Pattye Benson

Community Matters

TESD

Demotion of Professional Staff in T/E School District Remains Budget Option

Monday night was the Board of Supervisors Meeting and TESD Budget meeting. I attended the BOS meeting and will offer a few thoughts in a later post. Ray Clarke attended the school district meeting and offered his opinion on the evening which I provide below.

In reviewing Ray’s notes, I was pleased that it appears the elementary and middle school music programs are safe (at least at this time) from the budget ax. Although certainly not a perfect solution, increasing class size of students by one or two students may be something that the parents (and teachers?) can live with versus some of the alternatives presented such as elimination of music programs.

However, the ‘demotion of professional staff for economic reasons’ could have potential to go in many different directions. Apparently there was discussion at the budget meeting which suggested the idea of ‘demoting’ higher paid full-time staff to part-time. Ray wonders if they are referring to PhD employees.

It may be legally possible but is it realistic to think that the school board would demote teachers with the longest service (and presumably highest salary)? If we assume that the teachers with the longest service are the highest paid, surely the TEEA would step in and fight to protect those full-time positions. At the last finance committee meeting, there was discussion that perhaps there were individuals (for personal reasons) who would like to work part-time rather than full-time and might take advantage of this opportunity. It was my understanding that the teachers union had mentioned this option to its members.

Ray’s notes reference the statement from the teachers union in regards to using the school district’s fund balance towards budget shortfall. For the full statement from TEEA, click here. An excerpt reads as follows:

The Tredyffrin Easttown School District maintains a $32 million fund balance, which equates to 26% of revenue. Most other school districts maintain a fund balance of 8% to 10%. The Pennsylvania School Boards Association recommends a fund balance no greater than 5%. We ask the question and we believe the taxpayers and parents should ask the question, ‘Why is this fund balance not being used to save programs and preserve the great, award-winning T/E School District?’ Why are District officials insisting they do not have the resources to protect these programs?

Ray Clarke’s remarks from last night’s budget meeting:

Some notes on the TESD budget meeting from my perspective …..

The TESD meeting was notable for airing out some new projections for 2012/13 (previously discussed in committees), but we are still some way from numbers that can be trusted, and even when we have them, it seems that they’ll still show a deficit.
Some highlights I noted:
– The current enrollment figures show a 3% decrease over the current year, but the expectation seems to be that the final figures will be higher, but smaller than projected back in October 2011. The net result being 3 fewer FTEs now needed in 2012/13, reducing the expense increase by $225,000. Some more detail of the assumptions on this would have helped.

– To recap on professional staff: Average years of service continues upward – now 11.7 years – and so does average salary – by year-end approx. $86,000. TTRC member Barbara Morosse tried to get the Board to own up to the fact that the approx 30% increase in average salary (my number) over the last four years is in fact a major contributor to the current budget problem, but of course we continued to get the litany (best articulated last night by Kris Graham) that lists all the issues outside the Board’s control. There was no update on contract negotiations, but Art O’Donnell read a list of corrections to a recent TEEA commentary.

– A few expense analysis comments:
a) Next year has a $1.65 million increase in teacher salaries deferred from this year, and this makes up most of the salary line increase; presumably the cost of increased FTEs are offset by a mix change due to 17 retirements.
b) It looks like the current prescription plan can be funded with no increase, rather than the 10% previously budgeted (saving $500,000).
c) It was announced that the transportation company waived their contracted 2% increase this year, but it looks like the budget assumes next year’s increase will make that up.
d) There is a $725,000 increase in interest expense next year, and apparently no opportunity to use the Fund Balance to pay down debt and save interest expense until 2015.
e) The administration has benchmarked legal and architectural rates and found them to be competitive.

– There’s an good-sounding budget strategy to replace special education services purchased from the CCIU with our own staff and save $200,000.
– Of course, strategies to address the remaining budget gap (after a projected 3.4% tax increase, let’s not forget) are now getting contentious.
Betsy Fadem came out strongly for tabling any consideration of:
a) reducing EDRs (although new hires are already paid less) (saving forgone $220,000)
b) eliminating ES and MS music lessons (savings forgone $375,000)

She [Fadem] carried the day on those. On the other hand, the Board did vote to further consider:
a) demoting higher paid staff (PhDs??) from FT to PT (saving $640,000)
b) increasing the class size by one (or maybe two??) (saving maybe $500,000, but the numbers not at all clear on this).

The first of these seems completely insane to me, but maybe they are trying to make points to the TEEA and to the community about their willingness to undertake the limited options allowed by state law. There was a very confusing discussion about the overlap of the retirements and the demotion strategy, so maybe I’m missing something. So it looks like they are still at least $1 million short of a balanced budget, and facing a TEEA that wants to get further compensation increases paid out of the Fund Balance, while it lasts. Dr Motel called for a thorough review of all non-mandated programs: art, music, kindergarten, transportation, etc.

Not a pretty picture.

T-E School District has Projected $16 million Budget Shortfall but Underfunded Pension not the Only Factor

Over the next few years, Tredyffrin Easttown School District will be faced with a $16 million budget shortfall; but the pension crisis is not the only contributing factor.

For many years, a growing economy propelled increases in stock prices, enhancing the coverage of many pension plans, public and private. In the old days, the nature of traditional pension coverage in the private and public sector was quite similar; the majority of all employees were covered by a defined benefit plan where the liability of the pension lies with the employer. However, there is a reason why in the last decade that the vast majority of private sector employees have turned away from defined benefit plans to some form of a 401(K) type plan – the challenge of keeping a defined-benefit plan, particularly in our unstable economic climate, has proven too great for most companies to bear.

Defined-benefit plans may provide the best financial safety net for employees, but most private sectors can no longer afford to maintain them – the strain on the company balance sheets has proved too large for firms to withstand. And even in the case where a company struggled to keep a traditional defined-benefit plan in place, the economic downturn has prompted plan changes whether they were preferred or not.

Pennsylvania, like many states in the country, is facing a multi-billion dollar public pension crisis and now is the time for pension reform in Harrisburg. The Public School Employees Retirement System (PSERS) and the State Employees Retirement Systems (SERS), the two systems administering retirement accounts for state and public school employees, are severely underfunded and will become insolvent without an increase in taxpayer contributions.

Pension reform will be to the topic of Rep Warren Kampf’s town hall meeting on Sunday, March 18, 4 PM at the township building. The school district’s public budget workshop on Monday, March 19, 7:30 PM in the Conestoga High School auditorium, will include discussion of the pension crisis and its impact on the school district.

Kampf plans to introduce legislation that would move state workers and school employees to a 401(K) style retirement program. All lawmakers should embrace fundamental pension reform but this type of reform legislation is likely to be met with significant political barriers in Harrisburg. A key driver of ever-rising retirement benefit costs is their hidden nature; it is easier today to promise retirement benefits that will not have to be paid out for years.

The true extent of the unfunded liability of the state pension plan needs to be fully understood. Most of the funding for pension payments – 69% over the last 25 years – comes from investment earnings. The state and school districts combined for 17% over those years, with employees contributing 14%. The causes of the pension-rate jump, PSERS officials say, were pension-payment increases made over the last decade or so that the legislature did not fund adequately, and investment-market declines in 2001-03 and 2008-09. A Pew Center study shows that the Commonwealth has contributed only 40% of what is actuarially required — the lowest percentage of any state government.Pennsylvania’s two major pension funds were 116% and 114% funded in 2001, but dropped to 83% and 79% by 2009.

We can accept that the pension crisis contributes to the projected school district’s $16 million budget shortfall over the next few years but is not the only factor that led to the current economic situation. Because school districts are so reliant on property taxes to fund their respective budgets, the last few years and the next several years will show an ever-decreasing revenue stream as property values and real estate transactions have tumbled. The unfunded and underfunded mandates serves only to exacerbate the already difficult fiscal situation faced in the school district.

Looking back at the last teacher contract, the economic picture in the Tredyffrin Easttown School District was very different in 2007 than it is in 2012 — the school board signed a contract that guaranteed 5%+ salary increases each year. Add to that the rising healthcare costs plus the required PSERS contributions, and the total yearly compensation increase package is much higher. Therefore, it is impossible to balance that increased expenditure when the Act 1 index plus exceptions is below 4%.

Rising healthcare costs and PSERS contributions coupled with decreasing real estate revenues and state and federal support … equals the unprecedented new fiscal reality of our school district.

T/E School District and Teacher Union Contract Negotiation Honeymoon Period Over

The contract negotiations between the T/E School District and the T/E Teachers Union (TEEA) started in early January. What is the saying about the ‘calm before the storm’ – I had been thinking that the teacher contract negotiations must have been going well as everything was quiet.

In a Community Matters post, Expert Negotiators Named as TESD Teacher Contracts Talks Begin, dated January 28, 2012, I wrote the following:

“ … With a cooperative tone, both sides have issued their preliminary statements – the school board recognizing the quality and standard of the District’s teachers but reinforcing the severity of our economic times. And the teachers union proudly applauding the school district as one of the best in the state and stating their desire to work together through the contract negotiations…”

This week in the Tredyffrin-Easttown School District would suggest that I might have spoken too quickly. First, the T/E School Board publicly stated in a contract negotiation update on the school district’s website that ‘TEEA Negotiator Refuses to Discuss Healthcare Options”. The school district’s negotiator, Jeffrey Sultanik claims that TEEA “does not want any changes to the existing plan or premium share increases for the employee”. Sultanik suggests that the negotiator for the teachers union, Ruthann Waldie, refuses to budge on the healthcare issue. The school board has made it clear from the start that the teacher contract needs to focus on reducing healthcare costs. Having attended a number of finance committee meetings of the school district, the teacher’s benefits are routinely discussed, especially healthcare.

When the school districts’ negotiating team was named (Dan Waters, Sue Tiede and Art McDonnell in addition to Jeffrey Sultanik), I shared TEEA’s concern that there was no school board director serving on the negotiating team. The residents of TESD elected the school board members to serve them and at least one of them should be ‘at the negotiating table’. One of the school board directors, Kevin Buraks, is an attorney who specializes in the collection of unpaid real estate taxes in municipalities and school districts in Pennsylvania. Certainly, given his background, Buraks would have been qualified at the very least to participate as a contract negotiation ‘observer’. As far as I know (please correct me if I’m wrong) no prior contract negotiations in T/E school district ever occurred absent school board directors.

Soon after the school district posted the contract negotiations update on their website, TEEA fired back with a response that suggested the school district’s update is “a collection of factual inaccuracies, misinformation, mischaracterizations and personal attacks”. The response from the teacher’s union suggests a willingness and desire to negotiate issues … but at the bargaining table, not through press releases and websites, as the path that TEEA believes the school district has chosen.

Because there is no representation by the school board at the negotiation table, it is a bit like ‘whisper down the lane’. The information and updates that the school board receives are not through first hand attendance at the meetings, it is from one of the four members of the negotiating team. That’s not to suggest that the school district is intentionally misleading the public through its updates, but I would suggest that some of the nuances that occur in a meeting can be missed in the translation.

According to TEEA, the teachers union has presented a comprehensive set of proposals to the school district and are willing to discuss “the district’s finances, staffing levels, school calendar, health insurance, wages and all other important issues …”

As a taxpayer in this school district, I want to know that the contract negotiation updates are completely accurate … can the school board members provide that reassurance to the public. On the other hand, having attended a number of school district finance committee meetings, I also know that the current teacher healthcare benefits exceed much of what most of the residents of this school district receive themselves.

We are fortunate to live in one of the best school districts in the state and preserving that school system should be a priority to the residents, school district and the teachers. The new teacher’s contract needs to be line with our current economic reality. However, the negotiation process should be accomplished with a spirit of collaboration.

According to TEEA and the school district, there is no next negotiation session scheduled. I make a motion to move the contract negotiation process forward; do I hear a second?

No Custodial Outsourcing for 2012/13 but looks like Sports and/or Activity Fees Could be a Reality in T/E

Based on attending the TESD Finance Committee meeting, it looks like the custodial outsourcing in the school district is ‘off the table of consideration’ for another year. If you recall, the most significant cost-saving measure to the District remaining from last year’s budget was ‘outsourcing of custodial services’ with a savings listed as $950K. After internal TENIG (non-instructional union of TESD) discussion, the custodial workers made an offer to the school district, which was presented to the Finance Committee by school board president Karen Cruickshank.

For the 2012-13 year, the custodial workers of TENIG have offered a 10% reduction in their salaries and they will not take the 4.5% increase contained in their existing contract. In real dollars, the cost savings to the District is $197K in salary reduction, plus the additional percentage contractual savings for a total savings of approximately $285K!

Beyond the generosity of the custodian workers offer, the Board realizes that it is difficult to measure intangibles in the in-house custodial services … many of the employees live in the T/E and their families are part o the community. With that comes a level of safety that is difficult to measure. Although the custodial workers offer has to be reviewed internally by the District attorneys, the it received overwhelmingly positive support from the Board.

A $285K savings to the school district plus the bonus of saving local jobs … congratulations to TENIG, custodial workers, District staff and Karen Cruickshank (on behalf of the school board) for such a positive outcome early in the 2012/13 budget discussions.

Ray Clarke also attended last night’s Finance Committee meeting and I thank him for his willingness to share his thoughts and opinions below:

Notes from Ray Clarke, TESD Finance Committee Meeting

A relatively well-attended TESD Finance committee meeting on Monday, and some important topics discussed – in varying depth and with varying data quality – the two not always correlated.

1. A significant announcement from Mrs Cruickshank at the end of the meeting: the janitorial staff in the TENIG union have offered to take a 10% reduction in wages for the 2012/13 school year. Their contract entitles them to, and the preliminary budget assumed, a 4.5% contractual increase. By my math, starting from the $1.97 million compensation line item provided by Dr Waters, this means a total benefit versus the budget of $286,000. In return the union asked for the district to remove the outsourcing option for 2012/13. (Also, with no further actions next year, the salaries would revert in 2013/14 to the contracted level – a 20% increase that would not of course be a tenable option).

After getting the numbers sorted through, the Committee was very appreciative and broadly in favor of this offer, weighed against a potential outsourcing saving three times the offer, but with risk and the uncertainty of basing the alternative on now-expired bids.

This looks to be a good result for all concerned. Employment security is maintained and compensation continues to move towards market levels. Importantly, it can continue to do so assuming similar flexibility next year and a more equitable benefits program in the next contract.

2. Much information was shared regarding possible fees for “sports and activities”. Most neighboring school districts have either implemented some kind of fee or are considering doing so. There are as many approaches as there are school districts. Significant money can be raised: at $100 per sport/activity (with a cost to the district), the revenue would be about $150,000 for both high school students and middle school students. For context, about 1700 of the 2050 high school students participate in at least one sport/activity of any type; the middle school numbers are similar.

There seems to be a consensus that the district should charge only for those activities for which it incurs costs for either extra teacher time (EDRs) or for transportation. (An interesting issue thus raised: the process by which a club gets the status of having compensated teacher oversight). Also clear is that there should be a process to ensure that no student should be prevented from participating for financial considerations.

Decisions still to be made:

  • The same fee for any sport or activity, or some kind of tier system loosely based on cost?
  • A fee per student regardless of number of sports/activities or a fee per sport or activity up to a maximum?
  • The amount of any fees

The administration was charged with coming back with further permutations. It seems to me that it would be helpful to also tabulate other districts’ experience regarding participation levels and administrative costs. There seems to be a good argument for action here. For me, fairness would suggest some kind of tiered fee structure with a maximum, if it can be administered reasonably. The Committee is keen to give this air time at the Budget Workshop.

3. On revenues: no immediate bad news in the Corbett budget proposal. The move to bundle four separately calculated state funding items (basic ed, social security subsidy and public and non-public transportation) looks to me like a plan to cap future funding in a way that is unrelated to the actual underlying costs of those items. The one loss is a $50,000 grant that TE uses to fund the homework club.

Less good news on the property re-assessment front: $573,000 of lost revenue more or less planned for in the budget, but in addition $550,000 at risk from nine commercial assessments being appealed to the state courts and $820,000 at risk from a Vanguard appeal.

This illustrates the district’s vulnerability from relying solely on one tax that falls disproportionately on a class or classes of taxpayer that see no direct benefit from the tax, when many of those who get the benefit see their tax dollars going to other jurisdictions. But unfortunately any discussion of diversifying the tax base was hijacked in the last election.

4. A big mystery around the district medical benefits cost. Independence Blue Cross is apparently proposing a change in the way it gets compensated for administering our self-funded plan. Currently they get a 2.5% administrative fee (if only the overhead for the entire US healthcare system were that low!). Much perplexity about the proposal since it is being couched in terms of changing provider discounts. However, the net effect would be a $400,000 to $620,000 cost increase. I’m not sure there will be too much to be done about what is effectively a price increase, but more clarity needs to be provided.

5. No net surprises in the current district financials so far. We are on track for a deficit of about $0.75 million, as budgeted after adding back the $1.3 million budget reversal.

Custodian Outsourcing and Implementation of Activity Fees Remain TESD Finance Committee Options for 2012-13 Budget

I attended the T/E Finance Committee meeting last night as did Ray and Carol Clarke. However, other than one other resident, the 8-10 T/E school district teachers in the audience outnumbered us. Presumably, as the District begins the teacher contract negotiation process, there will be a continued presence at school district meetings from the teachers union.

Highlights from the Finance Meeting:

It should not be a surprise to learn that real estate tax delinquencies are up from last year, albeit only slightly at this point. However, the District has a process in place for the collection of unpaid real estate taxes and has hired Portnoff Law Association to collect the delinquent taxes. Currently there are 320 delinquent taxpayers, 75 are commercial properties and the remainder residential . . . total outstanding delinquent taxes: $1.7 million.

The majority of the meeting was spent in discussion on 2012-13 budget strategies. The most significant cost-saving measure that remains from last year’s budget discussion is the outsourcing of custodial services. Although the savings remains listed as $950K, the Board recognizes that is last year’s number and will need to be updated. There is the possibility of outsourcing a portion of the custodial services versus all of the services. There was talk of different options, such as outsourcing 3rd shift or segregating buildings to outsource. This will require a detailed RFP with specifics outsourcing options to bid. It was pointed out that some bidders may not be interested in bidding for a part of the custodial services.

There is an internal TENIG meeting on January 12, and the Board is hopeful that the union can ‘give back’ to help with expenses. The Board realizes that it is difficult to measure intangibles in the in-house custodial services . . . many of the TENIG employees live in the T/E school district and their families are part of the community. In addition to living in the community and protecting local jobs, there is a level of safety that comes from having in-house custodial services that is difficult to measure. The RFP is hold and the Board will wait to hear back from TENIG.

The implementation of an activities fee for participation in extra-curricular activities and transportation charges for some extra-curricular activities and busing for summer school remains on the 2012-13 budget strategy list. I recall the activities fee discussion last year, which the Board was able to avoid for 2011-12. However, because so many of the strategies are now in place, there are far fewer options in place.

The cost to the school district for non-mandated extra and co-curricular activities is $1.1 million. Because of the magnitude of the expense, the Finance Committee is looking at various options to help offset some of the cost, including an activities fee. In one scenario, a fee of $50 per student (high school only) involved in non-mandated sports or activities would net $70K to the District. This fee would be one-time only to the student, regardless of the number of activities. For those families unable to pay the fee, a hardship waiver would be in place. The cost-savings to the District for charging for transportation (middle school and high school) for some extra-curricular activities and summer school busing is budgeted at $140K. Of that amount, $20K is attributable to busing for summer school. Further discussion was suggested, including looking at other school districts.

Ray Clarke makes the following observation of the budget strategies,

There are no strategies for further meaningful deficit reduction beyond the possibility of TENIG concessions/janitorial out-sourcing. Reduction of in-service days ($200,000 per day) has been taken off the table during contract negotiations. To me, this means that we are looking at a deficit of at least $2 million. (One possible upside might be better healthcare cost experience – I read today of an S&P analysis that had private insurance spending growing in 2010/11 by 7.35%. Medicare growth was a low 2.6%. This mirrors TE’s experience, and suggests that cost growth has slowed for whatever reason and therefore the 10%/15% increases in the TE projection model may be too high).

The closing of St. Monica’s will affect approximately 150 students and the actual impact on the T/E school district is not clear. St.Monica’s will merge with St. Patrick’s in Malvern so for those students who change schools, there will be increased transportation costs to the District. For those families who decide on public education, there are increased educational costs. Devon and Beaumont Elementary are the public schools impacted by the closing of St. Monica’s. It’s too early to know the magnitude of the impact but it is possible that redistricting will be required to accommodate the additional students (specifically at Devon Elementary).

I asked for clarification on the teacher contract negotiating team. At the last school board meeting, members of the negotiating team included the hired negotiator, Art McDonnell (TESD Business Manager), Sue Tiede (TESD Director of Personnel) and Superintendent Dan Waters but no mention made of school board members. Although historically the District’s negotiating team for the teacher’s contract has always included school board members, it was confirmed that this time there would be no representation on the team by the school board. This decision struck me odd but it was explained that this was a Board decision and that the team would be given the parameters by the Board and receive ongoing updates. I know we have former school board members commenting on CM, who have been part of prior teacher contract negotiations, so I will be curious to know your opinions.

Perhaps, leaving the contract negotiations to the ‘professionals’ will keep the discussion focused and directed …? At this point, the negotiating team has not developed a strategy for public communication.

The Board is developing a communication strategy for the PSERS situation. There was discussion to include a special PSERS presentation for the public and updating the District website with PSERS information. Ray Clarke continues to believe that, “while it’s important for the public to know what’s driving the 1 – 1.5% tax increase that this [PSERS] represents for the next 4 years, it deflects attention from other issues under their [School Board] control.”

In closing, the Finance Committee presented a list of goals for 2012 that included (1) formulation of 2012-13 budget; (2) maintain 5-year budget projection model; (3) develop financial communication model and (4) develop steps for further EIT studies.

Ray Clarke asked the Finance Committee to explicitly address fund balance strategy as an additional goal. Clarke’s suggestion was rejected on the basis that it was included in goals 1 and 2 of the Finance Committee and was covered by the Policy Committee. As a reminder, T/E has one of the largest fund balances in the state — $30 million. Some in the community that would suggest that the fund balance is excessive and that as taxpayer’s money it should be used.

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!

2012 Township Budget and T/E School Board Updates

Today’s post includes notes from the Board of Supervisors and T/E School Board meetings held last night. Although a prior commitment prevented me from attending last night’s BOS and school board meeting, Ray and Carol Clarke attended the meetings and graciously forwarded their notes. I attended a TMACC (Transportation Management Association of Chester County) meeting and will provide a 202 project –Stage 3 update separately.

At the prior BOS meeting, the preliminary 2012 budget was presented which included a millage increase 6.9% for real estate taxes to cover the $500K deficit. The supervisors left that meeting with determination to review the budget and look for opportunities for further reductions and to take a hard look at expenditures and services before approving any tax increase.

The supervisors continued the budget discussion at last night’s meeting. In their review of the preliminary budget, the supervisors found some ways to decrease expenditures and as a result reduced the tax increase from the initial 6.9% to 3.5%.

The supervisors propose decreasing expenditures in several ways:

1) Reduction of professional fees by $49.7K

2) Use the Capital Fund to fund IT equipment – 67.5K (This changes the revenue source from the Operating Fund to Capital Fund)

3) Supervisors asked township manager to find $45K in reductions. (Not clear on how this will be accomplished; further discussion is required).

4) Defer the hiring of 2 full-time (currently open positions) in the Police Department until July – $85K savings

5) Associated savings in benefits due to #4 – $45K

To lower the tax increase to 3.5%, the supervisors are proposing a combination of decreased expenditures and the using fund balance reserves for the remaining budget shortfall. Based on the 2011 budget process and the severe cuts that were required, I am not sure where Mimi Gleason is going to find $45K in reductions for the 2012 budget. Reductions in the healthcare benefits could produce significant savings for the budget; but apparently due to contract negotiations may not be an option. If a reduction in benefits is off the table as a possible solution, it is not clear what remains that could be reduced.

The 2012 budget will have another final review at the next BOS meeting on December 19. If we want to feel better about our potential 3.5% tax increase, we need look no further than to our next-door neighbors. In Phoenixville, residents are facing a potential 19 percent tax increase to close their 2012 budget deficit. And remember, they pay an Earned Income Tax in Phoenixville!

The T/E School Board meeting was a very short meeting. With a 9-0 vote of confidence, Karen Cruickshank was elected to president and Betsy Fadem as vice president of the school board. Cruickshank will choose the committee chairs and members this week. There are significant Finance and Facilities Committee meetings planned for next week. With the loss of Kevin Mahoney on the school board, the School Board is going to be challenged with the Finance Committee.

In my review of the agenda for last night’s school board meeting, I was disturbed to read that the Public Information Committee would be abolished. Debbie Bookstaber’s presence on the school board had encouraged transparency and public information. Without her advocacy for transparency, it may be challenging for us to receive information during the contract negotiations.

Apparently, the board defended its actions to abolish the Public Information Committee last night, with the feeling that each school board committee should be responsible for their communications. Without the Public Information Committee holding the board to a high communications standard, it becomes the responsibility of the taxpayers to play watchdog. The school board members agreed that if a future need required it, the Public Information Committee could be re-instituted. Why do I feel like we are going backwards with this decision instead of forward?

Now that Debbie Bookstaber is off the school board, maybe she will join the conversation on Community Matters. Her insight as a recent school board director could be extremely valuable in the upcoming teacher contract negotiations.

Decision Time – Will T/E School Board Directors Vote in Favor of an EIT Voter Referendum Question?

Monday night is a case where I would like to be in two places at once . . .

Tredyffrin’s township finances and the proposed 2012 budget is on the Board of Supervisors agenda at 7:30 PM while the T/E school directors will hold a Finance Committee meeting at 6:30 PM followed by a special school board meeting at 7:30 PM to discuss the EIT. (Both school district meetings will be held in Conestoga HS cafeteria). I will attend the Board of Supervisors meeting and I am counting on my friend Ray Clarke to attend the school district meetings.

In reviewing the agenda for the T/E Finance Committee meeting and the draft minutes from their October 17 meeting, I read the following:

Education Committee Recommendation:

At the prior Finance Committee meeting the Committee was informed that the State reinstated $1.3 million in funding that was not included in the District’s 2011-12 budget. In light of this information, the Committee authorized the Superintendent to restore education program cuts made in the 2011-12 budget. Dr. Richard Gusick presented the proposed reinstatements of budget cuts to the education program and explained that they were already reviewed by the Education The Finance Committee asked that the proposal to reinstate these budget cuts be presented at a future Board meeting.

I am confused. Although I was aware that the State had reinstated $1.3 million in funding to the T/E school district, I was not aware there was a decision as to whether (1) restore the district’s education programming cuts or (2) add the money to the fund balance.

According to these minutes, the Finance Committee (or Education Committee?) authorized the money go to restoring education program cuts. Restoring which programming cuts? Latin in the Middle School? Foreign language in the elementary school? Technology purchases? Specifically, which education program cuts did the committee authorize restored? In addition, are we to assume that the option of adding the $1.3 million to the district’s fund balance is off the table for consideration? These are questions for the school board directors at Monday’s meeting.

I also noted that the Finance Committee meeting minutes indicate that the school district will wait until 2012 to release a RFP for the outsourcing (if needed) of custodial services. It is not clear at this point if custodial outsourcing will be on the budget reduction strategy list.

Immediately following the Finance Committee meeting tomorrow night, the school board will hold a special meeting at 7:30 PM to consider notification to Tredyffrin and Easttown townships of the intent to levy an EIT. November 16 is the deadline for the School Board to provide the townships with notification so the board will be taking a vote at this special meeting. The school board will vote on whether to include EIT as a voter referendum question on the primary election ballot on April 24, 2012. For school districts to levy an EIT requires voter approval. The maximum that TESD could levy is 1%. If approved by voters, all residents, including renters, in Tredyffrin and Easttown Townships would be taxed at 1% on earned income. If an EIT were to be approved, the townships have the legal option to request one-half of the 1% collected by the school district.

Leading up to Election Day, we watched as EIT become the ‘buzz’ word of the local campaign season. Early on, the local Republican Party took a stand against an earned income tax and furthered the issue by labeling the Democrat candidates as EIT supporters. Feeling the pressure, all the Democratic school board candidates responded that ‘they’ were personally opposed to an earned income tax.

The politicizing of the EIT prior to the public presentation of TESD’s tax study group troubled me. The EIT became a political football between the local political parties and in my opinion, damaged the community’s ability to completely understand the EIT as presented by the tax study group. Not to mention the confusion that occurred at the polls on Election Day! Three different precinct judge of elections have reported to me that there were some confused voters — asking where the EIT question was on the ballot. Based on the campaign mailers and political signs, many in the community came to the polls on Election Day expecting to vote on the EIT issue.

Now that we are on the other side of the election, how can newly re-elected school board members Karen Cruikshank (D) and Jim Bruce (R) now vote in favor of taking the EIT issue to the voters. I do not know whether re-elected Easttown school board member Pete Motel (R) made a public statement one way or the other re the EIT. Based on the pre-election political hype of the EIT, the vote count of the school board members will be interesting. Will we see the school board members following the lead of their political parties?

If the school board members vote in favor of an EIT voter referendum question on the April primary ballot, do many of us really think that the residents would vote in favor of this new tax. During the school board budget cut strategy meetings, there were residents asking for tax increases vs. further educational programming cuts.

Faced with the possibility of further programming cuts in the next school district budget, would there be sufficient support from voters for an EIT?

Election Day 2011 is over . . . Looks like much will remain the same!

Election Day 2011 has now passed and the ‘unofficial’ results are in. The full results for all races can be found at the Chester County website, www.chesco.org. In reviewing the results, all incumbents prevailed in the supervisor and school board races. Other than Karen Cruickshank’s re-election as school board director, it was a clean sweep for the Republicans for the T/E School Board and Board of Supervisors.

SCHOOL DIRECTOR TREDYFFRIN EASTTOWN REGION I
VOTE NOT MORE THAN 2
JAMES D BRUCE (REP) . . . . . . . 1,443 25.33
TARA G LA FIURA (REP) . . . . . . 1,336 23.46
KAREN CRUICKSHANK (DEM) 1,635 28.70
JERRY HENIGE (DEM) . . . . . . . 1,280 22.47
WRITE-IN. . . . . . . . . . . 2 .04

SCHOOL DIRECTOR TREDYFFRIN EASTTOWN REGION II
VOTE NOT MORE THAN 2
ELIZABETH A MERCOGLIANO (REP). . 2,416 25.71
KRIS GRAHAM (REP). . . . . . . . 2,428 25.84
JENNIFER LIGHTMAN WESSELS (DEM) . . . 2,322 24.71
SCOTT DORSEY (DEM) . . . . . . . 2,229 23.72
WRITE-IN. . . . . . . . . . . 1 .01

SCHOOL DIRECTOR TREDYFFRIN EASTTOWN REGION III
VOTE NOT MORE THAN 1
PETER MOTEL (REP). . . . . . . . 1,256 61.51
CRAIG A LEWIS (DEM) . . . . . . 785 38.44
WRITE-IN. . . . . . . . . . . 1 .05

Karen Cruickshank (D, Jim Bruce (R) and Pete Motel (R) were re-elected for TESD Region 1 and Liz Mercogliano (R) and Kris Graham (R) were elected for TESD Region II. In Region III, incumbent Pete Motel won by a significant margin against his opponent. If you recall from the school board debate, the candidate who made personal attacks was Craig Lewis against Pete Motel. Maybe this win indicates that voters from Easttown did not appreciate Mr. Lewis tactics. Cruickshank is currently serving as president of the school board and her win reflects a vote of confidence from the voters on her performance.

Looking at Mercogliano’s win, I am reminded that neither she nor Tara LaFiura participated in the League of Women Voters debate. If I had been a betting person, I would have thought that would have harmed her chances of winning. But she was only 12 votes behind the winner Kris Graham who did participate in the debate.

Here are the unofficial results from the Tredyffrin supervisor races:

TOWNSHIP SUPERVISOR AT-LARGE TREDYFFRIN TOWNSHIP
VOTE NOT MORE THAN 2
MICHAEL C HEABERG (REP). . . . . . 4,020 27.09
KRISTEN KIRK MAYOCK (REP) . . . . 4,042 27.24
MOLLY DUFFY (DEM). . . . . . . . 3,636 24.50
F MICHAEL MURPH WYSOCKI (DEM). 3,137 21.14
WRITE-IN. . . . . . . . . . . 4 .03

DISTRICT SUPERVISOR 1ST DISTRICT TREDYFFRIN 1ST DISTRICT
VOTE NOT MORE THAN 1
PAUL W OLSON (REP) . . . . . . . 1,331 50.21
VICTORIA SNYDER (DEM) . . . . . . 1,318 49.72
WRITE-IN. . . . . . . . . . . 2 .08

DISTRICT SUPERVISOR 3RD DISTRICT TREDYFFRIN 3RD DISTRICT
VOTE NOT MORE THAN 1
JOHN JD DIBUONAVENTURO (REP) . . . . 1,616 98.54
WRITE-IN. . . . . . . . . . . 24 1.46

Incumbent Mike Heaberg (R) was re-elected along with Kristen Mayock (R). Only 22 votes separated those two spots. Unopposed in the race, JD DiBuonavnturo (R) was re-elected for District 3. In District 1, Paul Olson (R) will retain his seat on the Board of Supervisors. Tory Snyder (D) gave Olson a real run and came within 13 votes of unseating him.

Based on these results, Tredyffrin’s Board of Supervisors will continue as an all-Republican board. Mayock’s election to the Board adds a third woman – it has been awhile since we had that dynamic. Personally I’m looking forward to that new element and what that will mean for the residents.

In an upset, Jeremy Blackburn (R) was unseated by Analisa Sondergaard (D) as District Judge. I was one of those who believed that our District Judge should be an attorney so I am very supportive of Sondergaard’s win in this election.

MAGISTERIAL DISTRICT JUDGE DISTRICT 15-4-01
VOTE NOT MORE THAN 1
JEREMY M BLACKBURN (REP) . . . . . 1,847 48.36
ANALISA SONDERGAARD (DEM) . . . . . 1,971 51.61
WRITE-IN. . . . . . . . . . . 1 .03

In the Chester County District Attorney race, I am pleased that Tom Hogan (R) won this race and will serve the county as our new DA.

DISTRICT ATTORNEY
VOTE NOT MORE THAN 1
TOM HOGAN (REP) . . . . . . . . 45,036 60.07
SAMUEL C STRETTON (DEM). . . . . . 29,826 39.78
WRITE-IN. . . . . . . . . . . 106 .14

In the County Commissioner race, the three incumbents, Ryan Costello (R), Terence Farrell (R) and Kathy Cozzone (D) were all re-elected to another term as Commissioners.

COUNTY COMMISSIONER
VOTE NOT MORE THAN 2
RYAN A COSTELLO (REP) . . . . . . 42,232 29.40
TERENCE FARRELL (REP) . . . . . . 40,629 28.29
KATHI COZZONE (DEM) . . . . . . . 31,933 22.23
SUSAN BAYNE (DEM). . . . . . . . 28,736 20.01
WRITE-IN. . . . . . . . . . . 111 .08

To all the candidates, thank you for all the time and energy spent over these last few months with your campaigns. To our newly elected officials, the community thanks you and remain hopeful that you will stand behind the campaign promises that you made to the residents.

Yesterday I visited several precincts and spoke to many people. There was a constant theme in our discussions; I learned that many people in this community were deeply troubled by the campaign rhetoric of the political parties. They spoke of the infamous yellow signs, the negative campaign mailers and of the robo-calls. I actually had several people say that they almost stayed home in protest and knew that would not help with the message. Regardless if you are the winning side or not, please know that the tactics during this campaign season was not what many in the community want. I hope that in the aftermath of Election Day 2011, the local Republican and Democratic party will take the time to reflect on their campaign strategies for the future.

Is EIT the answer for T/E School District — Tax Study Group Presents their Pros & Cons

Election Day is Tuesday and based on campaign mailers, signs and general rhetoric that we were voting on the Earned Income Tax. The EIT is not an issue for us on Election Day, at least not this election.

Much of this campaign discussion on the EIT stems from T/E School Board decision to form a Tax Study Group as part of their budget development process. The goal of the committee of eight volunteers, including Michael Abele, Michael Benning, Rita Borzillo, Marie Falcone, William Mullin, Terri Smith, Andrew Snyder and Edward Stevens, was to study the effect that an EIT would have on the residents and the school district and provide the pros and cons.

The Tax Study Group held 5 public workshop meetings and presented their findings yesterday at two public meetings. Based on the Tax Study Group’s findings, the school board will make a decision whether to include the EIT question on the April 2012 ballot. If the EIT question is placed on the primary election ballot in April, community members will hopefully be able to make an informed decision.

Although I was not able to attend the EIT meeting due to a prior commitment, it is my understanding that both were well attended. I am on record as saying that I believe the process for a fair and open discussion of the Earned Income Tax has been tainted by the last few weeks of campaign politics from school board candidates. Serious economic issues are going to continue to affect our school district and cause many challenges to the school board facing the 2012-13 budget and teacher negotiations.

If you were unable to attend either of yesterday’s public meetings by the Tax Study Group, the EIT presentation will be aired on TETV, Comcast Channel 14 and Verizon Channel 20 at 9 PM daily from November 4 through November 14.

Ray Clarke attended yesterday’s Tax Study Group and offers his candid remarks from the presentation:

The Tax Study Group matinee played to a packed house – probably a hundred or more residents in attendance. I whole-heartedly encourage anyone interested in the fiscal and educational future of T/E to attend the evening performance. Of the 30 slides, two thirds are devoted to background – really important to place the discussion in its proper context. The pros and cons of the EIT were fairly presented, although not weighted nor compared directly to alternatives (it was not the TSG mandate to do that). The audience seemed engaged throughout, and the questions at the end added much to the discussion.

The elephant in the room: what will be the attitude of the Townships? Will they take 50% of any money the voters may want to apply to their children’s education? Easttown and Tredyffrin may be very different, and I think we all need to have a very long memory about campaign promises made by Tredyffrin Supervisors. (The $30 million TESD fund balance did not go unremarked as a short-term support).

A lot of hard work and thought went into the research and analysis, and in developing a communication that is accessible to everyone. Shows how important the process was and what a travesty it is to try to short-change it. Hopefully many voters will be able to see the evening performance or the video and draw their own conclusions.

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