Emails of the Month

Every once in a while I will post an 'Emails of the Month' entry. It’s been a good first month here on the blog so its a good time to start. I have had tremendous feedback from all kinds of people. This was one of my hopes when I started this, to move the discussion about the School Board into the community. With people as involved in local government as we are here, it only makes sense.

Emails are edited but I try to make sure the intent/context of the emails stay intact. Here are some of the top emails for the month of May (reader emails in italics):

From C:
The blog is a great idea. Some folks think board members have preconceived ideas and personal agendas -- I applaud your efforts to be transparent and allowing us some insight into your decision making processes!

That was the first email I received regarding the blog. Much like the first dollar bill on the wall of a restaurant, this email will stay in my archives. Thanks for the email C and thanks for being ahead of the curve!

Others wanted to make sure I set clear boundaries about what I would talk about on the blog.

From H:
On balance, I applaud it (the blog) even though it is a change from past practices of having only the board president speak in public… My concern with the blog is about those confidential matters that cannot, by law or by good sense, be discussed in public. I'm sure you've carefully considered all of these things...On balance I applaud your efforts and wish you well. These comments are just some thoughts I wanted to share.

There are no doubt lines that should not be crossed. I will not be spilling any kind of confidential/executive session information into the public. However, our new Board President has made it clear that each Board member is free to respond to emails or questions from residents. There are some things that I simply will not know much about because I am not on the respective committee and I will refer those questions to the appropriate Board member(s). I will be careful with the information I post here. Thanks for the input H.

As for budget responses, well, I have had a few people simply ask for an explanation, and others offer some opinions.

From P:
I respect your vote even though I don't agree with it. Many compromises were made in the budget process and please excuse me if my numbers are off but the initial budget started at a mil increase of 1.53 and the budget was passed at an increase of .25 mils. Many compromises were made on behalf of our students and you still couldn't vote yes. I attended most of the budget meetings but don't recall any concrete alternatives/proposals being suggested by you.

I very much respect the opinion of this person and the feedback was appreciated. Its alright to have a difference of opinion on matters and the respectful way in which this person addressed the difference is the way it should work. I don’t know if we will agree on the solution, but it is extremely important to see issues from all angles. Input from perspectives like this helps me have a better understanding of what our community values. I know, I know, it sounds like lip service. Let me put it this way, if I was ever to be President of the United States, my cabinet would be made up of Republicans, Democrats and Independents. I wouldn’t want a bunch of ‘yes’ men and women surrounding me. That structure stifles thought and does not challenge ideas. This topic is blog-worthy itself and I will leave it for another day. I guess I am just saying I welcome ideas that contradict my own. I will point out, as I did in my response to the reader email, that I noted on at least three occasions during public meetings what I wanted to do with regards to reducing costs. I also talked individually and privately with a number of Board members and knew pretty quickly that I simply would not have the support during this budget to make additional changes.

More budget responses:

From E:
Kudos to you for your effort and openness… The total staffing number on your chart is contradicted by the 2007 CAFR pg 115. The teaching number reads 470, not 420.

The number I had for total staffing was a combination of the 2007 CAFR pg 104 and a document given to the Board in February that outlined total staff since 2001. I know someone had asked the Board at a public meeting to explain the discrepancy but I don’t know if we ever heard a response. I will follow up. While there are a few places where different numbers are floating around, (MTL Magazine had a different number altogether in their article a while back) I do know the teacher number on pg 104 is the one reported to PA Dept of Education to calculate the pupil/teacher ratio so I will have faith in that number until further notice.

From S:
Read your blog articles and found them to be very enlightening/thought
provoking. All too often while watching the televised board meetings, decisions or
arguments appear to be based solely on "its for the kids"… Seems to be two different agendas at work in the budget process-- "what we need" and "What We Want." You have the unenviable position of overseeing both.
Keep the info. flowing. Thanks!

I liked this email a lot because it really hits the nail on the head. The Board needs to balance the ‘needs’ with the ‘wants’ of the community while always having an eye on the Strategic Plan. S is right, it is not always easy.

There were a number of other emails as well and I appreciate them all.

As always, the opinions expressed in this blog are mine and do not represent the views of the Board as a whole.

Against the Wind

A number of people have asked me why I voted against the budget. I thought I would get this response out sooner than now but I spent the better part of the week verifying my research and then I realized how much detail I need to put in here to explain my position. It all made for a pretty long post.

First, as always, these thoughts are mine. Clearly, being the only one present that voted against the budget, that statement is perhaps never more true than right now!

This post is going to include a lot of statistics. Where I use statistics I will try to give you the source of the data in question so that you have an opportunity to not only see where I get the data, but you will have the ability to verify that the data is not being taken out of context. Mark Twain said (who attributed the following thought to Benjamin Disraeli), “There are three kinds of lies: lies, damned lies, and statistics.” Hopefully by giving the source and context of the statistics, I can better assure the reader that I am being as forthcoming as possible. However, data is subject to interpretation and it is that interpretation of the data that I think will make for good discussion.

Let me start by giving a few principles that guide my thought when approaching the budget. The first question I want to ask myself and get answered is what effect a budget will have on our constituents. This is quite a tough question to answer and goes to the core of figuring out the balance between services being offered by the District and the financial impact the District has on its residents. Second, the budget should NEVER be about the next 12 months. Certainly you look at how the planning will affect the next budget but budgeting is not about next month or three months down the road. We should always focus on the long-term financial health of the District. A good example of this long-term planning is using some of the surplus from this year’s budget to pay future retiree health care costs. That is a great use of those surplus funds because they are for a defined purpose and have a direct and known impact on keeping future costs in check. Additionally, it is using taxpayer money received today to reduce the tax liability on that same taxpayer in the future. Finally, I always want to look at and evaluate the impact of future financial obligations of the District. Some of the obligations might include the high school project or required future payments to pensions. These issues may not yet be clearly defined but need to be kept on the radar and, where appropriate, budgeted for with complete transparency.

Ok, now lets talk about some good things. Some people sent emails this week about the Newsweek article that did not have Mt Lebanon ranked as one of the top 1500 schools in the country. The fact is that every ranking system uses different criteria for their rankings. There are some rankings that place us near the top and others that leave us out altogether. Personally, when I moved to Mt Lebanon, my wife and I researched everything we could and eventually settled on using the Pittsburgh Business Times ranking of school districts in the state. In 2007, Mt Lebanon was ranked #3 in the state by the publication. We should be proud of that. Additionally, I think most will find the following chart very reassuring:

Click Image for larger picture.

What this chart tells me is that MTLSD kids that take the SAT are doing far better than the state and national averages. But let’s be honest, our community expects more from our students than simply beating those averages. I have therefore included the average SAT scores from Peter’s and Upper St Clair. This data is available on the Pennsylvania Department of Education website for each year going back to 2001. It takes a little work, but the data is there. Mt Lebanon has consistently outscored comparable school districts when it comes to SAT scores. There are many other statistics that say we perform far above our peers such as the number of graduates admitted to the finest schools, the percentage of students overall that graduate and head to higher education, etc. These are terrific advantages that this district has on other districts.

Now, I want to talk about something that concerns me. We have had a declining enrollment issue in our district for a number of years. In fact, the last year we saw an increase in student enrollment was in 1999, over ten years ago. In the late 1970’s MTLSD had over 7,100 students. Next year we are projected to have less than 5,400. In 1999 we had 5,751 students. The last time we had less than 5,400 students, we had only 8 schools operating instead of 10. And NO, I do not want nor am I suggesting that we close schools, that fact simply puts into context what I am about to say next. At the same time we have had the declining enrollment, the cost for each student has steadily risen. The statistics from the chart below are taken directly from the MTLSD Consolidated Annual Financial Report for 2007:

Click image for larger picture

What this chart tells me is a number of things, some of which will need additional explanation. First, since just 2001 we have lost 5.62 percent of our student population. That’s just over 1 out of every 20 students. This statistic alone is open to a lot of interpretation. Is there something going on at a higher level than the school district that is affecting the change? Is it taxes? Is it our housing stock? Is it that our community demographic is getting older? Is it the water? Or are we collectively just, you know, not romantic enough? The answer to the question “why?” is going to take some research to figure out. What I can point to on this chart and say for a fact is the following:
1) Our student population is declining at a rate that is concerning
2) Our costs per student have been rising at a rate that is higher than inflation

If you simply look at the costs you will find the following. In 1998 we spent $7,865 per student and in 2007 we spent $11,773 per student. This is an increase in cost of 49.69%. If we take inflation into account then we see a bit of a change. If we would have kept those costs in line with inflation, assuming a 3% inflation rate since 1998, that $7,865 number would have risen to $10,262 in 2007. Our current number is still 14.72% higher than the inflation adjusted number- and that is with a 3% rate of inflation which is a bit high for that period of time.

So again, let’s try to interpret the data. Again, we can look at the data and conclude that costs have risen above the rate of inflation. Going back through Consolidated Annual Financial Reports (CAFR) for the last six or so years we can see where some of that money has gone.

Let me take a look at one place where this Board made some efficiencies in the budget for next year:

Click on image for larger picture

Again, this data is taken mostly from the 2007 CAFR and partly from a document given to school board members earlier this year. This shows that there was an uptick in the amount of staff between 2000 and 2001 and another significant jump in both teacher count and staff count between 2003 and 2004. Looking in the CAFR you can see in 2004 that we implemented the FLES program which required an additional amount of teachers to expand foreign language learning to the elementary schools.

Some more data includes the fact that while our student population has decreased by over 5.62% since 2001, our total staff has increased by 3.74%. Another way to see this is to look at our student/staff and student/teacher ratios:

Click on image for larger picture

Since 2001 the District has increased total teaching staff by 15 and total staff by 24. At the same time, the District has lost 319 students. There are a few ways to look at this. First, if teaching staff would have kept pace since 2001 with the drop in students then we would be looking at 385 teaching staff instead of the current 420 number. This would be a reflection of the 5% drop in student population. I want to be clear right now that I am absolutely NOT advocating that we drop to 385 teachers. I simply want to point out this rather large divergence in the data. We have added a few programs which require a certain number of those staffing positions and we also have had a number of positions mandated by the state. Secondly, and this is the important thing to keep in mind, the Mt Lebanon community is one that wants its students to have a diverse curriculum. This diverse curriculum will always be something that causes us to have student/teacher ratios that are somewhat lower than most comparable districts. Personally, this is one of the things I like about Mt Lebanon and anyone who has been to an orchestra concert or to the recent film premiere or to Les Miserables, can attest to the value our curriculum brings to the community. It's tremendous and is part of what makes Mt Lebanon special. I don’t have that data in front of me right now but I know USC has a bit lower student/teacher ratio while Peter’s has a much higher ratio than Mt Lebanon.

In conclusion, based on all the data presented above, I thought we could have done a better job of setting ourselves up for the future. Next year we will face head-on the prospect of the largest publicly funded project in Mt Lebanon School District’s history. The budget we passed was a tough one, there was a lot of compromise and a lot of hair getting gray both on the Board (mostly mine!) and in the community. The budget is never an easy process and quite honestly, I am looking at next years budget and I am seeing a larger effort on the Board’s part to contain costs while budgeting for whatever it does with the High School. One of the principles I set forth in the beginning of this post was to look forward in the budgeting process. What will happen next year when the community faces a possible 15% jump in tax rates? What will the Board be faced with when it comes to containing costs next year in order to rein in that increase? These are questions that I hope to ask during some of the Audit/Finance Committee meetings coming up this summer. We had better start putting a plan in place now to address these issues next year.

I voted no for the following reasons:

1) I wanted to at least keep our pupil/teacher ratio the same and not let it go down any further. Despite that fact that we are allowing four positions to go unfilled, our ratio is still going down due to a projected drop in student enrollment of 63 students. If the Board would have let two additional positions (bringing the total to 6) go unfilled then our ratio would have remained essentially unchanged. Our ratio will be 12.75 next year, down from 12.82 this year. Two additional positions going unfilled would have left us at 12.81. That being said, perhaps the hardest thing to do on the Board is to make efficiencies in staff. There are a lot of machinations that have to be done on the part of the administration to carry out those type of changes and it is never easy to target a certain school or certain grade level with those changes.

2) I wanted a better future forecast for the budget than the one we had. I think this would have allowed for the community to see the point of view from which I speak. I blame myself for this since I should have asked for this in public. For instance, the forecast given to the public included a very small millage increase in future years even with a $100,000,000 high school project. I felt this was misleading since that document increased assessed valuation by $150,000,000 which is a pretty unlikely event unless the County and State come to some sort of legal assessed valuation agreement. Again, let me be clear, this is not to point a finger at anyone at all, I simply did not ask for the right data.

3) I would have liked to have nailed down a more precise amount that we would put towards future retiree health care benefits. Right now I am uncomfortable that the number is dependent on a few variables and I would have liked to have seen an amount over and above our fund balance that would go to that fund and have it better defined. As mentioned before, this sort of planning is very productive for both the short and long term.

All in all the budget process was a good learning experience and I think I did my part in contributing information to the Board to help make hard decisions. Next year is going to be a very tough year for the budget and I look forward to hearing from people about their thoughts.

Please email me at james.fraasch@gmail.com for responses to this post. I will read and respond to all of them.

Thanks for reading.

Budget Update

As always, the thoughts below are mine and do not represent the opinion of the Board as a whole or of other members of the Board. These are just my thoughts.

There have been some changes to the budget for the 2008-2009 school year. Discussion continued last night but I think the ideas are pretty well developed and ready to go. The three most important points of information in my opinion are as follows:

1) The millage increase has been reduced to .25 mills. This proposed decrease was done by applying the recently approved Galleria assessment increase tax payments for 2006 and 2007 to the general fund for the 2008-2009 school year. This amounted to approximately $577,000. This amount was not in our budget for this year since we did not have any idea about where the assessment for the Galleria would end up.

2) The District is projected to have just over $2,000,000 in surplus funds for the 2007-2008 school year. This is due to two things. First, we received unexpected (or at least unbudgeted) tax revenue from Covenant. There had been some question as to what they owed and what they would pay. Counsel was able to reach an agreement with them that allowed us to get about $1,000,000 in revenue that was not in the budget for this year. The other $1,000,000 portion of the surplus is mostly due to revenues being slightly higher than expected and expenses being held in check by District staff.

3) Surplus funds from this year are being proposed to be used to fund future retiree healthcare costs. Our collective bargaining agreement(s) dictates the amount the school district needs to pay for retiree healthcare. Accounting rules have changed to allow for districts to account for these retiree benefits in a way that is different from before. Previously we had these benefits included with the General Fund budget. Essentially, all that has happened is that the Board has discussed funding these retiree benefits for at least the next two years using some of the $2 million in surplus funds from the 2007-2008 budget year and putting these funds aside in a special fund dedicated to this purpose. Again, the new set-aside fund is required. What is being discussed is how much we want to initially put in that fund. Current policy says that anything in our Unreserved Fund Balance over 6% of next year expenses goes to the Capital Projects fund and that anything over 8% of next years expenses can be used at the Board's discretion. The $2 million surplus mentioned above would give the Board about $250,000 to use at its discretion. However, this would not even be enough to fund even one year of the expected $480,000 retiree health care cost. For this reason, the Board discussed the possibility of changing our policy to allow for any funds over 6% of Unreserved Fund Balance to be sent to a specified fund (Capital Projects or Retiree Healthcare being two such funds). From what I gathered during the discussion, the Board was in favor of keeping the policy in place that does not allow us to dip into the Unreserved Fund Balance to balance next years budget. The actual wording of the policy is still a work in progress and when the exact wording is worked out, I will post it here.

I believe there will be more discussion next week to determine the correct amount to put in the retiree healthcare fund. An initial funding amount of $1 million was mentioned.

A couple of my thoughts here. First, I am happy that we have gotten closer to a zero-mill increase on this budget. It's a heck of a lot better than where we started out. Expenses were reined in without impacting the education integrity of our school district. This was also done without mortgaging our future and without bringing down our fund balance. Our fund balances (ALL of them) will still get nice sized increases for next year. Our Unreserved Fund Balance will remain at 6% of budgeted expenditures (which is an increase since our expenditures are increasing), our Capital Projects Fund will receive additional funding (in anticipation of a high school project), and we will be able to fund the Retiree Healthcare Fund as well. What will happen is that anything over the 6% Unreserved Fund Balance will be split between Capital Projects and Retiree Healthcare. Using our surplus from this year to fund those two dedicated funds will reduce the future millage impact on Mt Lebanon residents. Personally, I want to be careful with how we fund the Capital Projects Fund since there is no decision yet on what we are actually going to do with the High School. However, for the Retiree Healthcare costs, we know pretty well what is going to happen until our next teacher contract comes up. If the retiree healthcare benefits are negotiated at that time, then our expenses would most likely change (up or down, depending on the agreement) going forward. Therefore, it might make sense to fund three years of the retiree costs but no more than that.

I'll post again once the budget is passed.

Since this blog is not associated with the District, please email questions or comments to james.fraasch@gmail.com

All the best!

Blog Mission

This will be my first blogging experience, well, except for the posts I have made over at BlogLebo. The goal here is to communicate more effectively with members of the community. Many decisions I make as a School Board member are not easily explainable during a meeting, and besides, most residents and other Board members don't always know what thinking has gone into making a decision or casting a vote a particular way. This blog will attempt to shed light on some of the processes involved in my decision making as well as present information to the public that I have researched in order to come to my decisions.

This blog will absolutely not have a focus on any other member of the Board besides myself. That is not fair to them since I have no way of knowing what information other Board members use to come up with their decisions. But, I do know how I think and that thinking is what I will try to communicate here.

I will read all emails sent to my email account james.fraasch@gmail.com but I will not post reader comments in whole on this blog. If you send me an email, I may post parts or all of it to help make or break one of my ideas. I appreciate that kind of feedback.

Look for a posting about the MTLSD Budget in the next week or so.

I will try to post at least once a week.

Thanks for stopping in.