Tuesday, December 30, 2008

The Economy and Pennsylvania School Districts

First, on a personal note, it is great to be back in Mt Lebanon. My family had a good vacation. We first spent some time in Washington DC and saw first hand the preparations being made for Obama's inauguration. We stayed across the street from the Willard Intercontinental Hotel which is famous for hosting both Martin Luther King, Jr (where he finished writing his "I Have a Dream" speech) and Julia Ward Howe (where she wrote "Battle Hymn of the Republic"). After two days in DC, the family headed down to Yorktown, VA where the last great battle of the Revolutionary War was fought. It was a great trip.

Upon my return I went through some of the newspaper articles I had missed. The following article from the Tribune-Review was published on Christmas Day:
Financial meltdown seeps to districts
By Rick Wills
TRIBUNE-REVIEW
Thursday, December 25, 2008

Public schools are feeling the squeeze from the financial chaos and instability that have clouded the future of everyone from the Big Three automakers to people nearing retirement.

Schools' revenue from earned income taxes has dropped in some cases, while real estate transfer tax revenue already is down 27 percent this year in Pennsylvania. Some school districts have reported abrupt jumps in tax delinquencies.

To make matters worse, returns on the handful of fixed-income investments that school districts are allowed have dropped from about 5 percent one year ago to less than 1 percent in many cases.

It is pervasive. Tax revenue is down across the board," said Jay Hines, executive director of the Pennsylvania Association of School Business Officials. "And state revenue shortfalls are a leading indicator of what will happen with schools and local governments."

No one expects state funding of schools to increase from last year.

"If the state flat-funds us -- and everyone thinks they will -- that's another hole in our budget," said Jeff Kline, business manager for the Hampton School District.

In Hampton, tax delinquencies already are on the rise, Kline said. The district anticipates that revenue from earned income taxes could fall as much as 10 percent this year.

"We were not impacted until the last two or three months," Kline said.

The district expects to lose between $300,000 and $400,000 because of falling income from the district's investments, which now yield less than 2 percent.

"It is a rough budget for this year," said Kline, who said his district might eventually have to look at a variety of cost-cutting steps.

In North Hills School District, mercantile and business privilege tax revenues are down slightly this school year. District business manager David Hall expects the outlook to worsen.

"We have four car dealerships in the district. And if General Motors' sales are down 40 percent, I can assume the car dealers are not doing well," Hall said.

The biggest part of any school districts' funds come from property taxes, a matter about which Hall is not especially worried.

"The same rule that keeps assessments from going up in Allegheny County also keeps them from going down," he said.

Even in the event of foreclosure, banks that take over properties generally continue to pay property taxes, said David Davare, director of research services for the Pennsylvania School Board Association.

"Banks will pay taxes to protect themselves," Davare said.

Communities with a large commercial base are more insulated in the short term but could be at risk in the long term if the economy continues to spiral downward.

"That will have an impact," Davare said.

So far, the biggest impact the recession has had on Pennsylvania schools is in the postponement of construction projects, Davare said. Four of the state's 501 school districts have postponed major construction projects, while six others have decided to go ahead.

An extended economic slump could force districts to make painful cuts, Davare said.

"They will have to look at the extras and maybe make some hard decisions. But we still have an obligation to educate every child that shows up," he said.

Keystone Oaks business manager Gwen Walker prepares for the worst, no matter the economic times.

"We always budget very conservatively and do not anticipate a high rate of return on investments. We learned that lesson in the late 1990s," Walker said.

Rick Wills can be reached at rwills@tribweb.com or 724-779-7123.



There was a second article published in The Almanac that went further into detail on effect the economy is having on the Pennsylvania State budget. The State is dipping into its rainy day fund to help balance the budget:

State dives headfirst into tight economy
By Bob Williams Staff Writer
December 30, 2008

The year 2008 may be remembered as the year the national economy imploded after many years of liberal lending by banks, and irresponsible borrowing by tens of millions of Americans from sea to shining sea. As of Dec. 9, there were 41 states facing budget shortfalls, Pennsylvania among them. But it could be worse, say Pennsylvania lawmakers and Gov. Ed Rendell (D). California, for example, is on the verge of fiscal collapse which could have a ripple effect throughout the U.S. in 2009. California this week eliminated $3.8 billion worth of construction on schools, roads and other public works projects.

Gov. Arnold Schwarzenegger (R) said California will run out of cash in February 2009, facing an 18-month deficit of over $40 billion.

By comparison, Pennsylvania is in good shape. As of Dec. 9, state revenues were $658 million behind estimates with current trending projecting a $1.6 billion shortfall by June 2009.

In response, Rendell and the state legislature have moved to approve a wish list of some $500 million in budget cuts. More cuts will follow, legislators say. A tax increase is not on the agenda--yet. Cuts proposed include the following: • $464 million from the already announced budget cuts and other cost-saving measures, including a wage freeze for more than 13,600 non-union employees and the elimination of this year's cost-of-living adjustment for the governor and cabinet members; a hiring freeze; and the curtailment of out-of-state travel; • $36 million in budget cuts by the General Assembly and other independent agencies - reductions that have yet to be identified by those entities; • $375 million from a portion of the commonwealth's $750 million Rainy Day Fund - which will safeguard the remaining half of the Rainy Day Fund to meet future economic challenges; • $174 million in income from the Marcellus Shale natural gas drilling leases•; $450 million in anticipated federal fiscal relief; and • $101 million in unused funds left over in state accounts from prior-year budgets.

"In Pennsylvania, general fund revenue collections from July through November were $657.9 million - or 6.8 percent - lower than estimated," Rendell said. "During the same period, motor license fund revenues were $112.5 million - or 9.8 percent - lower than estimated.

"Now that that rainy day is here, we will be able to draw on the funds we have prudently put aside to help us balance the budget. To continue its pattern of fiscal prudence, the commonwealth plans to use only half of the Rainy Day Fund - $375 million - to balance the 2008-09 budget," Rendell said.

While not confirmed, Rendell said President-elect Barack Obama has earmarked $450 million to Pennsylvania as part of his proposed federal stimulus package.

The reason actual revenues are down by $657.9 million with projections of a $1.6 billion deficit is that Pennsylvania budgets run from July 1 to June 30 of the following year. Pennsylvania's last budget was approved in July 2008. The $657.9 million represents the losses through December 2008. If the current trends continue through June 2009 and no cuts are approved, the deficit will be $1.6 billion by June 2009.
The State flat-funding our budget next year would clearly have an impact on us. While we do not get as much funding from the State as many other Districts in Pennsylvania, it will make it more difficult to pass a balanced budget.

Finally, there was a third article published in the Post-Gazette that looked into the PSERS contribution rate increase coming in a few years. I posted an entry on my website on December 18th. The full article is below:

Payments to school retirement system set to soar
Tuesday, December 30, 2008

North Hills School District over the years has built up a healthy $10.2 million fund balance, but officials won't go on a spending spree any time soon.

David Hall, director of finance and operations, said he expects to need at least some of that money to deal with ballooning payments to the state Public School Employees' Retirement System, forecast to begin in 2012-13.

School districts and the state, which share the employer pension costs, haven't contributed enough money to cover PSERS' liabilities, particularly as financial markets have declined.

As a result, PSERS has an unfunded liability of $8.4 billion, its actuaries, Buck Consultants, told the agency's board this month.

That shortfall is forecast to come to a head in 2012-13, when the rate of retirement contributions by school districts and the state are expected to more than triple.

"The chickens come home to roost eventually," Mr. Hall said.

The burden of coming up with the money will fall on taxpayers, both local and state, making the problem a critical one for school boards and state officials who already are struggling with tight budgets.

This month, PSERS approved an employer contribution rate of 4.78 percent of salaries for 2009-10, only slightly above the current rate of 4.76 percent. Of the employer contribution, about half is paid by school districts, charter schools and other public school entities. The state pays the other half.

Employees' contributions are expected to average 7.32 percent of their salaries in 2009-10. The state and PSERS cannot change the employee contribution rate without granting new benefits, so the shortfall ultimately must be made up by schools and the state.

Current estimates call for the employer rate to increase to 16.4 percent of salaries in 2012-13. But by this time next year, based on stock market trends, the estimate for the employer's 2012-13 rate may exceed 20 percent, Jeffrey Clay, PSERS executive director, cautioned the agency's board.

"We are not funding the benefits earned each year, much less paying the unfunded accrued liability of the system," Mr. Clay told the board this month.

"This is the equivalent of having the mortgage and not paying the principal. The principal gets added to the debt and, of course, interest is charged on top of that," he said.

For school officials in the North Hills, which has an annual budget of about $65 million, the increased share translates into millions of dollars. Currently, the district contributes half of its share of $1.5 million for the PSERS cost, or about $750,000. If the contribution increases to 16 percent of employee salary, Mr. Hall figures the district and state combined share will rise to about $5.8 million, meaning the district's share would be about $2.9 million.

How did the fund get to this position?

The state in 2001 and 2002 enhanced retiree benefits. Then it decided to delay larger contributions to the fund until 2012-13, partly because of stock market volatility in the years following the decision to enhance benefits.

The employer contribution rate dipped as low as 1.09 percent of salaries in 2001-02.

"That was, to me, the epitome of penny-wise and pound-foolish," Quaker Valley Superintendent Joseph Clapper said.

PSERS cannot raise the rate now to allow a more gradual increase because it must follow the rate formula -- which includes averaging five years of investment returns -- set by the Legislature.

The procrastination -- with its specter of massive payments beginning in 2012-13 -- has frustrated some school officials and the 40,000-member Pennsylvania Association of School Retirees.

"Even though we know we are coming up to a cliff, nobody's been willing to address that cliff ahead of time," Mr. Hall said.

Some districts -- including Butler Area, North Hills and Quaker Valley -- have nest eggs or forward-looking budgeting that may soften the blow.

But even if districts have set money aside, the high rate is not expected to be a one-year event. The current PSERS forecast put it above 14 percent for at least five years after the spike hits.

Some are calling for the Legislature to make changes to avoid or minimize any rate spike in 2012-13.

"I think the Legislature needs to take a look at the fundamental nature of the retirement system. We really can't afford this system going forward as structured," said Tom Gentzel, executive director of the Pennsylvania School Boards Association.

Richard Rose, a member of both the PSERS and Bethel Park School District boards, said, "I think something has to be done, but it's out of PSERS' hands to do it."

He suggested the Legislature require schools to follow a state Department of Education recommendation that schools budget more than 7 percent each year for retirement contributions so they can build a reserve to be ready for the rate spike.

Mr. Rose said that PSERS had been doing "very well until the market crashed on us like this. We have to ride out the storm. We are still currently investing money, and hopefully there are some reasonable investments out there today that will put PSERS back in good standing."

Over the last decade, about three-fourths of the pension fund came from investment returns.

In the last school year, PSERS investments fell 2.82 percent, its first negative annual return in more than five years and a significant drop from the 22.93 percent earned in 2006-07.

In a report last summer, the governor's budget office painted a troubling picture of PSERS and the State Employees Retirement System, or SERS, which covers non-school retirees.

SERS will not set its new employer contribution rate until spring. Its current rate is 4 percent, and its last projection for 2012-13 was 5.7 percent.

"Unfortunately, this year's investment climate has made old news out of that number," said SERS spokesman Robert Gentzel. SERS reported its investment returns fell 14.4 percent for the first nine months of this year.

The Association of School Retirees has asked the Internal Revenue Service to review the state's management of PSERS and SERS.

"The escalation of our systems' unfunded accrued liabilities poses a very real danger to the taxpayers of Pennsylvania, who will ultimately be required to contribute much more to our systems in later years to make up for the funds that the systems did not receive from the state and school districts and all that the systems were not able to generate from investment of those contributions," Ureneus V. Kirkwood, president of the retiree association, said in a Dec. 2 letter to IRS Commissioner Douglas Shulman.

Tom Gentzel expects that PSBA will make a proposal early next year to create a plan that would apply to employees hired after a certain date in the future.

"One of the ideas that we've been drawn to is the idea of some kind of a hybrid plan, a combination of a defined benefit and defined contribution," he said.

It may be time to think about such a plan, he said, because a high number of teachers who are from the baby boom era will be retiring in the coming years, resulting in new hires that could enter a new kind of retirement plan.

Joe Smydo can be reached at jsmydo@post-gazette.com or 412-263-1548. Eleanor Chute can be reached at echute@post-gazette.com or 412-263-1955.
First published on December 30, 2008 at 12:00 am
There are a lot of factors that will have an effect on our next budget. It will be difficult to navigate these waters.

Thanks for reading.

James

Thursday, December 18, 2008

PSERS Contribution Rates set to increase 244% by 2013

PSERS has released its employer contribution rate that will be effective July 1, 2009. That rate will be 4.78 percent, a slight increase from this year's rate of 4.76 percent.

From the press release:

PSERS Executive Director Jeffrey B. Clay also cautioned that, while the latest actuarial figures support only a small increase in the contribution rate, school employers should continue to prepare for the dramatic employer contribution rate increase forecast in four years.

Mr. Clay stated that “while PSERS cannot collect employer contributions in excess of what is actuarially required by funding methodologies, some school districts on their own have begun to create a reserve in anticipation of the large rate increase projected in FY 2012/2013. Mr. Clay recognized the difficulty for school employers to create a reserve in the current economy, but stated “it would be very prudent for school employers to do so.”


Here is a chart of the expected contribution rates that was put out by PSERS. This chart outlines the projected rates of contribution all the way out to the year 2038. According to this chart, the employer contribution rate is scheduled to increase from 4.78 percent for 2009 to 16.40 percent beginning in 2013. That would be a 244% increase.

Last year the District spent roughly $2.8 million on these contributions, half of which were reimbursed by the state. In the District budget available online on page 68 you can see how much revenue Mt Lebanon received in reimbursement. Forecasting from today's numbers, a 244% increase would mean our contribution for the 2013 year would be close to $6.8 million of which about $3.4 would be reimbursed by the state.

Hopefully our state lawmakers will see this and make sure they do some leveling of the contribution rate before the huge increase.

Thanks for reading.

James

Almanac Article

I thought yesterday would be my last post before vacation. However, there was an article in the Almanac that covered both the Mt Lebanon and Upper St Clair construction projects. I will post the article below and then give a few comments on some of the quotes that are in there.

School plans under review
By Bob Williams Staff Writer bwilliams@thealmanac.net

With the U.S. economy facing the worst downturn since the Great Depression according to J.P. Morgan Chase & Co., residents in Mt. Lebanon and Upper St. Clair have some thinking to do before investing nearly a quarter billion in three aging school buildings.

Mt. Lebanon High School and both Upper St. Clair's middle schools are in need of major renovations, say school board members in the respective communities.

A narrow majority of Mt. Lebanon School Board members say postponing $80 million to $150 million in construction at the high school is folly, while a strong majority of board members in Upper St. Clair say they aren't ready to put the brakes on a $60 million to $65 million overhaul of Fort Couch and Boyce middle schools.

The question is, will the national economic downturn have a local impact?

National outlook

National economists say 2008 could be one of the worst years since the Great Depression. In November alone, 533,000 jobs were lost. December could be worse. The national GDP for the fourth quarter may be less than zero with the GDP free-falling 6 percent over the year. The stock market lost half its value over 2008, over one trillion dollars. The 401K plans imploded.

The failed federal loans to the Detroit automakers caused GM to announce 21 plant shutdowns. Millions of jobs are affected by the Big Three. President George W. Bush may try to override a veto of the loan package by the U.S. Senate last week.

Offsetting these negatives is the federal government's trillion dollar bailout plan, which is hoped to shorten the duration of the recession.

Many economists, including J.P. Morgan, expressed confidence in President-elect Barack Obama's economic team. Once the new president is sworn in, the markets may react favorably and move in a positive direction. Fuel costs are down, as are interest rates. If these both continue to remain low, it could help boost the economy in 2009.

Mt. Lebanon's option

Reviewing these economic realities, Mt. Lebanon School Board member James Fraasch offered an alternative to the current plan for the high school renovation.

"If we were to raise our property taxes another 15-20 percent to pay for a large project, then we should all be concerned about the long-term effect that will have on families deciding to relocate here versus Peters, Upper St Clair, Cranberry and other towns like them," Fraasch said. "If our taxes are slightly higher than these places, that is one thing. Having them 20 percent higher is another thing altogether."

Mt. Lebanon's high school-aged student population has dropped by 500 over the past decade. U.S. News & World Report this year has recognized Mt. Lebanon, Upper St. Clair and Peters Township high schools with "silver" awards. The magazine has given only 20 of Pennsylvania's 670 high schools a "silver" rating.

Chart path

"If what the people want is a completely new school, then the only way to get there is to do my plan," Fraasch said. "Why spend $70 million today, when we can wait a few years and get the new school? Let's have this conversation. If the community wants a new school, let's sit down and chart a path to get there."

Fraasch's plan involves making the high school roof leak proof for 10 years and purchasing new boilers. He proposes using the district's $9 million in savings to pay for most of these repairs. Over the next 10 years, the district would pay down the existing debt. At that point, Fraasch said, the district could afford a completely new school.

"We could purchase boilers that use alternative energy, thus saving costs there. Once the new school is built, these boilers could be relocated to another building," Fraasch said.

The long-term bonus would be a modest tax increase to pay for a completely new high school, Fraasch said.

'Impractical delay'

Both Dan Remely and Elaine Capucci, chairs of the board renovation committee, said they oppose putting the plans on hold now. A 10-year delay would be impractical given condition of the building, they said.

Rough construction-only estimates for a 440,000 square foot high school range between $80 million and $132 million. The difference in the estimates reflect renovation, partial renovation and a completely new facility.

Kerry Leonard from Celli-Flynn Brennan (CFB) said those figures do not include any architect or engineering fees, construction testing, furniture, fixtures, equipment or cost escalation.

The present 545,000 square-foot building on a 28-acre tract houses 1,912 students in grades 9 to 12. District administration is also located within the building.

Remely in September presented a plan which cuts 80,000 square feet from the size of the building and features both new and renovation of the existing building. With construction fees approaching $200 a square foot, some $16 million could be saved. Remely told architects to work on his plan.

Board members declined to ask architects to do any study of Fraasch's proposal.

USC's choice

In Upper St. Clair, board members on Dec. 8 voted to proceed with construction planning and design for both Fort Couch and Boyce middle schools.

With $60 million possible in additional spending, the overall debt level of the district will top at $123 million, said bond counsel Mike Bova from Boenning & Scattergood, Inc. This figure includes previous debt.

In approving the final design phase, board members said a decision on whether or not to renovate the two buildings won't be binding until submitted bids are actually approved. Board Member Angela Petersen said when architects complete their designs in July 2009, their work could be used in the future if the board decides to withhold approval of bids or if the economy slips further into the red.

Scalebacks set

In October, estimates by project manager P.J. Dick put costs for both schools at $61.8 million with about $4 million in additional design alternates. On Dec. 8 the board advocated a series of scalebacks and set estimates at about $58.5 million with $4 million in design alternates.

The design alternates include a $1.6 million theater, $270,000 in field improvements and $1 million for artificial turf at Boyce and $1 million for article turf and $254,000 for a gym alternate at Fort Couch. Like the base bids, approval of the design alternates would be at the board's discretion.

This article has a quote from me that I had not put in the proposal or in any of the other previous articles out there. That quote is the following:

"If what the people want is a completely new school, then the only way to get there is to do my plan," Fraasch said. "Why spend $70 million today, when we can wait a few years and get the new school? Let's have this conversation. If the community wants a new school, let's sit down and chart a path to get there."

This one quote, without background information, would raise some eyebrows I think. It is what I said and it is what I believe so I am not in any way saying it was a misquote, I just feel it important to understand why I said it.

As this article points out, and as I have been saying for some time, we are in a different economic reality than the one that existed even a year ago. Two months ago the Audit/Finance Committee talked about how much additional debt this District could add before being forced to go to a referendum. There is a law on the books that says that a school district can have debt up to 225% of its 3-year average annual revenues before being forced to go to a referendum. Any debt that would force us over that 225% level would have to be approved by voters. What we learned at that Audit/Finance Committee meeting was that the "magic" number is roughly $116 million dollars in additional debt over the next year or two before we are forced to go to a referendum. The thinking behind the quote above comes from understanding that ANY high school proposal that requires the District to add over $116 million in new debt would likely fail in a referendum vote.

That is basically the final reason why I believe a fully LEED certified high school building is off the table in the near term. Understand that this isn't an either/or discussion. It isn't either do this proposal or build a new school. Those are not the only choices on the table. I am sure other Directors will make their thoughts known in January. Some of these ideas will include a complete renovation or perhaps a more phased construction approach that has yet to be fully discussed at a Board meeting.

There is a certain irony in this that I think is important to point out. There are many that have emailed the Board and said that the most important thing to keep in mind is that we need to hold our taxes in check so that we remain competitive with neighboring communities. There are also many that have emailed the Board and said the most important thing to keep in mind is that we need a new LEED certified school to maintain our reputation as a community that values education and that a tax increase to accomplish this is well worth the investment.

The reality of the situation is that the current economic environment seems to put these two groups of people on the same side.

Thanks for reading. I will be on vacation starting this weekend so email access will be spotty during the holiday's.

Thanks for reading.

James

Wednesday, December 17, 2008

Email of the Month

Since I am on vacation next week, I thought I would post this email of the month a bit early.

I have been very happy to see the conversation about the possibilities of the high school project take shape. While I took a bit of heat in the beginning for putting out a proposal on my website, the feedback has been largely positive and I firmly believe it was the right thing to do.

The Board receives emails most every day regarding the high school project. Some of those emails have been in support of a low-tax increase approach to the high school project and others are in support of a full brand-new school. There are a few that are in the middle.

Earlier today I responded to a constituent email regarding building a new school versus my "$15 Million Dollar Idea" as follows:

Thanks for the email.

I hope to be able to convey more thoroughly the thought process behind the proposal at one of our future Board meetings.

There are many pros and cons to my plan as there are pros and cons to all the other plans that have been put on the table.

At some point this Board will need to make a decision on what it is willing to spend and at what interest rates it is willing to spend. If bond rates continue to rise as they have for the past six months then the District could be forced into a bond market that might make floating bonds quite costly. We heard from our financial adviser on Monday night that bond rates have risen by 1.5% to 2% since July when we had our last community forum. The cost to float these bonds has risen as well.

Rather than float bonds at these rates, my opinion is that it may be prudent to investigate alternatives that would not hamper the District budget for a generation. That will be a discussion for the Board to have at a public meeting. I may very well be in the minority here and I am fine with that. I simply want to make sure that if we do engage in a large-scale project that everyone is aware of the budgetary constraints that would be placed on this District and its taxpayers for the life of whatever bonds are issued.

While you say the project will cost more if we wait ten years from now, I would suggest that at these interest rates, that might not be true- especially in light of the fact that both the Producer Price Index and Consumer Price Indexes are experiencing declines. The CPI dropped by the largest amount since 1947 in November of this year. Additionally, with a 2% increase (from 4.5% to 6.5%) in bond rates over a 25 year $110,000,000 bond issue, we would see total payments for that debt increase by about $18.5 million. The thing about bond rates is that they are very unpredictable. We do not know where they will be when we are ready for whatever project we do. At what interest rate will the Board deem going forward with a bond issuance impractical and irresponsible? That number exists and it should be defined by this Board before soliciting bids for any bonds.

The proposal I put out there takes a very stark look at what I believe to be the financial reality of where we are right now and puts that reality up against where this country is economically. After combining these two factors, the issuance of a massive amount of debt has me extremely concerned. That approach is but one way to look at this project. I understand that there are other perspectives to take with regards to the high school and I look forward to hearing them.

Best wishes,

James Fraasch

One quick note, I added the bolded part of the response to this website- I thought of it after I sent the response to the constituent.

As our Financial Advisor told us on Monday, we really are in a different economic environment. It is my belief that we have not yet spent enough time on the financial impacts to the District of any given plan. I hope that will change soon.

Thanks for reading.

James

Thursday, December 11, 2008

New Articles in Local Papers

There has been a good discussion going on regarding the high school project. Below are links along with comments I have on each story:

Mt Lebanon Officials Say New School Can't Wait


The Co-Chairs of the High School Project Committee weigh in on what they think of the proposal I outlined last week. I clearly don't agree with some of the comments by the other Directors but I was glad to see that the discussion regarding our options is making the rounds in the local papers.

Students Push Board to Renovate High School


Two high school seniors make their voices heard at the Board meeting on Monday night. It is not often that we see students take to the podium and these students ought to be commended for coming out like they did. It's not always easy, especially if you believe that some of the people standing in front of you don't agree with you. I would have liked to have had the opportunity to talk to the reporter regarding this article since it addresses something I did. However, I was not contacted for the story. I would have simply suggested that every option out there addresses the leaky roof.

Mt Lebanon and Steel Valley Pick Presidents


This article chronicles the actions of the Board at our reorganization meeting last week. I had to get something in here that was not related to the High School!

The discussion that we need to have as a community is starting to take shape. It may not be happening behind closed doors in Executive Sessions, and it may not be happening in the Board room at public meetings, but it is finally starting to happen.

Thanks for reading.

James

Tuesday, December 9, 2008

Mt Lebanon High School Ranked One of Best in Country

US News and World has released its ranking of the nations top high schools. Mt Lebanon ,along with six other high schools in Allegheny County, has received a Silver Award. You can see the Allegheny County list here.

With just 3% of Pennsylvania's 679 high schools being awarded a Gold or Silver award, we are in some good company.

Massachusetts ranked #1 overall with 8.6% of their high school being awarded the Gold or Silver award.

Thanks for reading.

James

Thursday, December 4, 2008

Tribune-Review Article

Reporter Matthew Santoni contacted the Board a few days ago to get feedback on the proposal I put out on Sunday. I think his article takes a fair look at some of the issues surrounding the high school. To be clear, the proposal does delay a large-scale construction project for 10 years but there is a sizable investment in the existing building to ensure its continued operation at levels above where we are today. Mr. Santoni's article is below or you can click here to go to the Trib website:"

Mt. Lebanon board member urges postponing school projects
By Matthew Santoni
TRIBUNE-REVIEW
Thursday, December 4, 2008

Growing debt, meager cash reserves and economic uncertainty have Mt. Lebanon school board member James Fraasch asking his colleagues to consider postponing the $130 million high school replacement project for more than a decade.

Fraasch recently took his case to the school board's audit and finance subcommittee. He argued that the district already is paying $5 million a year on existing bonds and has not set enough money aside for construction to avoid a 15- to 20-percent tax increase.

He said he hopes his proposal -- making some repairs, establishing a construction fund and delaying construction of a school until 2020 -- will be considered in February, along with four other options for renovation and replacement.

story continues below


"People deserve to have an option out there that does not include a massive tax increase," Fraasch said.

He said the board is awaiting revised cost estimates from construction manager P.J. Dick Inc. before determining exactly how much would be borrowed and how much taxes might be increased.

"The subcommittee is not making any recommendations before we get the updated numbers from the construction manager," said Edward Kubit, chair of the audit and finance subcommittee. "We'd rather have accurate information and wait a couple of weeks than rush it and have information that's less than 100 percent."

The district already is deep in debt after borrowing $55 million in 2005 to update its elementary schools and won't start making large payments on that debt until 2017, Fraasch said. And only about $9 million has been set aside for the high school project from budget surpluses in previous years.

"Every dollar you're spending to service debt is a dollar you're not giving to our kids for education," Fraasch said.

Instead of replacing the high school, Fraasch proposed a lower investment of $10 million to $15 million to make essential repairs during the next two to three years, financed with a 1-mill increase in property taxes. A portion of the increase would be set aside to either pay down future debt or be invested into large school projects in the future.

Delaying the high school project 10 years would allow the district to pay down its debts, accumulate money in the reserve fund and recoup some of its investment in repairs to the existing school, he said.

"I have many questions about the assumptions on which Mr. Fraasch bases his proposal and look forward to having them answered so I can better evaluate its merits," said board member Josephine Posti. Her immediate reaction to delaying the project, though, was to consider it "irresponsible and impractical."

High interest rates on the municipal bonds that the district would need are another reason to avoid borrowing and building now, Fraasch said.

Director of Finance Janice Klein has said, however, the district wouldn't start borrowing the money for years, even if the project moved forward quickly.

Matthew Santoni can be reached at msantoni@tribweb.com or 412-380-5625.



I look forward to getting final numbers from the CM and Architect in the coming weeks.

Thanks for reading.

James Fraasch

Wednesday, December 3, 2008

Reorganization Meeting Update

Last night the Board elected Alan Silhol as President and Ed Kubit as Vice-President for the next year.

Congratulations to both of them. I look forward to working with each of them in their new capacities.

James

Saturday, November 29, 2008

New Proposal for Mt Lebanon High School

Two Thursdays back, I made a presentation to the Audit/Finance Committee with regards to an alternative approach to our high school construction plans.

Readers of this blog have come to understand a little bit about where I think this District stands financially. Way back in May, after passing the 2008-2009 budget, I expressed concern about the way we handled the budget while not setting ourselves up to prepare for this high school project. In July I posted an analysis of the District's debt obligations. In August I did a comparison of the millage rates in school districts that are comparable to Mt Lebanon and what impact those differences have. In August I also did a analysis of where Mt Lebanon stood in comparison to the debt outstanding at school districts at both the County and State level. In September I looked at the effect the stock market meltdown might have on the PSERS (State Retirement Fund) and what that might mean for the taxpayer down the road. Since May I have also posted articles pointing out the economic issues that face not just the District, but our taxpayers as well.

All of the research that went into those posts led me to the conclusion that significantly raising millage to pay for a large high school renovation/construction project would be detrimental to the future of our community and to our school district in particular.

In putting this proposal together I used some principles to guide me to my conclusion. The criteria I used were the following:
1) We need a project that does not require a 15-20% millage increase next year
2) We need to do some things immediately with the high school to ensure the safety and proper education of our students
3) Over the longer term we need to put a plan in place that will reduce debt and put us in position to tackle large scale construction projects going forward

What I came up with is a presentation that is 14 slides long. I tried to walk through where we are now and how we can get to where I want us to be. The slides include the speaker notes I used for the Audit/Finance Committee meeting. Click on the slides below for a larger image.



Let me add a couple of notes. First, currently there is no consensus on the Board as to whether or not this should be one of the options voted on in February. It is my hope that this plan (or a derivative of it) does become one of those options. Second, admittedly there are some scenarios with the high school project where this approach does not make a lot of sense. If initial investment costs exceed $15 million, then this plan does not address all that needs to be done. Thirdly, there are a lot of scenarios where a plan like this does make sense. If the bond market is closed to us, if the Board decides that we cannot float in excess of $100 million of bonds for this project, or if a referendum on a bond float of more than $116 million fails, then this Board needs a Plan B (or Plan E as the case may be). Finally, I firmly believe the community deserves an opportunity to evaluate a plan that does not raise millage by a significant amount. I am of the opinion that we cannot afford to do nothing but we cannot afford to do everything either. This plan allows for that middle ground.

As you go through the slides you may have some questions. Please finish the slide presentation and then come back here to see answers to some of the more frequently asked questions that I have received from people after talking about this plan:

1) Under this plan, why do we have to wait until 2019-2020 to start a significant high school construction project?

There are a few reasons for this. First, the way our 2005 bonds were wrapped means that we are paying very little towards the principal of those bonds. It isn't until 2017-2018 that we finally start to make a significant dent in them. I'd like to see us pay two full annual payments towards the principal of those bonds before moving forward. Second, the 10 year wait allows us to get a sizable return on investment for the items we need to purchase for the high school immediately. For instance, if we spend $4 million on a new boiler system for the high school and that results in a 50% reduction in energy costs, then it would take approximately 8 years to fully pay for that system based on current utility costs. Based on my talks with Advanced Recycling Equipment, not only are their Biomass boilers at least 30% more efficient than what we currently have, but the fuel used to heat them (switchgrass patties, woodchips, etc) is up to 70% cheaper as well. Additionally, if we went with a FLEX Roofing system that is designed to overlay the existing roof, not only could it extend the life of our current roof by a guaranteed 15-20 years, but it would cost about one-third of what a total roof replacement would cost. That's the long answer on the ten year wait. The short answer is that the wait will allow us to get further out of debt, recoup some of our initial investment on the existing high school, and allow us time to save money for a 'down payment" on whatever project is started in 2020.

2) Where does the initial investment of $10-12 million come from?

The Board has been able to set aside approximately $9 million for a project. Any funds needed over and above this number would be accumulated from an increase in millage over the next few years. That millage increase of 1 mill would be dedicated to funding only the high school project and then future infrastructure improvements throughout the district. We currently do not set aside any millage to accumulate funds to pay for these construction projects. Please see this slide to see a possible high school investment schedule as well as a new high school/debt service saving schedule.

3) Why is it that you believe we cannot afford a significant project at this time?

There are a lot of reasons. Some were not addressed in the slide presentation. The presentation addresses how much debt we have in relation to other districts in the state, looks at some of the debt/income ratios, and points out that Mt Lebanon's revenue is nowhere near that of school districts that have the amount of debt that we are potentially adding. Other facts include the loss of over 500 students over the past 10 years. This loss of students is indicative of much larger trends. I believe that people make a choice on where to live based on many factors including the school system, taxes, and community services. Mt Lebanon has a high tax rate when compared to other districts that offer a comparable education. I am of the opinion that no other municipality matches the services or the community atmosphere found here, but to someone moving to the area from out of town, it is very difficult to communicate those subjective feelings. They see test scores and taxes and they may go to a district that offers a comparable education with a lower property tax. In many ways we compete against these towns for residents and tax dollars. If we were to raise our property taxes another 15-20% to pay for a large project then we should all be concerned about the long term effect that will have on families deciding to relocate here versus Peters, Upper St Clair, Cranberry, and other towns like them. If our taxes are slightly higher than these places, that is one thing. Having them be 20% higher is another thing altogether. Additionally, with 75% of our population not having school age children in their homes, we have to consider those on fixed incomes as well. What happens to the owner of a $200,000 home that is on a fixed income when you raise his or her taxes by almost $1000 per year? I think we need to know the answer to that question before we actually do it.

4) Is there a way to do this without raising millage?

Sure there is. Our budget has revenues and expenses just like any budget does. The type of cuts in the budget that would be needed to rid ourselves of over $2 million in expenses annually would be severe. If somehow the Board managed to do just that, then I believe our community would not stand for the resulting decline of the high standards that residents demand from this District. I would fight such cuts myself. There are smaller scale changes that we can make on a yearly basis. For instance, if we continue to lose students, then we should each year make sure our staffing levels reflect the new student population levels. Just as we would expect to hire teachers and staff when enrollment increases, we should expect that through retirements we can reduce our staffing levels in the case of student population decreases as well.

5) What is a Community Endowment?

When I was at the PSBA Conference back in October I was able to talk to someone who had experience with setting up a community endowment. It is a way for people who really love Mt Lebanon and its schools to give something back. It allows people to bequest assets to the District to fund a multitude of things. Typically these funds go to scholarships. However, in this case, I would be looking for these assets to be pledged to a high school project. Instead of sponsoring a brick for $5000 (which we will still be able to do) perhaps someone wants to bequest stock, deeds, trusts, etc., to the District. Right now we have no way to pledge these assets towards a particular infrastructure endowment. I honestly have no idea how much would be generated over 10 years but if we never start it, we will never find out. Check out the State College Area School District website to see what they are doing with community endowments.


6) Wouldn't a new LEED Certified High School increase property values?

The answer to that is "maybe". Mt Lebanon is no different than most towns in Pennsylvania when it comes to this discussion. There is a certain cost of living involved in any town you look at. One such cost is property tax. If Mt Lebanon was to build a new LEED Certified high school then I have no doubt whatsoever that there will be families that would love to have their children attend that school. Some of those people might be willing to pay any amount to move their families here for that opportunity. From that perspective, one might think that a new school would indeed bring in more bidders on homes for sale and therefore increase prices. However, you also have to see the other side of the coin here. A brand new school in the neighborhood of $130 million would require a very significant increase in property taxes. That increase in tax is a perpetual increase on the cost of living in Mt Lebanon. If you look at a comparative millage chart, you can see that residents of Mt Lebanon already pay higher taxes (about $450 annually) on $100,000 of assessed value than both USC and Bethel Park. If we continue to increase the spread between our overall tax and that of other municipalities, then prospective residents will have to weigh that increased annual tax against the possibility of their children attending a new school. Will those families still choose to locate here? Will it be worth an extra $1,000 a year for a $200,000 home for them to live here to attend that school? I think you can see which way I am leaning here. I feel that the impact on home prices will be neutral at best. But even if somehow home prices increased 20% after we build a brand new school, that would have NO material impact on the budget in the District. Remember, our County Executive has frozen assessed property values at 2002 levels. This means that if my house increases in value from $200,000 to $240,000, the District sees no increased revenue. At best we might see increases in the amount of transfer tax revenue to the District.

Finally, we cannot be naive and think that nobody would be forced out of their homes with a 20% tax increase. That will happen. I know from knocking on doors a year ago that there are a lot of families that are scraping by. Due to the changes in our economy, I have to believe that there are even more families in Mt Lebanon that are struggling to make ends meet now. While I don't think there will be an immediate mass exodus of people out of Mt Lebanon, I think over a few years you might see many more homes on the market that are forced sales. Any owner of a home in Mt Lebanon that is on a fixed income or just scraping by would have to weigh their options and decide whether they want to stay here or move to a place that has a lower cost of living. The possibility of these people coming to the conclusion that they would rather spend their limited income on necessities rather than taxes could result in a glut of home supply that will most likely depress home prices in our area and thereby negate any positive effect a new high school might otherwise have had on home prices.

7) Do we need a new building to properly educate our children?

Just a few years ago this District undertook a massive renovation of each elementary school in the Mt Lebanon. We did not need to build something brand new then. In fact, the Pennsylvania Department of Education held Mt Lebanon up as an example to other school districts in the state in an article called "Renovate or Replace? The case for restoring and reusing older school buildings." In that article there is a quote from an architect that worked on the elementary renovations. He says, " The School Board recognizes its schools are well built and represent a significant investment made by earlier generations...the schools are part of the fabric of the community". Please read the article beginning on page 24 to see where we were just a few short years ago. If you believe that our community wants a completely new school, then you must also believe that there has been a significant change in the social or demographic makeup of our community. How else can one come to such a different conclusion than the one made only few years ago?

The proposal I put out there is a starting point. With a vote scheduled for February, we need to begin the discussion on alternatives like this as soon as possible. I have worked with professionals from many fields, current and former school board members, friends, family, neighbors, you name it. Much of the research I did for this came in the form of knocking on thousands of doors just over a year ago and asking people what they thought about the direction the school district was taking. To all these people I give my thanks. To all those that are reading this proposal for the first time, I offer my gratitude to you as well for caring enough about the District to consider an additional proposal for the future of our high school. Now I would like to ask for your honest feedback. This community is full of innovative, creative, intelligent folks. What can you share that might help this idea along? What can you tell me that does or does not make sense about this approach? Are you strongly supportive or opposed to any of the other plans out there? What are your concerns about those proposals?

Send your thoughts to me at james.fraasch@gmail.com. If you have thoughts for the entire board, please send us all an email at schoolboard@mtlsd.net

Thanks for reading.

James

Thursday, November 20, 2008

State Budget Shortfall

Today's front page of the Post-Gazette had the following story:

Rendell: Falling revenues to force cuts
Thursday, November 20, 2008

HARRISBURG -- State officials are putting out the warning: The state's budget situation is bad and getting worse, and lower-than-expected revenues will force painful reductions in state spending.

"We're expecting a shortfall of somewhere between $1 billion and $2 billion" by June 30, the end of the current fiscal year, Gov. Ed Rendell said yesterday.

That was the highest estimate of a shortfall he's made so far, although other state officials have put the looming deficit even higher.

For the first four months of fiscal 2008-09, which began July 1, revenues were $565 million below what had been expected, as tax receipts and state investments fell off sharply due to the ongoing recession.

The governor already had ordered his departments to reduce spending by 4.25 percent, which he estimated will save $311 million. That would trim the 2008-09 budget to about $28 billion.

He has imposed a hiring freeze, a ban on out-of-state travel and a ban on buying new vehicles. He has asked state agencies that he doesn't control to cut their spending, for an additional $39 million in savings.

Next, Mr. Rendell said, he'll order a second round of budget cuts. He also will ask Republican and Democratic legislators to reduce their spending.

He said it won't be easy or enjoyable, as many people's favorite state programs are trimmed or eliminated. Specific details on the cuts are still to come.

"We will do everything we can to do as little harm as possible, but the budget cuts are coming," he said. "I don't want to hear any whining. The cuts will be painful. People have to get ready."

He vowed to do everything he can to avoid "a general, broad-based tax increase" next year as a way to balance the state budget, but with revenues declining so sharply, nothing is off the table.

He said he doesn't want to raise taxes because "that would be hurtful when we are trying to recover economically." Avoiding a general tax increase "is my goal. Can I guarantee we will reach that goal? No. We will work like heck to reach that goal, but right now I can't guarantee anything."

The House Appropriations Committee held a special hearing yesterday on the growing budget deficit, but didn't suggest specific spending reductions.

"We are facing a very difficult road ahead," said Rep. Mario Civera, R-Delaware, minority chairman of the panel. "The economy is showing no signs of improvement, so we must adhere to a much greater level of fiscal restraint. Controlled spending is more critical than ever. Tax increases should not be an option."

At the House hearing, James Diffley, an economic expert with Global Insight, said the current recession is deepening and looks like the worst downturn since 1980-82. The collapse of the housing market, the plight of U.S. car companies and growing job losses are huge problems, he said.

He expects national economic output to decline for four quarters in a row, into mid-2009, which is an exceptionally negative scenario.

There are a couple bright spots for the state budget. There is the $750 million Rainy Day Fund for use in case of emergencies, but state officials don't want to raid it unless absolutely necessary. Also, the state netted $200 million from selling leases for drilling for natural gas in areas of Marcellus shale in the state.

Bureau Chief Tom Barnes can be reached at tbarnes@post-gazette.com or 1-717-787-4254.


While I don't expect the State to cut much into the education budget, the article makes it clear that budget shortfalls are not confined only to those states that have a housing crisis. More than ever, we have got be careful with how we spend our money.

James

November 17th Meeting Summary

We had our normal voting meeting of the Board on Monday night. The agenda is posted here.

First off, the Pledge of Allegiance was led by students from Jefferson Elementary School who then spoke to the Board about one of the character education traits they are learning. This month it was about Honesty. What a great job they did.

In the Board President's report, Mr. Hart spoke of the challenges that will face this district given the current national economic crisis.

In the Superintendent's report, Mr. Allison congratulated the Mt Lebanon High School girls soccer program for an outstanding season. We also heard about an award for teacher Matthew Mikesell for his mock trial of George Washington. Please see this link to learn a bit more about that, including pictures of the students working with Pennsylvania Supreme Court Justice Max Baer. Great job.

Other things of note at the meeting included:
1) A recommendation by the Audit/Finance Committee to put aside a total of $1.5 million for OPEB liabilities. OPEB is the health care retirement fund that the district funds until retired teachers reach age 65. The $1.5 million will fund approximately 3 years of the trust and will get us through to the next teachers contract. In addition to this outlay, the District needs to continue to fund the OPEB Trust Fund each year. I first posted about this back in June and suggested at the time to fund as much as we could until the end of the current teachers contract.
2) There was also a mention of a proposal I put forth for an additional high school project option. I did talk about this at an Audit/Finance Committee meeting on Thursday in order to get some feedback on the willingness of the Board to pursue this option. It generated a very good discussion at the meeting and I am hopeful I will be able to present something to the public in the next month.
3) The Board voted to extend the contract of our bond underwriters. This did not commit us to anything but it did allow us to keep our options open regarding floating up to $69 million worth of bonds. If we had let this expire then we would be back at square one if we decided to pursue something with regards to bond issuance.
4) The Board voted unanimously to approve the graduation requirements and course offerings for the District. During the discussion meeting the previous week I had asked if there were any adjustments made in light of the State's desire to implement Graduate Competency Exams. The administration was confident that our graduation requirements met or exceeded any criteria that the State might put out and that no changes were necessary due to happenings at the PDE level.

One final note. I am soliciting feedback with regards to meeting dates. At the Reorganization Meeting, the Board will set the schedule for the next year of meetings. As I posted last week, the Commission and the School Board meetings conflict on the 2nd Monday of each month. I am willing to move our meetings to another night or the 1st Monday of the month to accomodate those that want to attend both meetings. It might be more difficult to do than it would seem at first glance, but I wanted to get some feedback from people. Let me know if you have any ideas.

That is it for now. Upcoming meetings are as follows:

December 2, 2008 – 7:30 p.m. Reorganization Meeting
Mt. Lebanon High School Library

December 8, 2008 – 7:30 p.m. Discussion Meeting
Mt. Lebanon High School Library

December 15, 2008 – 7:30 p.m. Regular Meeting
Mt. Lebanon High School Library

Thanks for reading.

James

Wednesday, November 12, 2008

Upcoming Meeting Schedule

I wanted to get this information out there so you can start making your holiday plans. Here is the upcoming regular meeting schedule for the Board:

-November 12, 2008 – 7:30 p.m. Policy Committee Meeting
Conference Room B, Mt. Lebanon High School

-November 13, 2008 – 7:00 p.m. Audit & Finance Committee Meeting
Conference Room B, Mt. Lebanon High School

-November 17, 2008 – 7:30 p.m. Regular Meeting
Mt. Lebanon High School Library

-December 2, 2008 – 7:30 p.m. Reorganization Meeting
Mt. Lebanon High School Library

-December 8, 2008 – 7:30 p.m. Discussion Meeting
Mt. Lebanon High School Library

-December 15, 2008 – 7:30 p.m. Regular Meeting
Mt. Lebanon High School Library

The architect and construction manager gave an update on the High School Project. Really, the most important thing to remember is that we expect to have conceptual cost estimates for public consumption sometime in December. Additionally, we will be holding a number of community meetings to talk and discuss what is happening with this project. Below is the proposed meeting schedule for the high school project:

-January 14- Public forum in the High School Auditorium
-January 20- Neighborhood meeting at Markham
-January 21- Neighborhood meeting at Howe
-January 22- Neighborhood meeting at Jefferson Middle School
-January 26- Special Board Meeting at the High School (location TBD)
-February 16- Board vote on option

Please let me know if you have any questions.

Thanks for reading.

James

November 10th Discussion Meeting

During Monday's discussion meeting there were a few topics that generated the most discussion.

First, we asked for and received an opportunity to extend the bond underwriter contract with Merrill Lynch/Bank of America. This is significant since Merrill had been recently taken under by Bank of America and there was some question as to what would happen with our agreement. The contract doesn't guarantee anything except that we will be able to use Merrill/Bank of America to do the underwriting of our bonds. Interest rates, demand for said bonds, etc, all will be dictated by the bond market and not by this agreement. The agreement, pending the vote next week, will be extended by two years.

Secondly, I had asked to put our 2009 meeting schedule on the discussion agenda. Last year during our reorganization meeting there were a few residents that expressed concern about the fact that the District and the Municipality have overlapping meeting dates. We meet on the 2nd and 3rd Monday of each month while the Commissioners meet on the 2nd and 4th Monday of each month. Residents do not have the opportunity to attend the discussion meetings of both the Commission and the Board. I would not have a problem moving to the 1st and 3rd Monday's of each month to clear up this scheduling conflict. However, if we do move to the 1st Monday then we will not have all financial information available for discussion during our meeting. That presents an issue that could possibly be resolved by having the financial information available to us as soon as possible and then discussing and voting on it at our voting meeting. That is not perfect, but could be an option. Moving the meeting to a Tuesday night, while doable, may not be practical either. Superintendent Allison will be researching the impact of moving the meetings to a different night of the week and should present this information to the Board in coming weeks.

I had thought about trying to change the time of our meeting to 6pm instead of 7:30pm. I just don't know if that is too close to the end of the workday for enough people to attend.

Any thoughts or ideas regarding scheduling would be appreciated.

Thanks for reading.

James

Wednesday, November 5, 2008

2008 Mt Lebanon Presidential Vote Breakdown

I had a lot of good emails yesterday regarding the voter breakdown from the Kerry/Bush election so I put together the results from last night. You can find them yourself here at the Allegheny County Department of Elections website.

Note that these are not the final "certified" numbers but there is little likelihood they will change.



The overall Mt Lebanon vote broke down to 10902 votes for Obama and 8983 votes for McCain with Obama winning 54.8% to 45.2% in Mt Lebanon.

If you want to see specific Wards and their Districts, please see this spreadsheet for a complete breakdown.

Thanks for reading.

James

Monday, November 3, 2008

2004 Mt Lebanon Voter Breakdown

With the election just a day away I thought I would post a Mt Lebanon Ward Map showing how we voted for Bush/Kerry in 2004.

In 2004 there were a total of 20611 votes cast for the Presidential election. 10727 (52%) were cast for Kerry/Edwards and 9753 (47%) were cast for Bush/Cheney. 1% went to other candidates.



I also thought I would link to a ridiculously detailed spreadsheet of voter registration patterns across Pennsylvania. They break down the numbers by County so you can look up Allegheny and see what has been happening at that level. Two thing about this spreadsheet. First, it is supposed to be accurate as of October 31, 2008. Not sure how the state can do anything that quickly, but ok. Second, it breaks down registration by age, new registrations, changed registration, active/inactive, new voter party, etc, etc, etc.

I am posting here on Google's site because its easier to share and forward to your friends. The original full featured spreadsheet can be found on the Department of State website here.

Hope you found this interesting.

James

Tuesday, October 28, 2008

Article Roundup

Part of the job of being a School Director is keeping up to date with the topics that are gaining attention in the education community. Outside of reading a couple of books, I try to keep up to date by reading many of the journals, magazines, and digests that come my way. It seems that once you are a school board member you get on a special mailing list.

Here is a partial list of articles I have been reading that I found interesting:

-From the, "Hey, things could be a whole lot worse" department- at least we are not going the route of the Belmont High School in Los Angeles. The nation's most expensive high school was just built and they are talking about tearing it down. Ouch! $350 million of taxpayer money will be spent. Check out the story here. Built on an old oil field and right next to an earthquake fault, costs have skyrocketed for this project.

- The American School Board Journal ran an article in its November issue outlining the plans both Obama and McCain have for education. The article started by pointing out the fact that education seems to be on the back burner for BOTH candidates. With a war going on and an economy in free fall it has been much easier for them to put education on the second tier of issues that concern voters. The ASBJ broke down the platform for the candidates as follows:



School Choice seems to be a major difference. Additionally, Obama does have a greater focus on early childhood education. The article lists the cost of Obama's plans to be in the neighborhood of $18 billion, $10 billion of which would go to early childhood learning. The article does not list any costs for McCain as he intends to redirect existing funds to pay for his plans.

- Two Western PA School Districts have merged. The Center Area and the Monaca School Districts, just northwest of Pittsburgh, have decided to merge their two districts. This merger was not forced by the State but instead was taken on independently by the districts. See the article here. Excerpt from the article below:

With local school boards facing spiraling prices for fuel, employee health insurance and other operating costs -- and opposition to increases in property taxes that largely pay for them -- the idea of consolidating to save money is becoming an increasingly common discussion topic.

-There is a another report that hails the benefits of full-day Kindergarten. I have written before that there will be a move towards mandated full-day kindergarten in this state. Please see this article detailing a report by Pennsylvania Partnerships for Children that outlines the benefits of full-day kindergarten. Excerpt below:

Schools with students attending full-day kindergarten in 2004-05 improved their third-grade reading scores on the 2007-08 Pennsylvania System of School Assessment tests twice as much as schools where students did not attend full-day programs, according to the report.

That's all for now.

Thanks for reading.

James

Friday, October 24, 2008

Post Gazette GCA Link

The Post-Gazette had a story that I missed. Please check out the link for more information about the status of the Graduation Competency Assessments.

http://www.post-gazette.com/pg/08294/921253-52.stm


The article and quotes from politicians form the argument against the GCAs as not being good for the already troubled state budget. There is one paragraph in there that gets to the root of the issue and that is local control. Here is that excerpt:

The cost isn't the only concern about the proposed GCAs. Some school districts fear the state may be intruding on local officials' curriculum authority and their power to decide if seniors have learned enough to graduate.

That is what it really boils down to.

Please click on the link here to watch a video about how the GCA might impact our students.


Thanks.

James

Tuesday, October 21, 2008

Two video links

First, here is a video from the Tredyffrin Easttown School District explaining how statewide Graduate Competency Assessments would effect some of their students. This video is about 12 minutes long. It is very detailed in what our administrators deal with everyday so drink a cup of a coffee, sit down, and then reward yourself with the following inspirational video.

At the PSBA conference last week, our introductory breakfast was kicked off with this video of 10 year old Dalton Sherman. He gave the keynote address to the audience for the kick-off of the Dallas school year. Wow!

James

October Meeting Update

EDIT: The Construction Manager contract is now available on the District website here.

We had a busy and productive schedule in October.

On October 2nd we awarded the construction management contract to PJ Dick. I posted about that here. There were some questions from the public about the contract and why it was not available to the public. While we did agree to the terms (financial and otherwise), there were some minor details in the language of the contract that needed to get worked out. We also had to wait for our attorneys to talk to their attorneys to talk back to our attorneys. From the update we received at last nights meeting, I believe we can expect the contract to be made public sometime today.

While I understand the concern expressed about the lag time between approving the contract and making it public, it was simply not feasible from a legal perspective to make the contract public without it being signed. I am not sure if the competing contract from URS will be made public so that the public can compare the two. If someone asks to see it then I can make that request and see where it goes. PJ Dick was slightly cheaper over the projected project length and it is my belief that their knowledge of the local market will help us save even more money on the full cost of whatever project we do.

Last night we had our regular Board meeting. We kicked it off with a new tradition of having students from one of our schools leading us in the Pledge of Allegience and then we heard the same students speak a little bit about a character education trait they are learning in school. Last nights character education trait was "Respect". Many thanks to the following Lincoln Elementary students for setting a high standard which all future students will try to match: Jake Posti, Noah Donald, Ally Hatton, Elena Rose, and Megan Gibbons, and Teacher, Carol Berklich

A couple of other items of interest that took place last night:
1) The Board President's report focused on the state of this economy and the need for ALL people to vote in the November elections. Regardless of party, this most basic democratic right should not be taken for granted and all people of appropriate age should excercise their right to be included in the democratic process.
2) Audit & Finance Committee has continued to meet to set the tone for future budget discussions. Last Thursday the committee received a list of all revenue for the District. The next meeting in Novemeber is scheduled to be about expenses.
3) The Facilities Committee reported that the PJ Dick contract should be made available today on the District website. Additionally, it is the expectation of the committee that PJ Dick have some information about each of the high school project options to the Board sometime in mid to late Novemeber.
4) The Board approved the establishment of the OPEB (Retiree Healthcare) Trustfund. I have posted about this here , here, and here. During last weeks discussion meeting it was revealed that we expect to have the actuarial study completed for our OPEB liabilities late this month or next month. While I had suggested that the Board fund a full three years of the fund with our $2.7 million 2007-2008 surplus, it was decided to fund only 1 year worth of expenses ($525,000) until this actuarial study is released. My expectation is that once the full liability is known, the Board will fund more of the OPEB Trust Fund than the one year. Once we get that number, I will report it here.
5) The Board approved an expense not to exceed $5,000 for improvements at the Jefferson Softball Field. State Representative Matt Smith had secured a $10,000 grant for this project and there was an additional $5,000 put into the pot by the Mt Lebanon Baseball Association (I believe it was them. If not, someone correct me). This means that of the total $19,629 cost, the District will be responsible for approximately $5,000. While this project was NOT part of our original capital projects list for this year and the process to get to this point was much different than normal, I felt that we should not penalize the hard work of the people who had secured the two grants for the field improvements. In the future we would like all projects like this to be discussed with the Board or the Administration as early as possible so that we do not get blindsided by an unexpected expense. That being said, I would like to thank the parents involved in securing the funding for more than 75% of the cost of this improvement. Good work.
6) I spoke for a moment about Governor Rendell's office and the Pennsylvania Department of Education pursuing statewide graduation competency exams. These exams would replace local school board graduation requirements. There was a press release from the Governor's office just yesterday touting his proposal. While the State Senate voted 48-2 to require the Governor to get legislative approval of any new statewide graduation requirement, the PDE and the Governor continue to move forward with plans to implement this program as early as next school year. Please take a moment to review this video put together by the Tredyffrin-Easttown School District.

Upcoming Board Meetings are as follows:

November 10, 2008 – 6:30 p.m. Architect Updates
Mt. Lebanon High School Library

November 10, 2008 – 7:30 p.m. Discussion Meeting
Mt. Lebanon High School Library

November 12, 2008 – 7:30 p.m. Policy Committee Meeting
Conference Room B, Mt. Lebanon High School

November 13, 2008 – 7:00 p.m. Audit & Finance Committee Meeting
Conference Room B, Mt. Lebanon High School

November 17, 2008 – 7:30 p.m. Regular Meeting
Mt. Lebanon High School Library

Thanks for reading.

James

Saturday, October 18, 2008

PSBA Leadership Forum, Day 3 and Wrapup

Friday morning was the final session for the conference. This session was essentially a presentation from Sam 'the Chalk Man' Glenn. Sam is a motivational speaker with a humorous and universal message about giving your best everyday and seeing the humor in adversity. You can see a demo of his work here.

Besides the seminars, working sessions, and motivational speeches, conferences like this are good for a few other things. First, there was a Vendor Expo where we had over 100 companies available to answer questions and demonstrate some of the services they offered. Secondly, since this was a PSBA conference, I was surrounded by other school board members at all times. I will talk a bit in detail about these other aspects of the conference.

In my full-time position I have been fortunate to attend expos much like the one at the Hershey Lodge. Before going to the expo I made sure to identify 10 vendors that I HAD to see. These were companies that I thought the District might benefit from talking to or vendors that we already do business with. The rest of the time I wanted to have the opportunity to let something catch my eye. Chevron had a booth there. Now, one might start to wonder why the heck Chevron would be at an event like this. I know I did. It turns out they have an energy consulting division that has a written guarantee of 30% energy savings if you go with one of their energy solutions. I talked with the sales guy for 15-20 minutes and came away with some good ideas. I talked to two different roofing companies. They both sell and install materials that can be laid on top of existing roofs that would be far less expensive than a full roof replacement. These materials can be guaranteed for up to 15 years. That sort of product might come in handy some day. I talked with a company that makes a boiler system that runs on alternative fuels like switchgrass patties. These patties pack more energy in them than do traditional energy sources and run about 30% less in cost than typical energy sources. There were obviously a number of other vendors I spoke with but I won't bore you with the details.

The other beneficial part of this conference is the constant interaction with other school board members across the state. You can learn a lot by watching. No matter how well we think our board might operate, there are ways to improve. It was great to be able to sit next to a past president of the PSBA and pick her brain for a while. There were people here with far more experience than I and I made sure to use the opportunity to learn everything I could from their experiences.

All in all I hope to share much of the information I gained from this conference with the rest of the Board over time and I will encourage each of them to try to attend next year. It was well worth the time.

Thanks for reading.

James

Friday, October 17, 2008

PSBA Leadership Forum, Day 2

Day 2 of the conference had a lot more to do with the business of the PSBA than Day 1.

During the morning session the PSBA adopted its Legislative Platform for 2009. One of the things the PSBA is good at is lobbying. Each year the organization adopts a number of platforms that it will try to advance through its lobbying efforts. Day 2 of the conference involved discussion surrounding the inclusion or exclusion of certain topics to this platform.

Here are some highlights of the adopted 2009 PSBA Platform:

1) Under Buildings and Construction- The PSBA support legislation that provides school districts with the same options for school construction and/or renovation projects that are available to te private sector. This includes relief from the Prevailing Wage Act and Separations Act ... and the opportunity for school districts to contract with a single firm to design and build school facilities.

2) Under Educational Programs and Assessment- The PSBA opposes any effort to reduce or remove the authority of local school districts to establish graduation requirements

3) Under School Governance- The PSBA supports legislation calling for the nonpartisan election of school directors.

4) Under Federal Issues- The PSBA support efforts that allow local decision making and flexibility to better serve students in implementation of the No Childe Left Vehind Act and the IDEA.

Sounds boring, right? Actually, this platform is probably the most important part of what PSBA does in my opinion. The PSBA's opposition to the statewide Graduation Assessment was instrumental in getting that program blocked this year. The PSBA was also instrumental in securing higher minimum State school funding in this past budget. That effort resulted in MTLSD receiving a 3% minimum increase in State funding as opposed to the orignally proposed 1.5%.

After that part of the conference I was ready for some real fun. I decided it was time to dig deeper into Pennsylvania's Code of Professional Practice and Conduct for Educators. This session was dedicated to reviewing how school district employees are responsible for behaving within some ethical guidelines set by this organization. The Professional Standards and Practices Commission put this seminar on and it was interesting to learn how they operate and what they do. Mt. Lebanon had a recent, very public case that was before the commission. Under certain circumstances the PSPC has the ability to revoke the certificate of those that violate the standards of the organization.

The lunch break came and I attended the vendor showcase in the Great American Hall. I will share the information gleaned from this part of the conference at another time.

After lunch I attended a session that reviewed recent case law that will have an effect on how all school districts operate in Pennsylvania. We reviewed the effect that even some local cases will have on our District. You may remember a case in northern Allegheny County where a student decided to put up a web page that was insulting to an employee in the school district. There was a similar case in Central PA where a student started a Facebook page mocking a school principal. The outcome of each case was very different. School Districts need to find out how to operate in an environment with laws that seem to contradict. There was another case where a student reported to a teacher that another student had drugs on her. The teacher reported to the vice-principal this information and the vice-principal then found the suspected student on campus. He brought the student to the office, had her empty her pockets and sure enough, the evidence was found. The case against this student was later deemed to be inappropriate search and seizure and there was no action that the District could take under these circumstances. We learned how to protect our rights in this instance so that if we are faced with a similar case we would be able to properly move forward without violating the Constitution.

Later in the afternoon there was a PSBA business meeting that dealt with the election of new officers to their positions.

That's all for now.

Thanks for reading.

James

Thursday, October 16, 2008

PSBA Leadership Forum, Day 1

I am spending a few days this week out in Hershey, PA at the Pennsylvania School Leadership Conference. This conference is held each year and is presented by the Pennsylvania School Board Association (PSBA).

Before I head out for Day 2, I wanted to put some highlights down from Day 1.

We kicked off the day with a welcome speech. One of the videos that is making the rounds on the internet today is this one. This is what education is all about. The belief in people to achieve. Do YOU believe. You will after watching that video. The introduction was followed by a terrific speech from Dr. Rudy Crew. Crew has been there and done that. From New York to Miami to Sacramento, the man is at his best when schools are at their worst. His message, while focused on his experience in inner-city schools, is a universal one. His morning greeting boiled down to a few terrific points:

1) Aim low, get low- The education system as constructed today is fundamentally flawed. We have schools across this country that aim at the No Child Left Behind scores for Adequate Yearly Progress. Crew says this is a false sense of success. When schools aim to get their students to show AYP progress they forget the important things. If you aim to get AYP progress, you will get AYP progress and not much else. We must aim high to achieve high goals. In the world of globalization that we will be entering it is not about who has the best AYP score. It is about who can do the jobs in a globalized world.
2) Civic Literacy in America has been killed- When you have Jay Leno, Howard Stern and others out on the streets interviewing average Americans about simple facts on civics and they literally have no clue, what does that say about our education system? What does it say about our education systems that you could ask the same questions of people in France, Germany, Australia, Latvia, etc. and they would KNOW the answers to American civics. Why is it that other countries put more emphasis on the American way than Americans do? Crew suggests that our educators must begin to re-emphasize the importance of civic literacy lest we lose sight of what this country is supposed to be all about.
3) Wear your best everyday- Dr. Crew emphasized the importance of doing our best everyday. Kids come to school to learn. In the places where Crew has worked, sometimes school is all these kids have to get shelter, to get food, to get love, and to get support. It is important for educators to understand this dynamic and to put their "best dress" on everyday.

Dr. Crew is an accomplished speaker and educator. You can view one of his presentations here.

I was moved by his morning speech and attended his break-out group on the topic of Educating in a Globalized world. This section dug much deeper into the topics mentioned above. He also talked a bit about the disparities in funding from one school district to another and the effect this has on students.

The afternoon session I attended was a legislative update. There are a number of worrisome bills out that that I will call more attention to later. Here is a short list:
1) Statewide Graduation Competency Assessments- While this issue was supposed to have been put to rest last year, the Board of Education is moving forward with plans to re-introduce GCA requirements when the moratorium expires next July. PDE has submitted an RFP for the formation of the actual tests. This RFP will be awarded in January. I have posted about the GCAs before and will do so again. That discussion will be its own post.
2) Allegheny County Assessment Appeal- This is another topic I posted about before. Allegheny County appealed a decision to the PA Supreme Court regarding using base-years to calculate real estate taxes. The PSBA does not think this decision will come down for at least another six months. If the court agress with Judge Wettick's decision then it will have a profound effect on property tax procedures in Pennsylvania.

This post went a little long and I have to get ready for Day 2.

Thanks for reading.

James