I put together this blogpost in March of last year when looking at the 2009-2010 preliminary budget.
We have to continue looking for solutions to the coming tax increases. If not through reducing the size and scope of the high school project, than by some other means.
This is why I recommended the Finance Committee endorse a resolution addressed to our Legislators asking them to find a solution to the immediate need for real local property tax relief. I have asked our Board President to add this to our February meeting agenda.
Timely repost below:
The Audit/Finance Committee continued its meetings about the 09-10 budget this past Monday. The process is a bit different than you may have seen in the past and I do like it better than how we approached the budget last year. Just in case you don't get enough of us on the Board, the Committee meetings are now being televised. This will continue to be the case until we pass the budget.
Most of the budget documents from Monday's meeting can be found at the District website at http://www.mtlsd.org/district/budget/budgetmeetingdocuments.asp. If you are going to read through this post then I would suggest having a window open with the 5-Year forecast of budgeted expenditures. To me, this is the place we need to start. As I have said in the past, I am not a fan of budgeting only for THIS year. We need to budget for this year while seeing what kind of impact the budget will have on taxpayers in future years. In some instances, having a zero mill increase today will result in a much higher mill increase in a future budget. In fact, in this budget I can already see some discussion happening with how to approach the looming teacher pension problem and I believe that there will be some disagreement on how to plan for that huge spike in expense.
In February, I had put together my own five year projection and it was good to see some of the numbers confirmed by finance director Jan Klein's forecast. For example, in my budget for 2012-2013 I had a $46,437,088 expense line for teacher salaries. Ms. Klein shows $46,647,820. I hadn't talked to Ms. Klein about salary growth rates but understanding what our teacher contract looks like and what our other obligations are, there are some numbers that just make sense. Teacher salaries expense is one such number and since it makes up more than 50% of our total expenditures, its an important number to get a handle on.
I want to take a broad view of the forecast for now. You can see on the five year forecast what assumptions are being made. They include the following:
1) Salary expense increases of 3.4% per year with no changes in staffing levels. This makes sense in that our teacher contract dictates what future obligations we have with regard to salaries. I am certain this Board will take up the issue of staffing levels before this budget passes.
2) 8% increases in medical expenses- Given historical patterns this makes sense. However, it is a good idea to keep on your radar the idea of a statewide teacher health insurance program. Governor Rendell has talked about that for awhile. At best it will reduce healthcare costs and not eliminate them.
3) No money set aside for retiree health care. You may remember last year that we took some surplus money and decided to allocate it towards funding an OPEB trust. This trust was to put aside some money to address a large retiree health care liability that the District has. Deciding not to set more money aside now means that it will simply be pushed to the future.
4) No change in real estate assessments. Honestly, if you have any idea whatsoever what our assessed valuations will be over the next 3-5 years, please let me know. What I do know is that when we changed the way we taxed people in 2002 to be for the full home value as opposed to a percentage value, the District was forced to change millage in kind so as not to receive a windfall of property tax revenues. My best guess says that this will again be the case. No matter what the assessed valuation changes to, the District will again be asked not to make a mint off that change. In both Ms. Klein's forecast and the one I put together, we kept the assessed valuation the same for the length of the forecast.
5) $117 Million for High School Construction.
6) 30% loss in PSERS investments for 2008-2009. This expense right here is the one that has me scared the most. I posted about the 250% increase in PSERS contribution rates in December. Since then, the contribution rate has jumped even further due to stock market losses. PSERS right now is projecting a 30% loss on investments for 2008-2009 (their year end is June 30, 2009). They are then projecting 8% returns (down from 8.5%) in future years. Listen, if you could guarantee me 8% returns for the rest of my life, sign me up. Having been a financial planner, I know good numbers when I see them. How many of you would ditch your 401k investments today for an 8% return going forward? How does PSERS expect to do this with a 10-year average return of 4.5%, a 5 year return of 3.88%, and a 1 year return of -1.88%? Understanding that past performance is no indication of future results, banking on an 8% return in an environment like this is probably not the right thing to do.
Given all the above information and seeing that our revenues (which the Committee went over last month) are largely driven by our millage rate, state reimbursement rates, and earned income taxes, the five-year forecast show some interesting things.
First, the high school project in this forecast is phased in over a few years. This results in millage increases in 2010-2011 (2.68 mills), 2011-2012 (1.59), and 2012-2013 (about 4.17). These millage increases are not due entirely to the project but are largely a result of the debt needed to finance the project. You can see on the Transfer-Debt Svs/Capital Fund line how the debt service number keeps creeping up until 2012-2013.
Second, the pension obligations rear their head in 2012-2013. This is illustrated by the almost $10,000,000 increase in the Fringe Benefits section of the budget. Given that 1 mill equals about $2 million in revenue, this spike alone will result in a significant millage increase for the District. Under current law, the State reimuburses us for half of our pension contribution payments. This is why you see the revenue from the state increase the same year by $4.5 million. Between the pension spike and the high school debt, the 2012-2013 budget is projected to result in a 4.17 mill increase.
In the end, you can see that the millage is forecast to be 37.13 in 2014-2015. Today your millage rate is 24.81. This forecast shows what might shape up to be a near 50% increase in property taxes.
Before you step to the edge of that cliff or put your home on the market, please understand that there are Districts across this state that will be in a very similar boat to Mt Lebanon. The pension liability problem is about as big a financial problem as we can have. Other districts are dealing with it in their own ways. Upper St Clair has made their financial forecast available to its residents. Since it is a public document and was forwarded to me by a resident of USC, I have posted a link to it here. Their forecast is not quite as dire as ours but I do not believe at the time it was published that it included the new renovations they are now talking about. At least those renovations are not included in the expense assumptions outlined in the presentation.
This forecast, and the one I had in mind last year, are what convinced me that moving ahead with a high school project in this environment would not be the most fiscally sound decision. Until we can put a five year forecast in place that does not result in such a large financial burden being pushed onto our taxpayers, I am reluctant to spend anywhere near $100 million. Our budget is not just about the high school project. It is about how we educate our kids, how we prioritize the use of taxpayers funds, and how we plan for our future. We don't have the ability to run a deficit budget to "invest" in things by borrowing money like our federal government does (nor do I want that ability). Every taxpayer dollar matters. A potential 50% increase in property taxes over five years should give everyone pause.
I'll post more next week.
Thanks for reading.
James
Sunday, January 31, 2010
Friday, January 29, 2010
January Audit/Finance
We had our monthly Audit/Finance committee meeting last night.
We first talked about the current year budget and where our revenues and expenses are today compared to where they should be. We are currently expecting a significant surplus due to liened taxes collected last year.
We also talked about our latest five year budget forecast. I am waiting for an explanation on a few items before commenting fully on it. The forecast is still grim due to PSERS, high school construction and base budget increases. When compared to last years estimated projection (and focus on the word ESTIMATED as we were reminded by our finance manager last night) there is a slight improvement (7% lower) from last year's headline 45% increase over five years number. However, like I mentioned above, there seemed to be a few errors that either need fixed or further explanation. Once I have it, I will be sure to post it here. Director Posti did post more information on her blog and I will direct you over there for her take on the meeting. Again, I will have more, but I am not comfortable presenting the full budget without an explanation or correction to the document.
The PSERS pension issue was another topic up for discussion. I talked about the current legislation being discussed in the House. Most of the information I pulled can be found at the Pennsylvania School Board Association website here. While there is current legislation meandering through the House, the legislation only deals with a long term fix the pension problem. It would create a dual-enrollment system where future employees would be part defined benefit and part defined contribution. While this may end up being a solution adopted by the Commonwealth, it does not address the immediate need for local property tax relief from the PSERS funding crisis.
As part of the PSERS discussion I asked that members of the committee recommend that the board adopt a resolution urging the legislature figure out a way to fix the immediate effects of the PSERS funding spike.
That's all for now. Congrats to the Mt Lebanon boy's basketball team for their victory over Baldwin. It was the first game I had attended this year.
Thanks for reading.
James
We first talked about the current year budget and where our revenues and expenses are today compared to where they should be. We are currently expecting a significant surplus due to liened taxes collected last year.
We also talked about our latest five year budget forecast. I am waiting for an explanation on a few items before commenting fully on it. The forecast is still grim due to PSERS, high school construction and base budget increases. When compared to last years estimated projection (and focus on the word ESTIMATED as we were reminded by our finance manager last night) there is a slight improvement (7% lower) from last year's headline 45% increase over five years number. However, like I mentioned above, there seemed to be a few errors that either need fixed or further explanation. Once I have it, I will be sure to post it here. Director Posti did post more information on her blog and I will direct you over there for her take on the meeting. Again, I will have more, but I am not comfortable presenting the full budget without an explanation or correction to the document.
The PSERS pension issue was another topic up for discussion. I talked about the current legislation being discussed in the House. Most of the information I pulled can be found at the Pennsylvania School Board Association website here. While there is current legislation meandering through the House, the legislation only deals with a long term fix the pension problem. It would create a dual-enrollment system where future employees would be part defined benefit and part defined contribution. While this may end up being a solution adopted by the Commonwealth, it does not address the immediate need for local property tax relief from the PSERS funding crisis.
As part of the PSERS discussion I asked that members of the committee recommend that the board adopt a resolution urging the legislature figure out a way to fix the immediate effects of the PSERS funding spike.
That's all for now. Congrats to the Mt Lebanon boy's basketball team for their victory over Baldwin. It was the first game I had attended this year.
Thanks for reading.
James
Wednesday, January 27, 2010
Response to a Request for Clarification
I received an email from a fellow Board member who asked me to make corrections to my white paper. I asked this individual if I could be given permission to publish the full email (without edits) on my website so that it could not be taken out of context. Unfortunately, I was not given permission to post the email in full. Instead, I will respond here to the general questions/corrections that I was asked to make.
Issue #1: The $117 million dollar number used in the "worst-case" scenario budget will NOT be the case since we voted to cap the project at $113 million.
First, the Act 34 maximum project cost is set at $113 million. Act 34 clearly states that, "A second Act 34 hearing is required if specified costs based on bids exceed by eight percent or greater those costs based on estimates". In reality, bids can exceed $113 million and the Board can still go forward- unless that number is over the referendum limit in which case we would have to stop everything and figure out the next step. Act 34 applies to new construction and allows us to exceed the maximum spend number on new construction by 8% before having to either change the Act 34 document to match the bids or to make adjustments to the design to have the next round of bids come in less than 8% over the Act 34 maximum spend number.
I know members of the Board last Monday said they expect bids would come in 17-25% below the estimates. The Board President was even confident enough of this to post it on his FAQ (which is apparently being mailed to you at taxpayer expense). Given that I appear to still be in the minority on this, I truly hope the bids DO come in 25% below PJ Dick's estimate. However, I have asked PJ Dick on more than one occasion if their estimate reflects the construction bids received by Bethel Park and Upper St Clair (both of their bids came in under budget). On these occasions PJ Dick has responded that their estimates DO include those reduced bids. Additionally, I asked PJ Dick in December what the variance might be from their $113 estimate. Their response was "plus or minus 5%". Please review the tapes from October, November, and December to verify that these questions were asked and were responded to as I describe above. Who is right on this? I hope its the Board President..
Finally, we found out recently that our reimbursement from the Commonwealth (known as the Commonwealth' share of the project) was going to be 8% instead of the 15% we were told previously. This was a loss of almost $600,000 a year in revenue to the District which was not accounted for in that long-term budget.
So yes, I used the "worse-case" scenario budget because it was the MOST ACCURATE. The other two possible budgets were not even in the same neighborhood because of their assumptions. Given that PSERS returns were -26% (the budget was based on -30%) and the construction budget was based on $117 million (and we are very much in that neighborhood) and that the reimbursement rate was reduced by almost $600,000/yr, that budget remains the most accurate of the three presented at the time. We should have an updated five-year budget available on Thursday night. You can be sure I will go through it with a fine tooth comb and I will post it here when it is available online.
Issue #2: The email took issue with the following statement from my recent blogpost: The FACT is that if we tried to borrow all of the money for this project at the same time we would HAVE to go to referendum. By splitting the bond floats into two different years we avoid it altogether
The email goes on to suggest that we DO have the ability right now to borrow all the money we need for this project. The email also suggests that we did not split the bond float into two separate floats in order to avoid a referendum.
First, no, we cannot borrow $113 million right now for this project. We have TOO MUCH DEBT already. The most we can borrow is $93,106,575. How do I know this? I have a copy of our 2008-2009 Comprehensive Annual Financial Report sitting right next to me (the link is broken on the District website and brings you to the 2008 CAFR otherwise I would link it). On pages 105 and 106 the calculation of Nonelectoral Debt (total debt we can take on without going to referendum) is done TWICE. Additionally, I asked this very question about how much we would be able to borrow "right now" late last year in a public meeting and the response from our Finance Manager was a number very much in line with the $93 million number above. This number has since been reduced because of the $69 million float for this project in October.
Second, we absolutely split this bond float into separate issues in order to avoid a referendum. In fact, a previous Board (circa 2006) approved a resolution to allow the issuance of $69 million in bonds prior to Act 1 passing in order to specifically avoid an Act 1 referendum. By approving the resolution before the passing of Act 1, the debt service required to pay for the bonds is not subject to Act 1 limits. By splitting the bond floats you allow your revenues to increase due to increased taxes which in turn increases your debt limits. So in essence, as you borrow more, you get to borrow even more because of the increased revenues/taxes required to service the new debt.
So, to sum up, we avoided a referendum by:
1) Approving the issuance of $69 million worth of bonds prior to Act 1 passing
2) Splitting the project bond floats into multiple floats (there was a scenario at one point where we were going to do three separate bond floats to avoid a referendum)
3) Approving an Act 34 project cost about 2% under our Nonelectoral Debt Limit
Issue #3- Cost Per Household
The argument is made in this email about the cost per household being an inaccurate way to measure the cost of this project. In retrospect, there were perhaps better ways to show the impact on the taxpayers. The cost per household number does NOT include the businesses in Mt Lebanon. This is true. So while it is true that if you divide the total project cost (approximately $160,000,000 with principal and interest and after reimbursement) by the number of household units, the total cost per household unit is more than $10,000, that is not the best way to measure the increase in debt since there are businesses that the debt will be spread across as well.
The impact on business in Mt Lebanon is not something I focused on in that paper. I could have spent more time on it but it was long enough as it was. Let's take Mt Lebanon's largest taxpayer as a case study. The Galleria is currently assessed at $30,400,000 (again from the 2009 CAFR which has a list of the Principal Real Estate Taxpayers). The Galleria makes up 1.4% of our total assessed value. An increase in taxes of just 30% would increase their taxes by almost $285,000 annually ($949,934 to $1,234,914). How is the Galleria going to pay for this? They certainly will have to figure out if they will cut staff, increase lease rates, or do something else to make their budget work. What impact will their decision have on other businesses that lease space from them? How will they pay for any increased lease costs? These are the questions that need to be answered before we commit ourselves to a $113 million project. Every business in Mt Lebanon will have to make the same kind of choice that the Galleria does but on a smaller level.
I used the Galleria above as a case study because it does point out the mathematical error of simply spreading new debt costs across only housing units. While the calculation was not wrong, I can see how some might see it as misleading since we have some significant businesses (like the Galleria) in Mt Lebanon. But does this change the argument at all? You make that call.
Issue #4- Why 50%
In my paper I used a range for the tax increases projected as between 45-50%. I believe the actual number from 2008-2009 to 2014-2015 was in line with a 47% increase. Last I checked, that number was firmly planted between 45% and 50%.
Issue #5- Emails about people calling for my resignation
This was an interesting addition to the email. The emails started rolling in while I was in Washington, DC this weekend. There were a bit more than a handful that asked for a resignation, censure, or outright censorship of me. By the time I returned home, I had received more than a few phone calls from people asking me if I had heard about the efforts to get me to resign. Mt Lebanon is a small place. News travels fast. One person overheard a conversation in a coffee shop about this movement. Another said they had received an email from someone saying that this was happening and they called to make sure I was prepared for it. This doesn't mean that there was a "leak" of an email at all. Like I said, news travels fast- especially in emails.
I hope this information clears some things up for everyone.
As always, feel free to email me with any questions.
Thanks for reading.
James Fraasch
Issue #1: The $117 million dollar number used in the "worst-case" scenario budget will NOT be the case since we voted to cap the project at $113 million.
First, the Act 34 maximum project cost is set at $113 million. Act 34 clearly states that, "A second Act 34 hearing is required if specified costs based on bids exceed by eight percent or greater those costs based on estimates". In reality, bids can exceed $113 million and the Board can still go forward- unless that number is over the referendum limit in which case we would have to stop everything and figure out the next step. Act 34 applies to new construction and allows us to exceed the maximum spend number on new construction by 8% before having to either change the Act 34 document to match the bids or to make adjustments to the design to have the next round of bids come in less than 8% over the Act 34 maximum spend number.
I know members of the Board last Monday said they expect bids would come in 17-25% below the estimates. The Board President was even confident enough of this to post it on his FAQ (which is apparently being mailed to you at taxpayer expense). Given that I appear to still be in the minority on this, I truly hope the bids DO come in 25% below PJ Dick's estimate. However, I have asked PJ Dick on more than one occasion if their estimate reflects the construction bids received by Bethel Park and Upper St Clair (both of their bids came in under budget). On these occasions PJ Dick has responded that their estimates DO include those reduced bids. Additionally, I asked PJ Dick in December what the variance might be from their $113 estimate. Their response was "plus or minus 5%". Please review the tapes from October, November, and December to verify that these questions were asked and were responded to as I describe above. Who is right on this? I hope its the Board President..
Finally, we found out recently that our reimbursement from the Commonwealth (known as the Commonwealth' share of the project) was going to be 8% instead of the 15% we were told previously. This was a loss of almost $600,000 a year in revenue to the District which was not accounted for in that long-term budget.
So yes, I used the "worse-case" scenario budget because it was the MOST ACCURATE. The other two possible budgets were not even in the same neighborhood because of their assumptions. Given that PSERS returns were -26% (the budget was based on -30%) and the construction budget was based on $117 million (and we are very much in that neighborhood) and that the reimbursement rate was reduced by almost $600,000/yr, that budget remains the most accurate of the three presented at the time. We should have an updated five-year budget available on Thursday night. You can be sure I will go through it with a fine tooth comb and I will post it here when it is available online.
Issue #2: The email took issue with the following statement from my recent blogpost: The FACT is that if we tried to borrow all of the money for this project at the same time we would HAVE to go to referendum. By splitting the bond floats into two different years we avoid it altogether
The email goes on to suggest that we DO have the ability right now to borrow all the money we need for this project. The email also suggests that we did not split the bond float into two separate floats in order to avoid a referendum.
First, no, we cannot borrow $113 million right now for this project. We have TOO MUCH DEBT already. The most we can borrow is $93,106,575. How do I know this? I have a copy of our 2008-2009 Comprehensive Annual Financial Report sitting right next to me (the link is broken on the District website and brings you to the 2008 CAFR otherwise I would link it). On pages 105 and 106 the calculation of Nonelectoral Debt (total debt we can take on without going to referendum) is done TWICE. Additionally, I asked this very question about how much we would be able to borrow "right now" late last year in a public meeting and the response from our Finance Manager was a number very much in line with the $93 million number above. This number has since been reduced because of the $69 million float for this project in October.
Second, we absolutely split this bond float into separate issues in order to avoid a referendum. In fact, a previous Board (circa 2006) approved a resolution to allow the issuance of $69 million in bonds prior to Act 1 passing in order to specifically avoid an Act 1 referendum. By approving the resolution before the passing of Act 1, the debt service required to pay for the bonds is not subject to Act 1 limits. By splitting the bond floats you allow your revenues to increase due to increased taxes which in turn increases your debt limits. So in essence, as you borrow more, you get to borrow even more because of the increased revenues/taxes required to service the new debt.
So, to sum up, we avoided a referendum by:
1) Approving the issuance of $69 million worth of bonds prior to Act 1 passing
2) Splitting the project bond floats into multiple floats (there was a scenario at one point where we were going to do three separate bond floats to avoid a referendum)
3) Approving an Act 34 project cost about 2% under our Nonelectoral Debt Limit
Issue #3- Cost Per Household
The argument is made in this email about the cost per household being an inaccurate way to measure the cost of this project. In retrospect, there were perhaps better ways to show the impact on the taxpayers. The cost per household number does NOT include the businesses in Mt Lebanon. This is true. So while it is true that if you divide the total project cost (approximately $160,000,000 with principal and interest and after reimbursement) by the number of household units, the total cost per household unit is more than $10,000, that is not the best way to measure the increase in debt since there are businesses that the debt will be spread across as well.
The impact on business in Mt Lebanon is not something I focused on in that paper. I could have spent more time on it but it was long enough as it was. Let's take Mt Lebanon's largest taxpayer as a case study. The Galleria is currently assessed at $30,400,000 (again from the 2009 CAFR which has a list of the Principal Real Estate Taxpayers). The Galleria makes up 1.4% of our total assessed value. An increase in taxes of just 30% would increase their taxes by almost $285,000 annually ($949,934 to $1,234,914). How is the Galleria going to pay for this? They certainly will have to figure out if they will cut staff, increase lease rates, or do something else to make their budget work. What impact will their decision have on other businesses that lease space from them? How will they pay for any increased lease costs? These are the questions that need to be answered before we commit ourselves to a $113 million project. Every business in Mt Lebanon will have to make the same kind of choice that the Galleria does but on a smaller level.
I used the Galleria above as a case study because it does point out the mathematical error of simply spreading new debt costs across only housing units. While the calculation was not wrong, I can see how some might see it as misleading since we have some significant businesses (like the Galleria) in Mt Lebanon. But does this change the argument at all? You make that call.
Issue #4- Why 50%
In my paper I used a range for the tax increases projected as between 45-50%. I believe the actual number from 2008-2009 to 2014-2015 was in line with a 47% increase. Last I checked, that number was firmly planted between 45% and 50%.
Issue #5- Emails about people calling for my resignation
This was an interesting addition to the email. The emails started rolling in while I was in Washington, DC this weekend. There were a bit more than a handful that asked for a resignation, censure, or outright censorship of me. By the time I returned home, I had received more than a few phone calls from people asking me if I had heard about the efforts to get me to resign. Mt Lebanon is a small place. News travels fast. One person overheard a conversation in a coffee shop about this movement. Another said they had received an email from someone saying that this was happening and they called to make sure I was prepared for it. This doesn't mean that there was a "leak" of an email at all. Like I said, news travels fast- especially in emails.
I hope this information clears some things up for everyone.
As always, feel free to email me with any questions.
Thanks for reading.
James Fraasch
A Timely Repost
I wanted to take a moment to look back while we are all looking forward to the Act 34 hearings in February.
In May 2009 I posted the following regarding my no vote for the 2009-2010 budget:
I've posted a number of times about the budget, about voting "no", about the high school, and many other topics under sun. There are people out there that get what I am saying. I am not on this Board for my own glorification. If I was, boy did I ever pick the wrong venue for that. I don't vote no just because I like to go against the grain. Honestly, it's not easy to vote against something. It is much easier to be FOR something. I don't take these votes lightly, however, I think many people do.
Take the budget for one example. Are you prepared to have your taxes raised 30-50% over the next five years? Think about that for a second. Our budget puts us on a path to increase taxes from 23.81 (last year) to 34.98 in 2014-2015. That increase depends on what rate we get on our high school bonds, the cost of the high school project (this number is based on $100 million) and what return the PSERS investments get. The increase may get bigger or it may come down if the stars align. As an example, if you own a $200,000 house in Mt Lebanon, your taxes are projected to go from $4,762 all the way to $6,996. A $400,000 home will go from $9,524 to $13,992.
Ask yourself if you really think those tax increases are going to attract young families to Mt Lebanon. When I moved here in 2004 and looked at competing school districts, communities, and places to raise my kids, Mt Lebanon was one of three places I thought would work. And I was right about that. My family loves it here. We are proud when we escort our out-of-town relatives to the different places in Mt Lebanon that make it unique. We go to the parks, Beverly, Washington Rd, our beautifully restored elementary schools, and the list goes on and on. People moving to Pittsburgh all do what I did. They look at the overall quality of life in any prospective community.
When I vote on that budget, I don't just look at what is happening this year (a .30 mill increase) because honestly, what happens on a year to year basis fluctuates so much. But when you see the impact that your decision is going to have on future families that are evaluating Mt Lebanon much the way my family and I did in 2004, you have to have a bit of perspective. The impact the Board will have TODAY on the decisions made by unknown families five years from now is staggering. After talking with a few Board member off-the-record, I know that there are more people on the Board that get the fact that putting us on the course to a possible 50% tax increase makes this budget unsustainable. But there is a bit of a fear of inevitability. That we can't actually avoid those increase. I completely disagree with that assessment. As a Board we hardly looked deep into the budget to find cost savings. We never did sit down and prioritize our budget objectives. We never did implement a process to start a zer0-based budget and we never did get the programmatic budget that was asked for after last years budget passed.
Until we can sit down and look at our expenses based on programs and until we can sit down and start every budget year over at a zero number, then I fear this Board will not have the ability to avoid the large tax increases coming.
We hear every day in the news today about school districts cutting staff (see Sto-Rox), cutting classes, closing schools (see City of Pittsburgh), asking teachers to forgo raises, etc. Mt Lebanon has largely been able to avoid most of that economic fallout. It is for this reason that I believe the community thinks things are fine- that the District has sounded an "all-clear" signal that those types of things simply won't fall on us. People by their very nature are optimistic for the most part- this is very much the same as what I said earlier, that people want to be FOR something and not against something. I don't know at what point residents in Mt Lebanon will start to figure out that 50% in property tax increases will start to erode their everyday lives, but it will happen. I might not be on the school board at that point but I will proudly say that I voted against these budgets and that I was unwilling to sit idly by and say nothing while it all happened.
A couple of problems I have with the budget this year:
1) Last year you may remember that I said we should try to maintain current teacher/student ratios. For the 2008-2009 budget we projected a drop in student population of 63. Well, it turns out that we were wildly inaccurate. We actually dropped 122 students or almost 100% more than projected. Last year we attritioned four teaching positions partly due to this enrollment issue. This next year we are again looking at a student population decline of about 35, however, we are not projected to lose any staffing positions. This is 157 students lost in 2 years and we are only losing 4 positions- all last year. There is something very wrong with this. Granted there are some issues with where the retirements are coming from this year and with only a handful of retirements throughout the District, it is hard to find efficiencies. But we MUST find them. That is our job and the job of the administration.
2) Funding of a PSERs Rate Spike Stabilization Fund- We are taking $500,000 of taxpayer money and putting it aside so that taxpayers will not get hit with the full one-year impact of the PSERS increase in 2012 (see story here). To me, this is the height of wasteful use of money. Setting this money aside does nothing to reduce future millage increases, it simply defers when you will see it. If we were to take this money, have it sit in a money market fund at .5% interest, it would be more beneficial over the long-term to our taxpayers than to use it to manufacture a level increases in taxes for PSERS. With the high school project staring us straight in the face, it makes all the sense in the world to use this money to INVEST in the high school project to reduce how much we will pay in debt service for the next 3o years. You take this money, you take the $175,000 we have saved in our latest capital projects (from bids coming in under estimate) and you start to invest all that money into a project that is going to be around a while- just like the high school. Heck, aren't we having issues with just a six-lane pool being installed at the new athletic wing? I wonder if half a million dollars would get us an extra couple lanes? I wonder if half a million dollars would allow us to expand that building a bit to build a stretch pool? I wonder what half a million dollars would do for our science wing? For our language arts classrooms? For turfing a field? For putting lights at Mellon? Any and all of these ideas are a better use of $500,000 than to level out a millage increase in my opinion.
3) Zero-based/Program Based Budget- We are still not looking at a budget that starts from scratch every year. Any time you get a base budget and increase items by a percentage every year (yes this is a simplistic way to explain it but is largely true) then you run the risk of a budget that gets out of control much like the Federal Government. We need to find a way to priortize every expense and we can only do this if we know the cost of everything in our budget.
Those are the reasons I voted against this budget. I don't feel comfortable approving a budget that sets us on a path to tax people out of Mt Lebanon or to tax so much that young families refuse to relocate here. We can do better than this and I think we owe it to our taxpayers to do better than this.
---------end of repost
The situation we find ourselves in now was not hard to see coming. Unfortunately, we took no action to avoid it.
Thanks for reading.
James
In May 2009 I posted the following regarding my no vote for the 2009-2010 budget:
I've posted a number of times about the budget, about voting "no", about the high school, and many other topics under sun. There are people out there that get what I am saying. I am not on this Board for my own glorification. If I was, boy did I ever pick the wrong venue for that. I don't vote no just because I like to go against the grain. Honestly, it's not easy to vote against something. It is much easier to be FOR something. I don't take these votes lightly, however, I think many people do.
Take the budget for one example. Are you prepared to have your taxes raised 30-50% over the next five years? Think about that for a second. Our budget puts us on a path to increase taxes from 23.81 (last year) to 34.98 in 2014-2015. That increase depends on what rate we get on our high school bonds, the cost of the high school project (this number is based on $100 million) and what return the PSERS investments get. The increase may get bigger or it may come down if the stars align. As an example, if you own a $200,000 house in Mt Lebanon, your taxes are projected to go from $4,762 all the way to $6,996. A $400,000 home will go from $9,524 to $13,992.
Ask yourself if you really think those tax increases are going to attract young families to Mt Lebanon. When I moved here in 2004 and looked at competing school districts, communities, and places to raise my kids, Mt Lebanon was one of three places I thought would work. And I was right about that. My family loves it here. We are proud when we escort our out-of-town relatives to the different places in Mt Lebanon that make it unique. We go to the parks, Beverly, Washington Rd, our beautifully restored elementary schools, and the list goes on and on. People moving to Pittsburgh all do what I did. They look at the overall quality of life in any prospective community.
When I vote on that budget, I don't just look at what is happening this year (a .30 mill increase) because honestly, what happens on a year to year basis fluctuates so much. But when you see the impact that your decision is going to have on future families that are evaluating Mt Lebanon much the way my family and I did in 2004, you have to have a bit of perspective. The impact the Board will have TODAY on the decisions made by unknown families five years from now is staggering. After talking with a few Board member off-the-record, I know that there are more people on the Board that get the fact that putting us on the course to a possible 50% tax increase makes this budget unsustainable. But there is a bit of a fear of inevitability. That we can't actually avoid those increase. I completely disagree with that assessment. As a Board we hardly looked deep into the budget to find cost savings. We never did sit down and prioritize our budget objectives. We never did implement a process to start a zer0-based budget and we never did get the programmatic budget that was asked for after last years budget passed.
Until we can sit down and look at our expenses based on programs and until we can sit down and start every budget year over at a zero number, then I fear this Board will not have the ability to avoid the large tax increases coming.
We hear every day in the news today about school districts cutting staff (see Sto-Rox), cutting classes, closing schools (see City of Pittsburgh), asking teachers to forgo raises, etc. Mt Lebanon has largely been able to avoid most of that economic fallout. It is for this reason that I believe the community thinks things are fine- that the District has sounded an "all-clear" signal that those types of things simply won't fall on us. People by their very nature are optimistic for the most part- this is very much the same as what I said earlier, that people want to be FOR something and not against something. I don't know at what point residents in Mt Lebanon will start to figure out that 50% in property tax increases will start to erode their everyday lives, but it will happen. I might not be on the school board at that point but I will proudly say that I voted against these budgets and that I was unwilling to sit idly by and say nothing while it all happened.
A couple of problems I have with the budget this year:
1) Last year you may remember that I said we should try to maintain current teacher/student ratios. For the 2008-2009 budget we projected a drop in student population of 63. Well, it turns out that we were wildly inaccurate. We actually dropped 122 students or almost 100% more than projected. Last year we attritioned four teaching positions partly due to this enrollment issue. This next year we are again looking at a student population decline of about 35, however, we are not projected to lose any staffing positions. This is 157 students lost in 2 years and we are only losing 4 positions- all last year. There is something very wrong with this. Granted there are some issues with where the retirements are coming from this year and with only a handful of retirements throughout the District, it is hard to find efficiencies. But we MUST find them. That is our job and the job of the administration.
2) Funding of a PSERs Rate Spike Stabilization Fund- We are taking $500,000 of taxpayer money and putting it aside so that taxpayers will not get hit with the full one-year impact of the PSERS increase in 2012 (see story here). To me, this is the height of wasteful use of money. Setting this money aside does nothing to reduce future millage increases, it simply defers when you will see it. If we were to take this money, have it sit in a money market fund at .5% interest, it would be more beneficial over the long-term to our taxpayers than to use it to manufacture a level increases in taxes for PSERS. With the high school project staring us straight in the face, it makes all the sense in the world to use this money to INVEST in the high school project to reduce how much we will pay in debt service for the next 3o years. You take this money, you take the $175,000 we have saved in our latest capital projects (from bids coming in under estimate) and you start to invest all that money into a project that is going to be around a while- just like the high school. Heck, aren't we having issues with just a six-lane pool being installed at the new athletic wing? I wonder if half a million dollars would get us an extra couple lanes? I wonder if half a million dollars would allow us to expand that building a bit to build a stretch pool? I wonder what half a million dollars would do for our science wing? For our language arts classrooms? For turfing a field? For putting lights at Mellon? Any and all of these ideas are a better use of $500,000 than to level out a millage increase in my opinion.
3) Zero-based/Program Based Budget- We are still not looking at a budget that starts from scratch every year. Any time you get a base budget and increase items by a percentage every year (yes this is a simplistic way to explain it but is largely true) then you run the risk of a budget that gets out of control much like the Federal Government. We need to find a way to priortize every expense and we can only do this if we know the cost of everything in our budget.
Those are the reasons I voted against this budget. I don't feel comfortable approving a budget that sets us on a path to tax people out of Mt Lebanon or to tax so much that young families refuse to relocate here. We can do better than this and I think we owe it to our taxpayers to do better than this.
---------end of repost
The situation we find ourselves in now was not hard to see coming. Unfortunately, we took no action to avoid it.
Thanks for reading.
James
Monday, January 25, 2010
Playing Some Defense
It's been a week since we saw over 100 people attend the school board meeting to set the Act 34 number and hearing date. That date will be February 22nd, by the way. The vote passed 6-3.
It was a whirlwind of a few days heading into that meeting after releasing the white paper that outlined some of the coming tax increases. That paper generated a significant amount of interest both by our local taxpayers and by the local media. Many members of the local media are residents of Mt Lebanon and therefore have significant interest in the happenings in Mt Lebanon with regards to this project. The school board received over 350 emails between Wednesday afternoon and Monday's school board meeting. That is a TON of emails and they are still coming in. I would like to personally thank everyone that expressed their opinion on setting the cost of this project.
Please be sure to again make your voice heard as part of the Act 34 hearing. I will post information on the ground rules for that hearing shortly.
I have often said that there is room to disagree on this project. While I expected significant blow back on the release of that paper, it did not really gather steam until this weekend. Some people even suggested that I "made-up" the numbers. Sorry, but that is just not the case. The biggest counter-argument I hear to that paper is that I used a "worst-case" scenario budget that was provided by our finance director from April 2009. Understand that there were three scenarios that were provided:
1) A five year projection that did not include either a high school project or increases in pension contributions
2) A five year projection that did not include any increases in pension contributions but DID include a high school project
3) A five year projection that included both a $117 million high school and increased pension contributions (based on a loss of 30% in PSERS investments- PSERS actually lost more than 26%)
Only one of those three scenarios was due to come true. We KNEW we had a HS project and we could have prepared as if the State would not be able to do anything with PSERS. Honestly, I was one of those that was hopeful they would do something, anything to ease the burden on local taxpayers. While there is some legislation pending, I am unsure how it will impact the immediate and real need for relief from local property taxes. The fact remains that the worst-case scenario budget was (and remains) the most likely of the three scenarios to come true.
As for the 5-year projections, add in the fact that our state reimbursement for the project was incorrectly projected to be close to 15% instead of the 8% we are actually getting (a difference of almost $14 million or approximately $600,000/yr over the 25 year bond) and you have yourself a pretty tough situation. Now, to be fair, we did secure bonds at very low rates which should reduce somewhat the millage required by the high school project. Additionally, we all hope that we will not have to borrow all the way to $117 million for this project. There were promises by Board members last Monday to bring the project costs under $95 million. I hope they are right and I hope they don't do this by reducing building material quality substantially, but that still will not be enough to avoid significant increases in millage.
That paper I put together is something that should have been done two years ago. There has never been a publicly available analysis done that puts into perspective what everything is going to cost us going forward. The point was that we cannot do the HS project in a vacuum. What we can afford has to be calculated by looking at ALL of our obligations, not just what the cost of only the high school will mean to our taxpayers and not just based on what the Commonwealth allows us to borrow before going to referendum. The FACT is that if we tried to borrow all of the money for this project at the same time we would HAVE to go to referendum. By splitting the bond floats into two different years we avoid it altogether.
In 2007 when I ran for this position I knocked on literally thousands of doors. At the time there was a project on the table that included a possible $120 million high school project. Even then many taxpayers said they could not afford the increase that a project of that size and scope would bring. This was BEFORE the market crashed, before 401k's got wiped out, before unemployment jumped to over 10%, before home prices stagnated, and before there was any real idea about the coming PSERS pension crisis. To think that today we can afford the same or similar project cost as something we would have had to stretch to achieve 2-3 years ago is the wrong way to think about this. We are in a different reality financially than we were in 2007. When running for election I said I was going to fight against spending anywhere near $120 million on this project and I will keep that promise until the battle is lost.
Lastly, I want to thank the people who have stopped me and expressed their gratitude for putting this project and our coming tax increases in perspective. I have maintained this blog for almost two years now and I have said repeatedly that a budget like the one we are looking at for 2010-2011 was going to be the norm going forward. Go back to the archives and see why I voted no on each of the last two budgets. The white paper I put out there was mostly a regurgitation of the information I have put on this blog for the last two years. When you put it all together like I did in that paper it just makes one heck of a case for us to step back and reconsider how much to spend on bricks and mortar.
To the handful of you out there sending emails to the Board asking for my head on a platter and for some public "censure", I'm not sure what to say about that. The last thing I would ever want to see happen is for someone's freedom of speech to be trampled on. Because I am a Board member do I give up my right to say publicly what I believe to be true? Do I automatically have LESS ability to express my opinions because I am an elected official? To some of you that is exactly what you believe to be the case. If you are simply suggesting that I am going outside of our Board Operating Procedures then I would suggest you apply those principles equally to those members of the Board who spoke negatively of other Board members at our reorg meeting in December. Please email them to tell them how upset you are with their conduct as well. I will wait to be copied on that email. Note that nothing I said was a surprise to anyone on this Board. In fact, in January of 2009 I gave a presentation to the Board and the community that had much of the same information found in my white paper. Quite honestly, the passion on both sides of this issue is a reason I love this town. People are genuinely involved and interested in local government more so than in any other place I have lived.
Mt Lebanon is a tremendous town. I don't want to lose what we have collectively built over generations of hard-working people being in this town. We have great people, we have great culture, and we have great schools. I am willing to pay a bit of a premium to live in this community for a long time. My fear is that as we raise taxes more and more, then those people that make this town great will find it less attractive. I will continue to fight for the future of Mt Lebanon every day I am on the Board.
Thanks for reading and stay tuned for an Act 34 hearing update in the coming days.
James
It was a whirlwind of a few days heading into that meeting after releasing the white paper that outlined some of the coming tax increases. That paper generated a significant amount of interest both by our local taxpayers and by the local media. Many members of the local media are residents of Mt Lebanon and therefore have significant interest in the happenings in Mt Lebanon with regards to this project. The school board received over 350 emails between Wednesday afternoon and Monday's school board meeting. That is a TON of emails and they are still coming in. I would like to personally thank everyone that expressed their opinion on setting the cost of this project.
Please be sure to again make your voice heard as part of the Act 34 hearing. I will post information on the ground rules for that hearing shortly.
I have often said that there is room to disagree on this project. While I expected significant blow back on the release of that paper, it did not really gather steam until this weekend. Some people even suggested that I "made-up" the numbers. Sorry, but that is just not the case. The biggest counter-argument I hear to that paper is that I used a "worst-case" scenario budget that was provided by our finance director from April 2009. Understand that there were three scenarios that were provided:
1) A five year projection that did not include either a high school project or increases in pension contributions
2) A five year projection that did not include any increases in pension contributions but DID include a high school project
3) A five year projection that included both a $117 million high school and increased pension contributions (based on a loss of 30% in PSERS investments- PSERS actually lost more than 26%)
Only one of those three scenarios was due to come true. We KNEW we had a HS project and we could have prepared as if the State would not be able to do anything with PSERS. Honestly, I was one of those that was hopeful they would do something, anything to ease the burden on local taxpayers. While there is some legislation pending, I am unsure how it will impact the immediate and real need for relief from local property taxes. The fact remains that the worst-case scenario budget was (and remains) the most likely of the three scenarios to come true.
As for the 5-year projections, add in the fact that our state reimbursement for the project was incorrectly projected to be close to 15% instead of the 8% we are actually getting (a difference of almost $14 million or approximately $600,000/yr over the 25 year bond) and you have yourself a pretty tough situation. Now, to be fair, we did secure bonds at very low rates which should reduce somewhat the millage required by the high school project. Additionally, we all hope that we will not have to borrow all the way to $117 million for this project. There were promises by Board members last Monday to bring the project costs under $95 million. I hope they are right and I hope they don't do this by reducing building material quality substantially, but that still will not be enough to avoid significant increases in millage.
That paper I put together is something that should have been done two years ago. There has never been a publicly available analysis done that puts into perspective what everything is going to cost us going forward. The point was that we cannot do the HS project in a vacuum. What we can afford has to be calculated by looking at ALL of our obligations, not just what the cost of only the high school will mean to our taxpayers and not just based on what the Commonwealth allows us to borrow before going to referendum. The FACT is that if we tried to borrow all of the money for this project at the same time we would HAVE to go to referendum. By splitting the bond floats into two different years we avoid it altogether.
In 2007 when I ran for this position I knocked on literally thousands of doors. At the time there was a project on the table that included a possible $120 million high school project. Even then many taxpayers said they could not afford the increase that a project of that size and scope would bring. This was BEFORE the market crashed, before 401k's got wiped out, before unemployment jumped to over 10%, before home prices stagnated, and before there was any real idea about the coming PSERS pension crisis. To think that today we can afford the same or similar project cost as something we would have had to stretch to achieve 2-3 years ago is the wrong way to think about this. We are in a different reality financially than we were in 2007. When running for election I said I was going to fight against spending anywhere near $120 million on this project and I will keep that promise until the battle is lost.
Lastly, I want to thank the people who have stopped me and expressed their gratitude for putting this project and our coming tax increases in perspective. I have maintained this blog for almost two years now and I have said repeatedly that a budget like the one we are looking at for 2010-2011 was going to be the norm going forward. Go back to the archives and see why I voted no on each of the last two budgets. The white paper I put out there was mostly a regurgitation of the information I have put on this blog for the last two years. When you put it all together like I did in that paper it just makes one heck of a case for us to step back and reconsider how much to spend on bricks and mortar.
To the handful of you out there sending emails to the Board asking for my head on a platter and for some public "censure", I'm not sure what to say about that. The last thing I would ever want to see happen is for someone's freedom of speech to be trampled on. Because I am a Board member do I give up my right to say publicly what I believe to be true? Do I automatically have LESS ability to express my opinions because I am an elected official? To some of you that is exactly what you believe to be the case. If you are simply suggesting that I am going outside of our Board Operating Procedures then I would suggest you apply those principles equally to those members of the Board who spoke negatively of other Board members at our reorg meeting in December. Please email them to tell them how upset you are with their conduct as well. I will wait to be copied on that email. Note that nothing I said was a surprise to anyone on this Board. In fact, in January of 2009 I gave a presentation to the Board and the community that had much of the same information found in my white paper. Quite honestly, the passion on both sides of this issue is a reason I love this town. People are genuinely involved and interested in local government more so than in any other place I have lived.
Mt Lebanon is a tremendous town. I don't want to lose what we have collectively built over generations of hard-working people being in this town. We have great people, we have great culture, and we have great schools. I am willing to pay a bit of a premium to live in this community for a long time. My fear is that as we raise taxes more and more, then those people that make this town great will find it less attractive. I will continue to fight for the future of Mt Lebanon every day I am on the Board.
Thanks for reading and stay tuned for an Act 34 hearing update in the coming days.
James
Tuesday, January 19, 2010
Quick Note
I'll post more regarding last night's vote. I am still going through emails from residents at the moment and trying to respond to them.
I wanted to take a moment to correct the record on some of the publicity surrounding yesterday's meeting. This topic brought many interests to the forefront and the media was one interest that does follow my blogs and the local blogs in Mt Lebanon. Many reporters live here as residents in Mt Lebanon. I was contacted by KDKA's Marty Griffin. The media contacting our home is not unusual. KDKA ended up coming out to my work and I was interviewed during my lunch hour. Unfortunately the evening news showed a portion of an interview where I was relaying a common thread from emails received from a community members, but it appears to many (myself included) that I am saying I am moving from Mt Lebanon if this high school project proceeds as planned. We are not moving. We have no intention to leave the area and as I often say, If I were to win the lottery tomorrow, I would stay in the same house I am in now. Our family does have to make some adjustments in saving, as do most families to their personal budgets, when this tax increase occurs. My family and I did move into a lower-assessed value home over the Summer in order to better prepare ourselves for a very long stay in Mt Lebanon. We have absolutely no intent to leave the area.
Thanks for listening. I plan on setting the record straight on some of the accusations that came up last night. That will have to wait until another day.
But, I want to thank EVERYONE who voiced their opinions last night. With the public advertisements for the Act 34 hearing ready to go out shortly, I expect the February 22nd meeting to have even more people attend than did last night.
James
I wanted to take a moment to correct the record on some of the publicity surrounding yesterday's meeting. This topic brought many interests to the forefront and the media was one interest that does follow my blogs and the local blogs in Mt Lebanon. Many reporters live here as residents in Mt Lebanon. I was contacted by KDKA's Marty Griffin. The media contacting our home is not unusual. KDKA ended up coming out to my work and I was interviewed during my lunch hour. Unfortunately the evening news showed a portion of an interview where I was relaying a common thread from emails received from a community members, but it appears to many (myself included) that I am saying I am moving from Mt Lebanon if this high school project proceeds as planned. We are not moving. We have no intention to leave the area and as I often say, If I were to win the lottery tomorrow, I would stay in the same house I am in now. Our family does have to make some adjustments in saving, as do most families to their personal budgets, when this tax increase occurs. My family and I did move into a lower-assessed value home over the Summer in order to better prepare ourselves for a very long stay in Mt Lebanon. We have absolutely no intent to leave the area.
Thanks for listening. I plan on setting the record straight on some of the accusations that came up last night. That will have to wait until another day.
But, I want to thank EVERYONE who voiced their opinions last night. With the public advertisements for the Act 34 hearing ready to go out shortly, I expect the February 22nd meeting to have even more people attend than did last night.
James
Friday, January 15, 2010
Citations for Your Schools, Your Taxes, Your Community and Your Child's Education,
A person who received the document asked for citations for the data. No problem and apologies for not including these in my last post.
The five-year projected budget prepared by our finance director can be found here:
http://www.mtlsd.org/district/budget/stuff/budgetforecastspsersandhsdebtapril16%202009.pdf
The statistics on revenues, expenditures, and debt levels for all school districts in the Commonwealth can be found here:
http://www.portal.state.pa.us/portal/server.pt/community/summaries_of_annual_financial_report_data/7673/afr_other_financial_information/509049
Statistics on enrollments and projected enrollments can be found here:
http://www.portal.state.pa.us/portal/server.pt/community/pre_k-12_schools_statistics/8775/home
Allegheny County Millage Statistics are available at the Allegheny County Treasurer's website here:
http://www.alleghenycounty.us/treasure/millsd.asp
Information about other high school projects in our area was done via Google searches using school district name and including the term "high school". There were multiple newspaper and/or professional organization references to these projects.
Thanks for reading.
James Fraasch
The five-year projected budget prepared by our finance director can be found here:
http://www.mtlsd.org/district/budget/stuff/budgetforecastspsersandhsdebtapril16%202009.pdf
The statistics on revenues, expenditures, and debt levels for all school districts in the Commonwealth can be found here:
http://www.portal.state.pa.us/portal/server.pt/community/summaries_of_annual_financial_report_data/7673/afr_other_financial_information/509049
Statistics on enrollments and projected enrollments can be found here:
http://www.portal.state.pa.us/portal/server.pt/community/pre_k-12_schools_statistics/8775/home
Allegheny County Millage Statistics are available at the Allegheny County Treasurer's website here:
http://www.alleghenycounty.us/treasure/millsd.asp
Information about other high school projects in our area was done via Google searches using school district name and including the term "high school". There were multiple newspaper and/or professional organization references to these projects.
Thanks for reading.
James Fraasch
Thursday, January 14, 2010
Your Schools, Your Taxes, Your Community, and Your Child's Education
Since we are so close to passing the Act 34 resolution next week, I put together a paper that describes what it means to move towards a project costing $113 million.
Please see this link. It is about seven pages and is intended for folks who may not have been following this project very closely. I hope it puts things in perspective.
Thanks to Tom Moertel and Joe Polk over at BlogLebo for the link.
Thanks for reading.
James
Please see this link. It is about seven pages and is intended for folks who may not have been following this project very closely. I hope it puts things in perspective.
Thanks to Tom Moertel and Joe Polk over at BlogLebo for the link.
Thanks for reading.
James
Tuesday, January 12, 2010
January 11th Meeting Summary
********Update made to calculation of State Reimbursement below*******
The meeting last night was a long one. If you were there or watched the entire thing on TV today, major kudos to you. Below is a summary of some of the more interesting points taken up last night:
1) Approval of Act 34 Document- There was a lot of discussion about this as it was a first review of the Act 34 documents as required by the Pennsylvania Department of Education. I brought up a number of points about clarifying what was in the document. Some of the information regarding costs and financing could have been made much clearer. Additionally, there was a major change to the project when we found out that our reimbursement rate will be around 8% instead of the 15% we had been told it would be for the last few years. What does that difference mean to you? I have asked for our staff to get back to us about the impact it will have. See this link from PDE on how to calculate the reimbursement rate. It goes something like this: First calculate the total project cost, then calculate how much of that project cost is reimbursable by the state, then multiply your annual debt service payment (both principal and interest) by the reimbursable rate calculated above and then multiply that by your aid ratio. Make sense? Basically, we need to first figure out how much of this project is reimbursable by the state before we can figure out why our reimbursement rate went down from the expected amount. One of the design criteria was to maximize state reimbursement and in this case it certainly does not appear to have happened.
2) Policy JKF, Non-School Related Drug and Alcohol Violations- We had a good discussion on this possible change to our policy. It was really an extension of the conversation the Board held at the last Policy Committee meeting a few weeks ago. I have issues with the policy and its ramifications. In my opinion it is an overstepping of our duties as a Board. Our job is to educate students, not to police and punish off-campus actions for which there is already a system of justice in place. Our current policy applies to students who sign a code of conduct that states they will not take drugs or alcohol. A violation of that code of conduct could lead to serious consequences. That current policy is not very clear but it is there. A re-write of this policy to make it more clear would be a route I would be willing to explore. The new proposed policy would impact every student without them signing a code of conduct like we have now. Besides the legal ramifications of this possible change (check out this ACLU lawsuit here) I am reluctant to have the Board take on a role that I strongly believe should belong to parents and law enforcement.
3) Preliminary Budget- The Board got its first glimpse at a possible budget for 2010-2011. Right now we are looking at a 3.41 mill increase for next year. This would be about a 14% increase in property tax. And yes, we still have to float more bonds and incur more increases for PSERS in the coming years. This is not new news to the Board. It is something that I have been talking about since I was elected to the Board. These increases are the reason I have voted against the last two budgets. We have not put ourselves in a good enough position to weather these increases. Unfortunately, as we learn more about the true budget numbers, we are going to have to have very serious discussions about what is important to us as a District and a community.
That's all for now. I'll update the Act 34 information as I find out more.
Thanks for reading.
James
The meeting last night was a long one. If you were there or watched the entire thing on TV today, major kudos to you. Below is a summary of some of the more interesting points taken up last night:
1) Approval of Act 34 Document- There was a lot of discussion about this as it was a first review of the Act 34 documents as required by the Pennsylvania Department of Education. I brought up a number of points about clarifying what was in the document. Some of the information regarding costs and financing could have been made much clearer. Additionally, there was a major change to the project when we found out that our reimbursement rate will be around 8% instead of the 15% we had been told it would be for the last few years. What does that difference mean to you? I have asked for our staff to get back to us about the impact it will have. See this link from PDE on how to calculate the reimbursement rate. It goes something like this: First calculate the total project cost, then calculate how much of that project cost is reimbursable by the state, then multiply your annual debt service payment (both principal and interest) by the reimbursable rate calculated above and then multiply that by your aid ratio. Make sense? Basically, we need to first figure out how much of this project is reimbursable by the state before we can figure out why our reimbursement rate went down from the expected amount. One of the design criteria was to maximize state reimbursement and in this case it certainly does not appear to have happened.
2) Policy JKF, Non-School Related Drug and Alcohol Violations- We had a good discussion on this possible change to our policy. It was really an extension of the conversation the Board held at the last Policy Committee meeting a few weeks ago. I have issues with the policy and its ramifications. In my opinion it is an overstepping of our duties as a Board. Our job is to educate students, not to police and punish off-campus actions for which there is already a system of justice in place. Our current policy applies to students who sign a code of conduct that states they will not take drugs or alcohol. A violation of that code of conduct could lead to serious consequences. That current policy is not very clear but it is there. A re-write of this policy to make it more clear would be a route I would be willing to explore. The new proposed policy would impact every student without them signing a code of conduct like we have now. Besides the legal ramifications of this possible change (check out this ACLU lawsuit here) I am reluctant to have the Board take on a role that I strongly believe should belong to parents and law enforcement.
3) Preliminary Budget- The Board got its first glimpse at a possible budget for 2010-2011. Right now we are looking at a 3.41 mill increase for next year. This would be about a 14% increase in property tax. And yes, we still have to float more bonds and incur more increases for PSERS in the coming years. This is not new news to the Board. It is something that I have been talking about since I was elected to the Board. These increases are the reason I have voted against the last two budgets. We have not put ourselves in a good enough position to weather these increases. Unfortunately, as we learn more about the true budget numbers, we are going to have to have very serious discussions about what is important to us as a District and a community.
That's all for now. I'll update the Act 34 information as I find out more.
Thanks for reading.
James
Monday, January 11, 2010
On Character Education
There was an interesting article in Milwaukee-Wisconsin Journal Sentinel over the weekend. Check out this op-ed piece (excerpt below):
To people who run companies, honesty and punctuality are as important as computer literacy. Traits such as these are about respect for ourselves and others; they make up our character. Without character, quality work is almost impossible to produce no matter the number of employee incentives.
This is why we believe in character education. Starting in primary schools, we are advocating for a culture of character, one where we respect each other and are willing to sacrifice some personal pleasure for the greater good. It pays in more ways than one.
This piece was written by three people including the CEO of Harley-Davidson.
It feels good to know we do a lot of things right.
Thanks for reading.
James
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