Pattye Benson

Community Matters

TEEA

T/E Teachers Contract Not yet Public

September 25, 2012
12 Comments

The TESD held its regular monthly school board meeting last night. I was unable to attend but Ray Clarke attended and forwarded his notes from the meeting. There had been much speculation about whether or not the public would see the tentative agreement between the District and the teachers union, TEEA. The agreement was not available last night but the residents were told that TEEA will vote to ratify the agreement by October 11. Therefore, as a result the school board has scheduled a special school board meeting for October 15 at 7 PM, before the previously scheduled Finance Committee meeting, which has now moved to 7:30 PM.

Ray asked the board if the public would see the contract before the school board vote and they said it would be available at the meeting and the public would have a chance to comment before the vote. As Ray says in his notes, “We’ll have to do some speedy analysis in the allotted 30 minutes”. Ray’s questions to the school board were fielded by the solicitor, who offered “a lot of legalese about ‘labor relations case law’ and prejudicing the TEEA vote, while never explaining exactly how those factors would operate to adversely impact the district and its taxpayers”. I am pleased to know that school board member Rich Brake attempted a thoughtful explanation as to the rationale behind not providing the complete information at this point but with a commitment of a thorough explanation in the meeting before the vote.

However, Ray writes, “Kevin Buraks, on the other hand, used the recent property purchase as an example of the need for the secrecy, which of course proves my point rather than his! That draft contract [Old Lancaster Rd. property purchase] – negotiated privately directly between the parties, of course was made available to the public a full week-end before the ratification vote”. If you recall last month, I was surprised to see the property purchase of the house on Old Lancaster on the school board agenda. Its agreed that there had been much discussion over the years about that remaining property and the need to purchase it – just came as a surprise and a little unsettling how the property purchase was seemingly buried in the bottom of the agenda. The agreement of sale identified the property as 892 Old Lancaster Avenue, the seller as the Estate of Arthur Fennimore, and the price as $265K.

Ray’s noted the school board’s updated communications objectives for 2012-13 as including the communication of “milestones”, not substance. He reminds that it is this board of nine that “completely determines the budget, programs and taxes”. I was hopeful that the school district was moving forward in the direction of transparency but there certainly appears to be a sense of mystery surrounding the contents of the teachers’ agreement. My guess is that the school board believes in the ‘less is more’ approach when dealing with the public. Their theory appears to be the less that we [public] know, the less that we [public] can then question.

Community Matters Not Going Anywhere — ‘Our Collective Voices’ Matter!

September 11, 2012
24 Comments

Community Matters was down for about 4 hours yesterday, causing some regular readers to speculate that either I had voluntarily closed the site down or, that someone had forced its closure. For those prone to conspiracy theories, concerns heightened when it was discovered that the township’s website was also down. I have no idea what caused the township website to go off-line but it is possible that the problem, was the same as for Community Matters. Go Daddy, one of the largest Internet hosting firms, had major technical difficulties yesterday, which resulted in 5 million of their sites (including Community Matters) to go down. An anonymous hacker is claiming responsibility for the service disruption.

So, for those who would wish otherwise, I remain stoic in my resolve … our ‘collective voices’ are important in this community. Community ‘matters’ and our voices are part of this community. In the last couple of days, I have been in contact with two members of the Board of Supervisors in regards to (1) the use of the township website by a supervisor for personal messages and the policy (procedure) for such usage and (2) the communication I received from our township manager, which was posted on Community Matters. My hope is that the Board of Supervisors will address my concerns, and those of many in the community, prior to their next meeting on Monday, September 17. One thing I can say with absolute certainty is that what happened last week will not be forgotten. The offensive letter may be off the township website, but its damage is not easily erased. At this point … I say, stay tuned.

Moving forward, I could not help but think about our own school district as a I watched the news yesterday and the striking teachers from Chicago’s 675 public schools. As I understand it, Chicago teacher union leaders and district officials were not far apart in their negotiations on compensation. But other issues – including potential changes to health care benefits and a new teacher evaluation system based partly on students’ standardized test scores, remain unresolved. Chicago teachers object to their jobs and performance being tied to students’ standardized test scores.

In T/E School District, on September 5, members of the school board and Tredyffrin Easttown Education Association (TEEA) reached a tentative agreement on the contract. The existing contract expired on June 30. The public will not see the agreement until both sides ratify the tentative agreement. I am not sure why the delay, but it will be about 6 weeks until the school board votes on the tentative agreement at their October 22 school board meeting. Presumably, at that point, the contents of the agreement will be released to the public.

The TESD Finance Committee held their first meeting of the 2012-13 school year last night. for 2012-13 year was held on Monday night. Thank you to Ray Clarke for attending and providing his notes to Community Matters.

First, a few miscellaneous items I jotted down:

  • We got an unbudgeted $330,000 refund from Blue Cross. This flows from mysterious BC prior year accounting which has in other years resulted in a charge. This is a nice non-recurring bonus (especially since we are now self-insured).
  • Federal revenues from the ACCESS program were also $300,000 more than budget.
  • The risk from new commercial assessment appeals remains, and a $1.4 million reduction is included in the budget
  • Residential appeals of about 150 parcels is at about the same rate as last year and we’ve lost $56,000 from about a quarter of these settled so far. The reduction is less than it was last year, though.
  • The district is appealing 23 commercial assessments; the historical success rate has not been high (~10%, I think).
  • At this early stage, the administration sees no need to use the $5.15 million “budgetary reserve”.
  • Over the last couple of years we have actively managed bus routes to reduce the need by 5 buses (down to 105) – a saving of $250,000 a year. This success makes me think that it would be nice to see a short table of the results of all the budget strategies.

The Financial Report did not include any impact of the tentative TEEA contract agreement. I was told that this could not be done, since anything would be “speculation” until the Board votes on the contract. Dr Waters said that releasing tentative contract details would be counter to “40 years of history”. Dr Motel said that the Board has complete authority to enter into an agreement, regardless of what their constituents think. There was no explanation of why the secrecy is in the interests of the district or of the taxpayers.

It strikes me that if 40 years of history was always the guide, then most CM readers would never have got the right to vote. How is it that the beneficiaries of a contract have the ability to review and approve it, but the people paying for that contract do not? Every other budget item gets months of public discussion. We heard tonight a report of the revenues from advertising, which was debated ad nauseam for 2 years and has just now realized its first revenues of $760 (over two years). Every year the $10,000 or $20,000 cost of PSBA membership is discussed in multiple meetings. The TEEA contract represents one-third of total expenses for just salaries alone (and probably influences double that), yet we have no chance to give our representatives our opinion?

So that leaves us to speculate for ourselves. My thought is that the back-end loading of the tentative deal busts the budget far beyond the maximum tax increase will allow, and leaves the post-election mess for the next school board generation to sort out

School Board Members to Join T/E Contract Negotiating Team

August 28, 2012
12 Comments

Last night’s School Board meeting represented a distinct shift in attitude from the School Board directors in regards to the teacher negotiations. Since the District named their negotiating team last January (Dan Waters, Sue Tiede, Art McDonnell and professional negotiator attorney Jeffrey Sultanik), I have been very vocal in my concern that there was no school board director serving on the negotiating team. I was of the opinion that the residents of TESD elected the school board members to serve them and at least one of them needed to sit at the negotiating table.

Without representation by a school board director, the reporting process had the appearance of a ‘whisper down the lane’. I understand that Sultanik was hired to negotiate at the direction of the School Board, but I think that the Board’s public appearance of ‘hands-off’ to the process, may have added to the strife with the teachers. The information and the updates that the school board receives were not by firsthand attendance at the meetings, the flow of information was from one of the four members of the negotiating team. I am not suggesting that the District intentionally mislead the public through its updates, but I was of the opinion that without a seat at the table, it was possible that subtle nuances that occur in a meeting could be missed in the translation.

But here is some good news for anyone that shares my concerns with the negotiation process. At the end of last night’s meeting, Board president Karen Cruickshank gave a brief update on the status of the teacher contract talks. She explained the District has made another offer to the teachers and offered hope that a resolution could be forthcoming. Not certain what is contained in the latest offer but there was something else … Cruickshank announced that going forward, school board directors would have a seat at the negotiating table. Karen Cruickshank, Pete Motel, Kevin Buraks and Betsy Fadem will join the negotiating team at all future meetings with the teachers union. I believe that this was the right decision for the District, the residents and for the teachers! The last few months have been contentious between the two sides, but I think this latest decision represents an encouraging sign.

T/E School Board: 2nd Vote Not to Accept Fact Finders Report

August 21, 2012
83 Comments

Last night was both the Board of Supervisors meeting and the special meeting of the school district. I attended the BOS meeting and Ray Clarke attended the TESD meeting and kindly provided his personal notes of the meeting. Although we should not be surprised that the school board rejected the fact finders report a second time, in speaking with Ray I am troubled by something that happened. Now again — I was not there so if my interpretation is incorrect, someone please correct me.

It appears that there was a heated exchange between Sultanik (the negotiating attorney hired by TESD) and Laura Whittaker, the teacher union president. Apparently it is OK for Sultanik to make public claims against the union but Ms. Whittaker is not allowed to defend her position. Why? Because although Ms. Whittaker is a TESD teacher, she is not a T/E resident. Regardless of which side you support (TESD or TEEA) this does not seem fair.

I understand the economics of the school district, but that does not give Sultanik the right to disrespect the teachers and then offer no option for them to defend. These people teach our children, are they not entitled to respect? The school board has a policy that non-T/E residents are not permitted to comment at school board meetings and I appreciate that if there is long line of people waiting to comment, that it is fair that residents be permitted to speak first. Regardless of the union, TENIG, TEEA, etc. I am of the opinion that the union president representing his/her members should be permitted to speak at school board meetings, without a ‘residency’ requirement. I am not saying all the non-resident teachers, custodians, etc. just the presidents, should they be non-residents.

Again, I did not attend the meeting and would certainly appreciate the opinions of other who did attend. Bottom line for me … I want both sides fairly represented but I don’t like the idea of public ‘dressing-down’ from either. Here are Ray’s notes:

The School Board took advantage of the forum offered by tonight’s Board meeting to present their side of the contract negotiations and to outline the details of their three year offer suggested at the last Board meeting. Unfortunately, perhaps, they felt the need to rebut the TEEA week-end comment that “School board members have not met with us….” with Mr Sultanik recounting a minute by minute list of the emails between him and the union’s Ms Waldie, during which an offer to meet was repeatedly made, and which did in fact lead to a meeting of the parties on August 15th. At that meeting the Board presented their proposal, to which – according to Sultanik – the TEEA has not officially responded. There were shouts of “You lie!” or similar from the audience, but Ms Whittaker, not a district resident, was not permitted to speak.

Here’s the essence of the District proposal:

– Freeze matrix, step and column positions for 2 years. One step and column movement halfway through Year 3

– One time $2,500 bonus for all teachers in Year 2 and one time $1,000 bonus for all teachers on the top step in Year 3

— Sizable incentives that do not build in recurring expense (use of the fund balance!)

– 189 day calendar in Years 2 and 3, down from the current 191 days

— Locking in the 2 furlough days (1% salary reduction) in the Fact Finder report

– Two health plans with family coverage with premium share rising from 9-10% to 11-12% in Year 3. The individual dollar cost for the most expensive plan is projected at $1,743 to $2,531, compared to $1,020 under the current plan. A $50,000-$60,000 copay pool in Years 2 and 3 if the higher cost healthcare plan can be dropped due to less than half the employees selecting that plan.

— The national average for premium share is 29%

— There’s a tax provision that allows employees to deduct their premium share, reducing the net cost by their marginal tax rate

– A cap on tuition reimbursement of $150,000 in Years 2 and 3 (compared to $290,000 under the current MOU and $650,000 last year)

–– Radnor and Lower Merion have introduced caps on tuition reimbursement

– Prescription copays as in the Fact Finder report

– Demotions allowed for economic reasons in Years 2 and 3

– Settlement of outstanding grievances, particularly re the CHS 6 period day

— If ruled in favor of the union would require the hiring of 12 additional FTE at a cost of $1.2 million a year

Sultanik stated that the deadline for a TEEA response is August 27th at 12 noon. It’s not clear if that is a mandatory deadline per the law, but it could be, since the process is still under the aegis of the state arbitrator and law does require continuation of the negotiating process.

Art McDonnell presented two slides that provided the current status quo budget/3 year projection and the Fact Finder report. As presented, the Fact Finder report reduced the Year 1 and 2 deficits by about $300,000, but the year 3 (and 4) deficits increased by the same amount. He did not show how the latest Board proposal would stack up under the same model, but in response to my question there were general comments from the Board that the deficits would still not be eliminated under likely tax scenarios. (I think that there may be enough data to model the impact ourselves, and with some time over the next couple of days I’ll take a shot at that, but it will be difficult to account for all the inter-relations of salary, PSERS, etc.)

Ann Crowley and Kris Graham explained their August 9th votes to accept the Fact Finder report largely on the basis of expediency and on the intangible impact of an unsettled contract on home values, teacher stress, need for students to continue to out-perform, and so on. Mrs Graham thought there was now benefit to the teachers to get the 3 year deal and so changed her vote tonight, in order to get the parties back to the negotiating table. Mrs Crowley abstained from voting in protest of the email litany recounted by Mr Sultanik. Dr Motel reminded the audience that salaries for all other employees have been flat for three years, and at some point increases may need to be found. President Cruickshank also noted this and the give backs from TENIG employees and separately custodians. She noted that the Board has to balance the budget and recounted the last three years total of $10 million expense cuts, maximum tax increases and falling real estate assessments. Remaining options are to cut kindergarten, transportation and extra-curriculars. She made a plea for “two austere years to right the financial ship”.

The Board voted 8 to 0 with one abstention to reject the Fact Finder report.

The audience seemed to be largely teachers, with little public comment. Andrea advocated rationalizing the healthcare benefit craziness by providing a defined contribution rather than a Blue Cross-specific defined benefit; another resident supported the Fact Finder report on the basis of retaining qualified teachers and supporting property prices. ABC News was there, also.

T/E Teachers Union Appeals to School Board to Accept Fact Finder Report

August 18, 2012
26 Comments

President of Tredyffrin Easttown Education Association (TEEA Laura Whittaker has released the following appeal in advance of Monday’s TESD vote on the Fact Finders report. The statement urges the school board to vote to accept the report at the special meeting. Whittaker claims that the school board has not moved from their original position of last February although TEEA has offered “significant financial sacrifices”.

The clock is ticking down to September 4, the first day of school. If the school board does not vote to accept the Fact Finder’s report, is a teachers strike on the horizon … ?

Board’s decision to reject impartial Fact Finder’s report further exposes its inflexibility

Tredyffrin-Easttown Education Association President Laura Whittaker is calling on the members of the Tredyffrin-Easttown School District board to reverse their decision to reject an impartial Fact Finder’s report intended to settle the district’s expired contract with TEEA members.

In the fact-finding process, a neutral, third-party arbitrator reviewed the contract proposals of each side and made recommendations intended to settle the expired contract. The review took 40 days. Once the fact finder issued the report, each party had 10 days to accept or reject the fact finder’s recommendations.

The TESD board rejected the report at its August 9th meeting, and will vote again on the issue during its Monday, August 20, special school board meeting. The meeting starts at 8 p.m. in at the Tredyffrin-Easttown Administrative Offices.

TEEA members voted to accept the Fact Finder’s report even though it contained significant financial sacrifices on their behalf, including approximately $500,000 in lost wages, a reduction in health care benefits, and a loss of tuition reimbursement for professional development.

“School board members have not met with us, and they rejected the Fact Finder’s report without having moved from the original proposal they gave their negotiator in February. They now have another opportunity to vote to settle this contract,” Whittaker said.

Whittaker urges all members of the T/E school community to turn out for Monday night’s school board meeting and make their voices heard. “Parents do not want their children’s education interrupted because of the school board’s stubborn inflexibility,” she said.

“If the board would be reasonable and accept the impartial Fact Finder’s report, it would assure that the school year can start on time and without disruption,” Whittaker said.

T/E School District and Teacher’s Union … ‘Status Quo’

July 8, 2012
50 Comments

The June 30, 2012 contract deadline for the T/E teachers came and went with no new contract signed. Therefore, as of July 1, the School District and the teachers union, TEEA are now in status quo. This means that the T/E teachers’ salaries will be frozen at their salary level based on their 2011-12 salary until a new contract is signed.

According to the School District website, “… the teachers will continue to receive their salary at the current rate until the earlier of (1) a strike or lockout within the terms of Act 88 of 1992; or (2) the entry into a new contract.”

Also during the status quo period, the teachers health care benefit plan remains intact based on the expired contract, until a new contract is signed between the School Board and TEEA.

The School Board passed the 2012-13 TESD budget in June, which includes a property tax increase of 3.3%, or .6154 mills – equating to approx. $3 million revenue. The 3% tax increase will translate to an annual increase to homeowners in T/E of about $155.

Former T/E School Board member Andrea Felkins created the following graphs with descriptions below each graph for Community Matters readers. When we discuss the benefits, salary and pension costs of the District, it is difficult for some (myself included) to fully grasp the magnitude of the situation. Through the use of the graphs, the data is more organized and easier to understand. When you view the data through Andrea’s graphs, it is much clearer the role that each of the three components play in the budget, especially as the School District moves forward. It should be noted that these graphs assume no salary increases.

Based on the final budget presentation, this is just a depiction of the PSERS and the BENEFITS numbers for the next few years. It’s why I advocate a major change in the benefit plan – knocking $5M off the expenditures annually.

 

Based on holding salaries constant, while PSERS is climbing, benefits stay well ahead of the PSERS contribution.

 

Each piece of the budget deserves scrutiny. This graph shows that PSERS takes a bigger piece each year, but the other components dwarf the PSERS costs.

TE School District … Teacher Contract Costing

June 28, 2012
25 Comments

Keith Knauss, Unionville-Chadds Ford School District school board member, and regular contributor to Community Matters, has written ‘TE Contract Costing’ that may help us all better understand the teacher-school board contract negotiations process and the reasons for certain decisions. I thank Keith for his research and for sharing the information with us. I have provided an overview below along with my comments. (If you have a problem reading the numbers in the tables, click on the graphic and a larger version will open in a new window.)

In his opening remarks, Knauss states …

“ … Understanding contracts has taken on new importance since Act 1 of 2006. Previous to Act 1, school boards could negotiate contracts and raise taxes to whatever level was necessary to balance the budget. Since Act 1, many districts have had to, with great reluctance, reduce staff and programs to keep budgets within the limits of the ‘cap’.”

Employee compensation is the major factor determining the size of a school district budget and, subsequently the real estate tax rate increase. If the District budget is to be balanced under the restrictions of Act 1, close attention must be paid to the terms of the contracts.

In the following table, Knauss presents the TE offer summary – the initial 1/9/12 offer by TEEA, the TE School Board 2/9/12 offer and TEEA 6/18/12 offer. The table indicates the average teacher compensation and taxpayer impact. According to Knauss, “The percentage increase in Average Teacher Compensation is more than the percentage increase of Local Tax Impact for 2 reasons … state subsidies and attrition.”

The following table reviews the salary and benefit packages of TE teachers. Krauss provides the approximate compensation (salary and benefits) for the average T/E teacher using the current teachers contract. The numbers are supplied by the District or are multiplications of the salary and the appropriate rate (PSERS and FICA).

Knauss presents the following Salary and Benefit table, offering that the “… Total Teacher Compensation is a straightforward multiplication of the Average Teacher Compensation and the number of Employees. Total Teacher Compensation is the money taken from the taxpayers (local and statewide) for the services provided by TE teachers.”

Here is an interesting graphic from Knauss, indicating the funding sources for teacher compensation. The major source of funding – local taxes and a secondary source of funding is from state and sales tax for half of PSERS and half of FICA.

Krauss looks at the effect of any contract settlement on the T/E taxpayers, and whether it can be financed within the Act 1 limits. He looks at two different costing methods – “One method looks at the total cost of the contract to all taxpayers, local and statewide; the other method looks at the cost of the contract to the local taxpayers to reflect the local tax impact of any other offer by ‘backing out’ the statement reimbursement for PSERS and FICA.”

The Local Tax Impact is calculated by “backing out” the state contributions to FICA and PSERS. Notice that the state contributes $3.0M in subsidies to lessen the Local Tax Impact.

————————————————————————————————-

When reviewing a teacher contract offer, Knauss supports the use of the following criteria:

  • Is the offer economically sustainable under Act 1 limits?
  • Are the compensation increases of the offer in line with the current economic climate?
  • Is the compensation appropriate to attract and retain employees of quality?

Knauss answers a question that many have wondered … what happens if the teachers and the school board cannot reach a settlement? Due to substantial differences between TEEA and TE School Board, the union requested fact-finding by the PA Labor Relations Board. The independent fact finder will review both TEEA and TESD proposals and then make recommendations … however, remember the recommendations are non-binding.

The current teachers’ contract ends on Saturday, June 30. If an agreement is not reached, the teachers enter the “status quo” period, meaning that they continue to teach … to the expired contract. The teacher’s benefits and salary remain the same as in the expired contract. It is obvious that the School Board would not want an extended ‘status quo’ status for the teachers because it precludes any change to heath care benefits, compensation, etc. Knauss points out, that although the teacher compensation is frozen at its current level in ‘status quo’, legally the District must absorb any increases due to PSERS contributions or healthcare.

However, the situation is different from the teachers’ standpoint. During better economic times, the teachers would not want their contract settlement in ‘status quo’ state because working under the expired contract would mean that they would receive no additional compensation for years of service increase. But what choice do the teachers have?

According to TEEA website, the teacher’s last offer included a reduction in health care benefits and salary freeze for the first year. In their rejection of the union’s offer, the School Board instead asked the teachers to take a compensation reduction of $8,000 per teacher – which equates to as much as 13% for some teachers. There is little surprise that TEEA rejected that District’s offer, opting instead to go to the PA Labor Board. Why would the teachers want a new contract … status quo also keeps their current salary intact and preserves their current benefit package intact.

Knauss provides a multi-year analysis, assuming status quo and average compensation. He presents his analysis in several slides, giving us an idea of what certain scenarios would mean to the average taxpayer. To read Keith’s full report, click here.

TEEA and T/E School Board Reach Contract Negotiation Impasse

June 22, 2012
62 Comments

With only a few days remaining in June, it does not appear that a new contract will be signed in the T/E School District by the June 30 deadline. According to the Tredyffrin-Easttown Education Association (TEEA), attempts to resolve the contract differences between the school board and teachers have reached an impasse, and therefore they are requesting independent fact-finding from the PA State Labor Board.

On Monday, June 18, TEEA made a 2-year “off the record” proposal to the school board that “… included a reduction in health care benefits, an increase in health care premium share including a shift to percentage-share, a reduction in advanced studies assistance, and a full salary freeze in the first year. In return, TEEA asked for salary schedule advancement for non-master teachers in year two, a one-year-only “off-schedule” salary premium for master teachers in year two, and “no-demotions” language for the duration of the contract. This offer was rejected.”

The counter-offer from the school board asked the teachers for a salary reduction, approximately $8,000 per teachers. According to TEEA, the reduction could equal as much as 13% for some of their members. Earlier in the month, the teachers had agreed to modify their contract regarding tuition reimbursement. Their offer which was accepted and at last week’s School Board meeting, a Memorandum of Understanding was entered into which modified the existing contract for one year. The MOU represented a savings of more than $400K; as a result, teacher demotions were taken off the table as a budget strategy.

It has becoming increasingly more common for PA teacher unions to take the route to request an independent arbitrator from the PA Labor Relations Board. Under Act 195, this is a process used to resolve contract negotiations when the parties have reached an impasse. The severe economic times and decreasing revenue are creating major challenges for school districts; therefore making reasonable teacher negotiations almost impossible. As I understand the process, the independent arbitrator will hear both sides, with TEEA and the School Board presenting evidence to support their position. Based on the fact-finding, the Labor Relations Board will issue a report containing their findings along with recommendations for settlement. It should be noted that the report is non-binding and the recommendations require the approval of both TEEA and the School Board.

According to a recent Daily Local article, West Chester teachers and their school board are also far apart on their new contract negotiations. Like T/E School District, Jeffrey Sultanik is serving as West Chester School District’s chief negotiator.

However, unlike TEEA, the West Chester Area Education Association is proposing a salary increase of 18.3% over the course of the 3-year contract, with a cost of living increase plus a salary step movement equating to 5.57% increase first year, 5.81% increase in year 2 and 3. The union is also requested expanded health care benefits and additional pay for meetings and a reduction of 2 work days. All I can say is WOW! I have to believe that TEEA and our School Board are not nearly as far apart as the School Board and union in West Chester.

T/E School Board Passes 3.3% Tax Increase; Highest Percent Increase in the Area

June 15, 2012
21 Comments

The T/E School Board meeting on Thursday night was rather anticlimactic. Most of us who have been following the budget process were not surprised by the 3.3% tax increase (1.7% Act 1 Index, 1.6% referendum exceptions) for the 2012-13 school year. Based on the District’s average residential assessment of $252,601, this translates to an average increase of $155 per homeowner in their tax bill.

The Act 1 Index increase will produce projected revenue of $1.5 million and the exceptions increase projected revenue of $1,498,916. The total revenue produced by the 3.3% tax increase is $2,998,916. The 2012-13 tax will be levied at the rate of 19.2628 mills, on the assessed valuation at a rate of $19.2628 per $1,000 assessment; an increase of .6154 mills from the 2011-12 tax rate.

How does TESD tax increase of 3.3% increase for 2012-13 school year stack up against neighboring school districts? The following local school districts have approved their budgets for 2012-13 and needed to include the following tax increases:

  • Radnor School District: 3.21% tax increase
  • Great Valley School District: 3% tax increase
  • Haverford School District: 2.73% tax increase
  • Lower Merion School District: 1.99% tax increase
  • West Chester School District: 1.7% tax increase
  • Downingtown Area School District: 1.7% tax increase
  • Phoenixville School District: 1.66% tax increase
  • Unionville-Chadds Ford School District: proposed 2.65% tax increase in Chester County and a 1.74% decrease in Delaware County (the difference comes changes in the gross property valuation of the two counties) to be approved at UCFSD meeting on Monday, June 18.

Following the final budget summary, discussion and resident commentary, the school board members were presented the opportunity to weigh-in on why they were voted for or against the 2012-13 budget. The 2012-13 budget passed 7-2 with school board members Liz Mercogliano and Rich Brake providing the dissenting votes. Brake provided a lengthy 30-minute oration, which offered historical details of what brings the District to this point and his reasoning for voting against the 2012-13 budget.

Ray Clarke also attended the school board meeting and offers his thoughts on last night’s School Board meeting. Thanks Ray!

Comments from Ray Clarke …

1. Karen Cruickshank reported that the tone in the TEEA negotiations is “increasingly positive”. One small signal of this is the memorandum of understanding that removes the requirement for the district to pay for “advanced studies assistance”, in return for dropping the demotion idea for 2012/13. Amazingly, this saves $360,000 – and it’s not even all the tuition that is paid! (Payments are continuing for those on the lowest Bachelors steps).

2. The General Fund Balance debacle continues. At its root is the fact that the Board treats this as a completely discretionary slush fund, with absolutely no rules about how it is to be used. I believe that it is completely unacceptable for $30 million of taxpayer money be be treated so cavalierly. Just one example: last year the “commitment” for PSERS “stabilization” was $15.4 million, this year it’s $3.6 million. It’s not that the difference has been used to stabilize PSERS, it’s just that the number is a plug for when other things have been accounted for. Ridiculous. Why even have that item in the first place – we plan to raise taxes for it anyway.

Having said that, the changes in this year’s commitments do move us in the right direction. $10.4 million will be moved into the Capital Fund, where it will be used for the one time expenses that we’ve discussed here are the appropriate uses for the Fund Balance.

Also worthy of mention is the commitment for the liability for vested employee services. This went up by $0.8 million. The actual payment was $0.3 million; It’s interesting that the actual employment expense was therefore $0.5 million higher than was recognized in the operating statement, another problem deferred for future taxpayers.

3. Which gets me to Dr Brake. He treated us to a half hour analysis of the school district’s finances and the changes over the last decade or so, with desktop slides. I encourage all to look for the video. He voted against the tax increase, and argued for “an entirely new status quo” for the school employees. Here are some notes I took with my commentary:

– The drop in revenues from assessment appeals offsets the increase from increasing the tax rate for the exceptions. He used this to suggest we have reached taxing capacity.

– Special education is a “ticking time bomb” and the increased costs of autism “threaten public education”. Relatedly, we heard in the Policy Committee how parents of non-residents, shopping for schools, want the right to come into classrooms to observe TE”s special education programs.

– All entities (governments/households, US/Europe, etc) have a “pathological addiction to spending beyond our means”. [An OT comment: In a long run he’s right that this is unsustainable, but in the short run, national governments able to determine monetary policy can have a stabilizing role when consumers all of a sudden come to that unsustainable realization. The problem in the US is that the political actors cannot agree on the long run plan to get the house in order, and in Europe, they have a completely crazy monetary union without a fiscal union].

– For TE routinely taxing to the max is unsustainable and not the solution. I note that the agreed 3.3% tax increase this year, and the subsequent annual 3% increases in the 4 year projection model accumulate to an increased tax bill of $600 per year for the average residential assessment. And there’s still a $4 million deficit in 2016/16.

– He is now going to pay more attention to the Fund Balance. Good!

Long-Term Pension Reform … Only Solution For Pennsylvania Taxpayers

June 7, 2012
41 Comments

As school boards across the state are scrambling to balance their own budgets, it’s also crunch time in Harrisburg. At this point, it is unclear how much help the Governor and his administration is willing to provide in the budget for education. Even if Corbett restores some of the education funding in the state budget, it seems impossible that the economic crisis in school districts will be solved.

School boards have been put in the difficult position of making tough decisions on educational programming cuts, staff reductions, increased class sizes, etc. in an attempt to balance budgets. But looking ahead, how does the state and local school districts handle the inevitable … the pension tsunami. Whether it is the pensions of the state government workers or the public school teachers, how is it possible to solve this seemingly impossible situation?

The State Employee Retirement System (SERS) and Public School Employment Retirement Association (PSERS) enjoyed huge investment gains in the 1990’s and the pension funds climbed to 123 percent. In their wisdom at the time, legislators decided to reduce the state’s contribution in May 2001 (known as Act 9). However, without the benefit of crystal ball forecasting, four months later the world plunged into a recession and the pension funds balances began to fall. Unfortunately the state’s pension problems were increased with the passage of Act 40 in 2002, which allowed the state to continue to lower their contributions to the pension, increased the employee contribution rate to 7.5 percent and provided for a cost of living adjustment (COLA).

The next round to pound the state pension plans was the recession of 2008. As a result, the once overfunded pension system plummeted and is currently funded at around 80 percent. Couple the underfunded pensions with the fact that a wave of baby boomers are set to retire this year thru 2016. How are the school districts (taxpayers) going to make up the unfunded liabilities? Pennsylvania school boards are left to manage the 800-lb gorilla in the room – Harrisburg’s public pension crisis.

We know that the only solution to the problem is a long-term pension reform plan. I have written several articles on the absolute need to overhaul the pension system of Pennsylvania’s state workers. (If interested, enter ‘pension reform’ in the search box on the home page of Community Matters). It is no longer possible for the state to fund a traditional defined-benefit plan; a change to some type of 401(K) pension plan is needed (required) for all future state employees and public school teachers.

The move away from traditional defined benefit pension plans, where the investment risk is borne by the taxpayer, is long overdue. There really is no other way. Many legislators have addressed the need for pension reform, including our state representative, Warren Kampf (R-157) who held a town hall meeting on the subject this past March. (Click here).

The school districts do not control teacher pensions – Harrisburg does. The precarious, ‘at the edge of the cliff’ situation of school districts will continue as long as there is no pension reform. There is no ‘new’ news on the pension disaster; it has been staring lawmakers in the face for some time. But now that the pension crisis is upon us, the real question is … how do we get Harrisburg to act … and to act quickly!

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