Pattye Benson

Community Matters


Tredyffrin’s Board of Supervisors – ‘Team Players’ and TESD Budget Discussions Get Underway

As is often the case, Tredyffrin’s Board of Supervisors meeting conflicted with the TESD Board meeting last night. I attended the BOS meeting and Ray Clarke attended the TESD meeting and graciously offered his comments from the meeting.

The Board of Supervisors meeting saw the swearing-in of four supervisors — Paul Olson and JD DiBuonaventuro returning for new 4-year terms, Mike Heaberg starting his first full-term and newly elected Kristen Mayock joining them. Although rumored over the past few weeks, it was probably still a surprise to some that Michelle Kichline was named ‘Chair’ and JD as ‘Vice Chair’ of the Board of Supervisors. The board members themselves nominate and vote on these positions and traditionally, these positions go to the longer serving members of the Board of Supervisors. However, in this case, Michelle received the unanimous support of her fellow board members for the chair position after serving only 2 years as a supervisor and neither as a vice chair. Congratulations to her and to JD as Vice Chair.

It was obvious from the moment that Michelle was named chair that there is going to be a distinctly different tone to the Board of Supervisors – starting with gifts for freshmen supervisor Kristen Mayock and for Tom Hogan, Tredyffrin Township’s former solicitor and newly elected Chester County District Attorney.

Michelle made a special point in describing the qualifications and strengths of each of her fellow supervisors and described the Board of Supervisors as members of the ‘team’ and here to serve all the people. This team approach and sense of community could provide a winning combination for moving the township forward in 2012. There have been some missteps by Board members in the past and we know the Board is faced with some unfinished business from 2011, so here’s hoping this upward movement and spirit of cooperation continues.

As I said, Ray Clarke attended the TESD meeting last night and provides us with some interesting notes below. He mentions the Catholic Schoolclosings and the possible effect this could have on T/E school district. I was surprised to learn that T/E has 600 students who attend Catholic Schools. My guess is that the Catholic school closings may not affect many of these students as it is unlikely that schools which typically draw TESD students like Villa Maria, St. Monica’s, Devon Prep, Malvern Prep and Archbishop Carroll would be on the ‘closing school list’. Nevertheless, this is another dynamic to consider in the school district budget discussions.

TESD Notes from Ray Clarke:

A fair turnout (~50?) for the TESD Board meeting on Monday. They voted 7-2 to apply for Exceptions that allow a property tax increase of 1.6% on top of the 1.7% increase allowed by the Act 1 Index. Much lip service paid to the fact that this was not a vote to actually increase taxes by that amount, although we do know how that works. Brake and Mercogliano were the two dissenters, with the former articulating the danger of the incremental policy-making that will just give us over the next ten years the 50% tax increase we had over the last ten. He wants to give taxpayers a break. He was also the only one to give a realistic assessment ofHarrisburg’s view of PSERS: the options are to increase taxes or reduce benefits – and neither is going to get any political traction in the near future.

Let’s think about PSERS for a minute, because no one seems to be being objective here.

The state allows school districts to increase taxes to fund the increase in contribution to PSERS. Next year that tax increase is $0.94 million, the net PSERS expense increase about $1.1 million – pretty much one for one. That tax increase is about 1%. All the other cost increases ($4 to $5 million in 2012/13) are for things other than PSERS, yet all the school board could do was blame Harrisburg. The PSERS increases for the next two years are a little more (about $1.3 million a year), and then fall $0.7 million in 2015/16, then little changed for a decade or so, before tapering off. We can deal with a $4.4 million net increase in PSERS costs with a 5% tax increase over 4 years, and if we use the $15 million of fund balance set aside for that purpose, we can spread out that tax increase over twice the number of years.

No one wants to think objectively and long term likes this, because that would force attention on the issues within the District’s control:

  • Pay salaries and benefits that the taxpayers can afford
  • Get really rigorous with suppliers of all purchased supplies and services
  • Manage the cost of in-house services (like janitorial, maybe maintenance?) to market levels
  • Accelerate the hard look at nice-to-have things like the extra paid in-service days

Much commentary that about the cuts in FTEs, programs and costs in recent years, but none about where all the money saved has actually gone: employee compensation (and not yet PSERS, either).

It’s time to stop passing the buck!

One factor outside the district’s control, and which could have a major impact on costs: which Catholic schools will the closed, and what will that mean for TE enrollment? There are currently about 600 students living in TE that attend Catholic schools. It was stated that there is to be an announcement of the school closings on Friday.

Another observation: new Board member Kris Graham was a consistent pro-teacher advocate, and tried to invoke the hoary old chestnut that the homestead exemption offsets the property tax increase! Not recognizing that the exemption actually makes the property tax even more regressive. Because the exemption is a fixed amount, unchanged for many years now, the lower the assessed value the greater the effect of a given millage increase. The 3.3% tax increase is actually 3.5% for a home assessed at $150,000 that claims the homestead exemption.

And finally: it was notable that Mike Broadhurst showed his hand, advocating for keeping the janitorial out-sourcing option on the table, not “going too far” with tax increases so that “Harrisburg’s hand will be forced again”, questioning many of the projection model assumptions, and drawing attention to the hardly-new-news that the employee benefit cost is $1,040 per year for a family (but not completing the calculation to show that this is merely 1.2% of the median $85,000 teacher salary).

Loss of $570K in T/E Real Estate Appeals & Outsourcing of Custodial Services Remains a Strategy Option for TESD

There was a T/E Finance Committee meeting last night and although the entire school board was present, the Finance Committee is Betsy Fadem (Chair), Kevin Buraks, Jim Bruce and Rich Brake.

There were several interesting discussion items for me – Ray Clarke’s notes follow mine. There was much discussion about the school district’s decreasing real estate tax revenue. We learned that for 2011, there have been 147 successful residential real estate assessment appeals ($217K) and 41 successful commercial appeals ($352K) for a combined total of $570K in lost tax revenue. The largest commercial appeal was by Vanguard who was successful in five separate appeals. There was discussion about the school districting appealing the decisions on some of these successful commercial appeals. The example of Mealey’s Furniture and Big Lots was used – where a commercial real estate owner could have appealed their tax assessment while their real estate was vacant, received a lower assessment and then the property is leased and its value goes back up (but the commercial owner remains at the lower assessed rate). The case could be made by the school district that the assessed value of the commercial real estate has gone up and they should now pay more.

Appealing some of these commercial decisions could be a way to generate additional revenue for the school district. However, what was unclear was the ‘cost’ of these appeals to the school district (financial and staff time). In Harrisburg, there is discussion on requiring nonprofits organizations to pay real estate taxes. This was not discussed at last night’s meeting, but should this change occur, there is some new tax revenue to the school district. I wonder what kind of revenue could be generated from real estate owned by nonprofit organizations.

Another possibility for generating school district revenue was to shorten number of days on the school calendar. Apparently, TESD’s current school year is 9 days longer than the state requirement. For each non-teaching day, the district would save $200K in teacher and benefit costs. Shortening the school year by 9 days would yield $1.8 million in district savings. This is an interesting cost-savings approach and clearly the district cannot cut all 9 days. Some of those extra days are in the calendar if snow days require their use. But does it need to be 9 extra days — the last few days of a school year are not productive so what about cutting those half-days at the end of the year from the calendar.

(Note: It is not entirely clear to Ray Clarke and myself re the 9 days. Ray understood that strategy had to do with the 9 in-service days of the teachers ‘only’ and decreasing those in-service teacher days versus my understanding that the strategy involved decreasing the number of calendar school days. Ray has a call in to the school district for clarification and I will update when the information is available.)

A ‘new’ budget strategy under review for FY2012-13 was listed as ‘reduce equipment budget’ – $300K. I was clueless what ‘equipment’ this referred to – turns out the administration is suggesting reducing IT equipment purchases for the district. This is confusing because computer equipment was on the chopping block for the FY2011-12 budget and then when Corbett returned funding to the school districts (TESD received $1.3 million) the T/E school board discussed the putting the computer equipment back into the budget. Ultimately, the $1.3 million was added to the fund balance. So now here we are again with another round with IT equipment and a strategy to reduce the budget by $300K. Where is the school district’s long-range technology strategy? Taking technology ‘on and off’ the budget each year is not a strategy!

The outsourcing of the custodial services carried over from last year’s budget strategies and at $950K remains the most significant line listing of possible savings. The school district was able to save the in-house custodial services for the FY2011-12, helped greatly by the union members not taking raises for this year. As reported last night, their members are working with the school board on ways they continue to lower costs. More information should be available in January.

Ray Clarke’s comments from the Finance Committee Meeting:

At Monday’s meeting the TESD Finance Committee decided – I think – that it will recommend that the full Board on January 3rd 2012 not limit the 2012/13 tax increase to no more than the Act 1 Index increase of 1.7%. However, there seemed to be a sentiment that the tax increase in the Preliminary Budget (required therefore to be made available by January 5th) be capped at the Index plus Exceptions (a total of a 3.3% increase). Anything more would require a referendum.

A few observations:

  1. The property tax rate goes up as the base goes down. Successful appeals have cost over $0.5 million in revenue for 2012/13. The Index increase raises $1.5 million. The Committee did not pay much heed to the linkage.
  2. The Committee plans to raise property taxes through “Exceptions” that compensate for the increase in PSERS expenses just about dollar for dollar, while sitting on $15 million of taxpayer money in the Fund Balance earmarked for exactly that purpose and with no plan whatsoever as to when the money might be used.
  3. With the $3.3 million tax increase and visible budget strategies worth $0.7 million, the 2012/13 deficit is projected to be about $2.5 million. On top of the quantified strategies, there was a report of constructive discussions with TENIG (for savings at some percentage of the $950,000 out-sourcing estimate) and the option to cut up to nine teacher in-service days, worth $0.2 million per day. It appears that these numbers made the Committee comfortable that any gap after the 3.3% property tax increase could be covered from the Fund Balance.
  4. Notable that the largest expense decrease is $300,000 from reduced IT hardware spending. Is that the same line item that was last recommended for an increase to use of some of the $1.3 million state windfall? Is there an IT strategy at all??
  5. There was mention of a sentiment inHarrisburgto again reduce the social security match, and also to even reduce the PSERS match. Not quite the direction desired by the advocates of a state solution to the problem!
  6. The cost of the current benefit plan was mentioned in passing. $19,000 per year for family coverage. I have to think that a majority of union members would be willing to restructure the plan, if it meant more cash compensation and an overall benefit to the district. There was no discussion of any change to the status quo salary/benefits projection in the financial model.

It should be noted that this recommendation does not preclude the tax increase being lower than the Index plus Exceptions, but we know how that works!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The state Senate has opposed the education cuts proposed budget.

Budget Ax Falls in Philadelphia; Pink Slips Could Go to 3,820 School District Employees

Late Wednesday, the Philadelphia School District announced that 16% of the district’s 24,000 employees . . . or 3,820 positions might be eliminated. The district has a shortfall of $629 million and estimates they will need to severely reduce the work force to meet the deficit. A budget for the district must be approved by the end of May and the clock is ticking.

If Gov. Corbett’s proposed budget is passed, Philadelphia School District stands to lose $292 million in state funding – representing close to a 10% reduction in the District’s overall funding. As a result, pink slips could go to hundreds of aides, custodians and central office staff, plus about 12 percent of the teachers. The school district will be forced to cut the workforce by 3,820, which includes 400 members of Central Office staff, 1,260 teachers, 650 aides, 430 custodians, 180 counselors and 51 nurses. The district also plans to increase class sizes and curb spending on transportation, special education, summer school, arts, music and sports.

Some are forecasting that teacher cuts will be on the newer and probably younger teachers. On hearing the District announcement of massive teacher cuts, a friend forwarded me an email from a young Philly teacher. Sad words from a dedicated teacher:

This whole thing is so terribly sad. I am a new teacher in fear of being laid off. In view of the circumstances, it may be likely that I will not ever be called back for my job.

Like many other teachers, I put my heart and soul into my job. No expense was ever too great for my students. I feel like I did not even get a chance to prove myself in becoming an even better teacher. My heart goes out to all teachers in fear of losing their jobs. I wish they would let us know so that we can try to make sense out of this and try to cope with this.

I feel like my heart has been ripped out, and I have been robbed of true happiness in doing what I love. I wish everyone the best—including the new teachers who probably will be the first to go.

In addition to the major reduction in the workforce, the District is looking for $75 million in budget help to come from teacher union concessions. As to be expected, union membership feels that they have given enough . . . collectively, the teacher’s are saying, “they do feel the pain!”

We learned this week from Harrisburg that the state school voucher program is inching forward again and discussions are continuing on proposed legislation that permits furloughing of teachers for ‘economic reasons’.. The teacher pension crisis continues to underscore the severity of the current economic situation. In the morning news, it is reported that New Jersey’s unfunded pension liability stands at $53.8 billion, the fourth highest in the country.

Does this news from Philadelphia School District have any significance for local school districts?

“Don’t Read my Lips; Read my Budget” . . . so said Gov. Corbett at today’s Budget Address

Gov. Tom Corbett delivered his budget speech at midday to a joint assembly of the House and Senate, suggesting “Don’t read my lips; read my budget.” For a full text of his speech, click here:

In his opening remarks, Corbett’s presented an overview of his budget including “ . . The substance of this budget is built on four core principles: Fiscal discipline, limited government, free enterprise and reform. . . ” Corbett’s fiscal year 2011-12 budget totals $27.3 billion, but no new taxes.

There has been much discussion concerning the economic woes facing school districts across the state. In his budget address, the Governor supports letting the taxpayers decide . . .

” . . . Now, we all know that there’s an elephant in the room when it comes to education funding: The property tax. Too often we have seen school boards raise property taxes to avoid hard and necessary choices. It’s human nature. When you’re spending someone else’s money it’s easier to say yes than no. I believe any new property tax increases beyond inflation should be put on the ballot. If school boards can’t say no, maybe the taxpayers will. Let’s listen to the taxpayers on this one. . . “

The governor takes on the teacher unions with teacher furlough remarks,

” . . . At the same time we need to give school boards some breathing room. There are too many mandates that tie the hands of local school boards. This administration is committed to curbing these mandates, including one that violates every law of economics: the inability to furlough employees when there isn’t the money to pay them. It puts the entire enterprise of public education at risk. . . “

Specifically, how did the Department of Education fair in Corbett’s budget? A quick review indicates that education will receive an expected major cut in funding. The proposed cuts to education include a 10 percent cut in basic education (K-12), which is a loss of $550 million across the state. The budget also eliminates all $260 million in grants that are being given this year to school districts to invest in learning, including pre-K, full-day kindergarten and class-size reduction in kindergarten through third grade.

In his speech, Corbett asked public school officials to consider pay freezes; calculating that each year of this cost-saving measure would save school districts $400 million. Corbett said that he was returning the state education funding to the pre-stimulus funding level.

Addressing the state workers, unions, pensions and collective bargaining, Corbett’s approach was direct –

” . . . In Pennsylvania, we will be looking for salary roll backs and freezes from state employees as well as asking them to increase their contributions for healthcare benefits. We also need to start the conversation about the necessary repairs to our public retirement system.

I want to be clear about this to our union leaders. Collective bargaining doesn’t mean some ill-defined middle ground. It means finding the spot where things work. In this case it is going to have to work to the good of the taxpayer or it’s not going to work at all. Let’s find that place and meet there. Let’s keep things working. Neither side need lose for the taxpayers to win. We need to act on our financial challenges now, before they act on us. . . “

Although Corbett did not use the word, ‘voucher’ in his budget address, he was specific about his desire for school choice . . .

” . . . Pennsylvania needs to re-think how best to educate our children. We simply can’t work within a broken system. We need to change the whole system. We need a new set of priorities: child, parent, and teacher – and in that order. What we have now in too many places are schools that don’t work. Families are trapped in failing schools, or schools that are a bad fit. We need to develop a system of portable education funding; something a student can take with him or her to the school that best fits their needs. One size does not fit all. But as it now stands, not all get to choose. Let’s give them school choice. . . “

During his budget address, the Governor referred to the ‘Budget Dashboard’ available online. The dashboard is on the state website, is user-friendly and provides an easy access for information of individual state agencies. Here is a link to that reference:

If you are interested, here is a link to the entire budget — all 1,182 pages. If you decide up upload the file, remember this is very large file and suggest patience.

Teachers’ Unions Set ‘Blocking School Vouchers’ as Priority

Two sides to every coin . . . supporters call school vouchers a right; a matter of choice. Opponents believe that the proposed voucher program is unconstitutional and will further erode the state’s lowest-performing schools.

The teacher union opposition to school vouchers became clearer this week when representatives from the two major unions brought their case to the state’s House Education Committee. Representatives from Pennsylvania State Education Association (PSEA) and American Federation of Teachers of Pennsylvania (AFT-PA) told the Education Committee that the teacher unions were focusing on two major priorities for 2011 – budgetary assistance and blocking the proposed school voucher legislation.

Pennsylvania is loosing federal stimulus money, which will create a shortfall of $1 billion in education funding. According to Gov. Corbett, the state is facing a $4 billion deficit in next year’s budget so education-spending cuts are expected. If you recall, Corbett and Democratic state senator Anthony Williams of Philadelphia (one of school voucher bill SB1 originators) supported school vouchers in their individual campaigns last year. At this point, we do not know how steep the cuts in education spending will be and no one may know for sure until Corbett unveils his preliminary budget, which is expected to be delivered sometime in March.

Although the school voucher bill will have several hearings in the state House during the next couple of months, Corbett’s budget address in March may see the proposed legislation moving forward. As the proposed SB1 now stands, it would direct over $50 million to the neediest families in the lowest-performing schools in the state. The estimated cost of the program is less than 1% of the current education subsidy.

Besides the school voucher program, the other major education issue that must be addressed by the state is the funding of the Public School Employee Retirement System (PSERS). PSERS as currently designed is not sustainable and threatens to break the budget of school districts across the state. Although the State Legislature recognized the significance of the PSERS funding problem last year, a long-term solution is needed.

Anticipating a major battle ahead over the proposed school voucher legislation, the PSEA union, which represents 190,000+ teachers in Pennsylvania, has announced an 11% increase in dues for its members.

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

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 . 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.

Public Pension News Out of Harrisburg Today

Following up on the discussion from last night’s school board meeting, there was some interesting news out of Harrisburg today. The House lawmakers made a first stab at addressing the impending public pension crisis by voting to reduce pension benefits for future state and school district employees.

The House passed an amendment that, among other things, would raise the standard retirement age to 65 for both the Public School Employees’ Retirement System (PSERS) and the State Employees’ Retirement System (SERS). The retirement ages now are 62 and 60, respectively. It also extends the vesting period to be eligible for a pension from five years to 10 years. If I understand the components of the amendment correctly, it would offer the taxpayers short-term relief but also incorporate long-term reform.

The size of pensions for people who are hired in the future would be cut by one-fifth, unless the employees agree to have more money taken out of their paychecks. Retirees would no longer be able to withdraw their own contributions, plus interest, in a lump-sum cash payment upon retirement.

All the proposed changes would affect new employees only. The bill would have no effect on pension benefits for 200,000 current and retired state employees and 500,000 members of PSERS or change the format of both systems’ defined benefit pension plan, under which a retiree collects a percentage of his or her salary based on a formula that weighs age, years of employment and their own contributions. If enacted, the new pension rules would take effect January 1 for new state employees; July 2, 2011, for new school employees and December 1, 2011, for lawmakers who take office after the fall election.

The underlying bill — which could get a vote on final passage in the House as early as tomorrow — would add to the long-term cost of the pension systems by restructuring them financially but reduce the projected size of crippling payments due into both systems in two years. Should it pass, the bill would gradually limit the amount of a single year’s increase in costs to governments and school districts (taxpayers) to eventually reach no more than 4.5 percent of payroll.

It is my understanding that the prospects of passage in the House appear positive (given its wide support by both political parties). A positive vote will send it on to the state Senate.

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

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:
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:
“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?

Mt. Pleasant Town Hall Meeting and TESD School Board Meeting Tonight!

The much anticipated Mt. Pleasant Town Hall meeting is tonight. This meeting has been a long time in the works; previously cancelled twice due to snow. The community meeting will be held at the First Baptist Church on Upper Gulph in Mt. Pleasant, 7 – 9 PM. Many of us have heard Christine Johnson at Board of Supervisors meeting speak passionately about issues facing her Mt. Pleasant neighborhood. Tonight should present an opportunity for residents of this panhandle community to voice their opinions and concerns.

Tredyffrin Township Police Officer Larry Meoli has help to organize this meeting with Mt. Pleasant residents. Attending the meeting will be members of the Board of Supervisors and representatives from the township staff, zoning and police departments. Liaisons from the Board of Supervisors will be supervisors DiBuonaventuro, Kichline and Richter. Having just recently written about the Sunshine Law, I now understand that if more than three supervisors attended tonight’s town hall meeting, that would be viewed as a violation. I will be attending the Mt. Pleasant meeting and look forward to the exchange of information. I will provide an update tomorrow on Community Matters.

Tonight is also the Tredyffrin Easttown School District monthly school board meeting. Here is the TESD agenda.The agenda is very detailed (117 pages). In reviewing the agenda, I did note the resolution from the school district in regards to the Pennsylvania Public School Employees Retirement System (PSERS). Much has been written about PSERS and the escalating associated costs; I am pleased to see that TESD is supporting pension reform in the state! (I am hopeful that my friend Ray Clarke will be attend tonight’s TESD meeting and will provide his remarks.)

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