bottoming out of the housing market.”Controlling health care costs, which even in a good economy is a challenge, is exacerbated in this economy, and now we are also contending with dramatic increases in the school employee retirement system,” he continued.

While local school districts all have unique situations, this year they share their budget woes and the cause of those woes, namely increased contributions to the Pennsylvania School Employees Retirement System, higher health care costs, reduced interest earnings, declines in real estate taxes and the costs of unfunded state mandates.

At the top of every district’s list is the increase to the employee retirement system contribution. The local contribution will increase 72 percent this year and continue to increase every year until 2015. According to the retirement system’s projected employer rate, Pennsylvania school districts’ contribution rates will go from 8.22 percent this year to 10.59 percent next year and to 29.55 percent in 2012. The rates will then level off at 33.6 percent in 2015 and remain above 30 percent until 2020. For the Intermediate Unit, this means going from $2.5 million this year to $4.4 million next year and to $20.5 million in 2015.

The Great Valley School District, which recently passed a resolution urging legislative action for school employee pension reform, estimates pension contributions will cost the district an additional $12 million over the next five years, beginning with a $1.3 million increase next year.

The Great Valley School Board also voted not to apply to the state for an exception to raise taxes above the 2.9 percent index allotted under state Act 1. Contributions to the employee pension fund and special education are two costs for which school districts are allowed to apply for an exception.

The Great Valley School District is not alone in voting to remain within the confines of the Act 1 index. Avon Grove, Coatesville Area, Downingtown Area, Oxford Area, Tredyffrin/Easttown and other school districts have taken similar positions. The Chester County Intermediate Unit lacks taxing powers of its own and relies on its funding from its member school districts.

Health care costs also continue to spiral out of control. For example, medical renewal costs in the Kennett Consolidated School District are expected to increase by 40 percent, in Owen J. Roberts by 39 percent and in Phoenixville Area schools by 27 percent.

In addition, while special education costs continue to rise, state and federal support for the mandated programs has steadily decreased as an overall percentage of support. Special education costs have risen at the Great Valley School District from $2.8 million in 1999 to a projected $10.1 million next year. Meanwhile, state and federal funding rose from $1.1 million in 1999 to $1.5 million for 2010-11.

State support has gone from nearly 40 percent to less than 15 percent of the district’s total budget.These costs alone would strain a district’s budget, but coupled with decreased interest and tax revenue, they have created a perfect storm for school district budgets in the 2010-11 school year.

The tax base in Chester County has steadily eroded over the past seven years, decreasing by $12 million in the past school year alone. School districts hardest hit include Avon Grove, Downingtown Area, Great Valley, Kennett, Oxford Area, Tredyffrin/Easttown, Unionville and West Chester Area. Tax revenue has decreased $654,023 for Kennett, $218,898 for Great Valley, $184,000 for Octorara and $180,442 for Oxford.

Interest earnings are down as well. The Intermediate Unit’s interest earnings are down from $1.2 million in 2007 to a projected $627,991 next year.

Similarly, Great Valley predicts interest revenue for 2010-11 will fall from $1.9 million in 2007 to only $90,000 next school year, or an annual loss of nearly $2 million in revenue. The decline has been sharp over the past three years, with last year’s interest only generating $390,169, a net loss of $640,182 from 2008-09.

All of these factors are leaving school districts with three options: cuts costs, raise taxes, or find alternative sources of revenue. With many county schools boards opting not to petition the state for exceptions that would allow them to raise taxes above the state-approved index, all districts are looking at a combination of these three options.

For example, to close a $4.9 million budget gap, the West Chester Area School District eliminated 19 staff positions and put stadium lights on hold, and it may change school bell schedules, consolidate bus routes, raise student parking fees and increase taxes 2.9 percent.Several school districts are looking at charging facility rental rates for the first time or increasing existing rates.

In the Great Valley School District for the 2009-10 school year, the school board eliminated nine full-time positions and 12 teacher extra-duty positions and reduced summer workers by 50 percent, theme readers by 50 percent and instructional aide by 3,500 hours.

For the 2010-11 budget, just to maintain the status quo, Great Valley officials will need to cut expenditures by $1,645,933 and raise taxes 2.9 percent. The Chester County Intermediate Unit has deferred hiring staff and has eliminated 18 positions. It has reduced energy and operational costs by $268,000 a year. In addition, the Intermediate Unit continues to work with the school districts to save money through joint purchasing, in which participating schools realize an annual cost reduction of $2 million by bidding for supplies jointly.

The Intermediate Unit’s self-insured medical program continues to contain health care costs, and while the Blue Cross fully insured program saw an average rate increase of 30.88 percent, the Intermediate Unit’s rate increase is projected to rise just 2 percent next year.

Although not bound by the Act 1 index, the Intermediate Unit has made a commitment to its member school districts not to raise costs above the average county index and has kept its member core contribution rate unchanged. The Intermediate Unit is also working with school districts to find alternative funding sources. It recovered $2.9 million in costs for Chester County school districts through medical reimbursements for services provided to special education students. Districts are responsible for these costs as part of the students’ educational programs.

Many school districts are requesting community input to help them through this fiscal crisis and have extensive budget information on their Web sites. To find out more about a school district’s budget process, visit the district’s individual Web site. A link to all Chester County school district Web sites can be found at (click on the “Find Your School District” link).

Mary Jeanne Curley is public relations director for the Chester County Intermediate Unit.

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