Pattye Benson

Community Matters

TESD 20100-11 Budget

TESD Finance Committee Meeting Last Night . . . Notes from Malvern Resident Ray Clarke

I attended the Board of Supervisors meeting last night — once again, reality TV was alive and well in Tredyffrin Township. I will write about the BOS meeting later, presenting some of the highlights and, unfortunately lowlights of the evening. As a result of attending the BOS meeting, I counted on my friend Ray Clarke to attend the school district’s Finance Committee Meeting. Below are Ray’s notes from last night . . .

Moving to the TESD Finance Committee tonight, I must admit to much disappointment, as the past couple of months have brought little clarity and some regression. Analysis seems to have stalled.

Of the $1.5 million in “Strategy #2” expense items, I think that fully 50% must be discounted, at least in part, because:
– The idea does not account for all associated costs or qualifications (eg not all JV and Varsity sports teams can be bussed together)
– There are difficulties with the concept (eg selling advertising for extra-curricular activities/events)
– The notion is fundamentally vague (eg reduce utility costs, reduce legal costs)
– And last but not least, the strategy is thought of as unfair to some employees. Chairman Kevin Mahoney believes that the proposed salary freeze and adjustments for non-unionized staff are inequitable, and has asked for a rethink of the idea. Estimated impact: $445,000. Debbie Bookstaber took the position that taxpayers don’t have the money for these increases. Note that in any event, these pay freeze strategies are noted in the written descriptions as “one time”, implying that the amount was to be made up in subsequent years anyway.

It is coming to be accepted that there will have to be a larger draw down of the fund balance than has been discussed so far – another $0.5 million at least is my guess.

Noteworthy discussion: general support (with some clarification needed) for a fee of $20 per extra-curricular activity for middle and high school students and for a $100/year parking fee for students (only) at CHS (up from $10). These rates were thought to be low relative to other districts. The process for converting to self-insurance for health care is moving ahead – it will be important to keep a close eye on utilization.

There was another bond issuance discussion. The District is moving from funding capital projects from general funds (paid by past tax payers) to funding them from bond proceeds (to be repaid by future taxpayers). By necessity really – the capital fund has just $1.7 million, and there are plans to spend $16.7 million over the next three years. Now, the accounting rules let you capitalize the interest on the bonds for the first two years, so the day of reckoning can be pushed out even more.

All the more reason to actually move this discussion forward by:
a) quickly coming up with fully thought-through deficit reduction proposals for the upcoming year, and
b) presenting an accessible multi-year operating projection which includes:
– Adding back all one time expense reductions
– Adding all bond principal and interest costs
– Consideration of the likely base level of capital spending and bond issuance strategy (Will the district spend $15 million in capital every three years? Are there options?)
– Adding a best guess of medium term strategies that save real dollars (eg the changes to the CHS program)
– Adding the contracted increases in compensation and benefits costs

The size of the resulting multi-year deficit will show that it’s not going to be good enough to keep pushing off the discussion of all the options for both expenses and revenues. Again, tonight there was no discussion of an EIT, beyond two pages handed out that detail the difference between Act 511 and Act 1. My summary: only the former seems relevant, the Townships do not have to claim any of the revenue (but may), additional gaming revenue may allow TESD to claim some taxes paid to Philadelphia, and implementation would be subject to a voter referendum at a May primary, for earliest implementation on July 1, 2011. There was no quantification of the impact.

To my mind, it’s time for the district to show that it truly has a grasp of the big picture, and move on from reducing $10,000 in landscaping expenses to addressing the fundamental problem of managing and funding escalating educational requirements and employee/capital costs, in a largely developed community and a non-bubble economy.

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