The question now on many people's minds is, "Now What". Our property taxes just increased over 10% in June. The High School Project is effectively stalled until Judge James renders his ruling. We just let the cat out of the bag on the deduct alternates. We will have no tennis courts for approximately 3 years at the high school in the current design. We were recently turned away by both the Zoning Hearing Board and the Planning Board. The Board recently passed a new policy requiring many documents in our packets to be released to the public only by a majority vote of the Board or after our voting meeting. We are also having discussions regarding posting information about who is requesting right-to-know requests on the District website.
Unfortunately, these are the issues that the Board is dealing with. Most, if not all, of them could have been avoided with the proper foresight, advice, and planning. I am going to comment on the issues one at a time while keeping in mind that there are some legal issues surrounding the Zoning Hearing Board.
First, I want to update you on where we are with our property taxes. As you know, taxes were increased for the 2010-2011 school year to help pay for the high school. We floated the bonds in October 2009 in order to try to take advantage of what were historically low interest rates. As you may know, interest rates have remained at about the same level as they were in October 2009. The District has paid hundreds of thousands of dollars in interest on these bonds. This is interest that was unnecessary as we had enough money in the bank to pay current bills for some time. Additionally, the bonds we floated were traditional municipal bonds and not the less expensive Build America Bonds. We floated the traditional bonds in order to "maximize bond proceeds" as opposed to trying to make the bond float more beneficial to the taxpayer. This was a decision I voted against as it was clear on the documentation we had on the night of the vote that the Build America Bonds would have saved our taxpayers over $2 million over the life of the bonds. Our bond advisor was given the instruction to maximize proceeds and we therefore were able to get a premium on the traditional bonds. The premium simply meant that the District was going to make payments on the bond that were higher than what the market was asking for at the time. In exchange for this higher coupon payment, bond buyers were willing to pay the District a little more (a premium) for our bonds. While this does mean we will borrow less in the second float of the bonds for the high school, this is only because we paid more than market coupon rates for the first float of bonds. These bonds accounted for a very large percentage of your recent tax hike.
Another factor in our latest budget is that it is another year in which we plan to have a reduction in students and another year in which we will not lose any staff to compensate for that reduction. You may remember from the passing of the
2008-2009 and
2009-2010 budgets that I advocated for reductions in staff to compensate for the reduction in student enrollment. In fact, in the 2009-2010 budget we planned to eliminate 3 positions partially to account for this reduction in students. However, every one of these positions was added back prior to the start of the school year. As I said last year, just as we would plan to increase staff when we have an increase in students, we need to figure out how to reduce staff when we have the trickle out of students that we have seen over the past 10 years. In a perfect world we would have been able to reduce staff to account for the reduced student population. This would have had the effect reducing the overall burden of the high school project on our residents. Unfortunately, there was not enough Board support to either reduce staff or programs to help offset the tax increase for the bonds floated for the high school (the budget passed 6-2).
Here is a table of our student population:
| Year | Student Population |
| 2001 | 5640 |
| 2002 | 5597 |
| 2003 | 5610 |
| 2004 | 5551 |
| 2005 | 5494 |
| 2006 | 5441 |
| 2007 | 5429 |
| 2008 | 5423 |
Over 200 students lost (and counting) and we have not reduced our staffing levels. Since staffing is the single largest expense in our budget, it is important that we stay on top of exactly what we need. Otherwise, we start to raise taxes at a rate far faster than the Districts that have the ability to adjust more readily to these types of changes.
Here is an updated graph comparing our millage (municipal and school district) to some other Districts throughout the County:
What this graph shows is exactly what I talked about in my
White Paper in January. We are continuing on a path to taxing our residents at a much higher rate than school districts with which we compete. A continuation of this trend will no doubt lead to some serious consequences in Mt Lebanon. We cannot expect to charge a large premium to live in our community and avoid negative consequences. At what point that happens I don't know. But I have a feeling that the point is awful close.
As of the passage of school district 2010-2011 budgets, here is a list of the
millage rates for the 25 highest taxed school districts in Allegheny County:
| School District | Millage |
1
| Fort Cherry | 118.5 |
| 2 | Wilkinsburg | 35 |
| 3 | Brentwood | 28.27 |
| 4 | Northgate | 27.6 |
| 5 | East Allegheny | 27.54 |
| 6 | Mt Lebanon | 26.63 |
| 7 | Deer Lakes | 26.25 |
| 8 | South Park | 25.99 |
| 9 | Woodland Hills | 25.65 |
| 10 | Shaler | 25.63 |
| 11 | Sto-Rox | 25 |
| 12 | South Fayette | 24.88 |
| 13 | Penn Hills | 24.81 |
| 14 | Bethel Park | 24.56 |
| 15 | Highlands | 24.41 |
| 16 | Carylton | 24.15 |
| 17 | Cornell | 24.11 |
| 18 | Steel Valley | 24.07 |
| 19 | Riverview | 24.05 |
| 20 | Elizabeth-Forward | 23.51 |
| 21 | Baldwin-Whitehall | 23.5 |
| 22 | Allegheny Valley | 23.46 |
| 23 | West Mifflin | 22.992 |
| 24 | Upper St Clair | 22.29 |
| 25 | Plum | 22.2 |
There we are, sandwiched between Deer Lakes and East Allegheny. No disrespect to the other school districts, but what else do we have in common with them besides these millage rates? For a District and community that wants to compare itself to other peers like Upper St Clair, Fox Chapel, North Allegheny, Bethel Park and others, is this the position in which we want to find ourselves?
Regardless of the tax hike to pay for it, the high school project itself is effectively stalled. It is public knowledge that the District went before the Mt Lebanon Zoning Hearing Board and requested two variances. One of the variances was for parking spaces and the other was for lot coverage. The Zoning Hearing Board voted unanimously against approving the variances to allow the project to move forward. The District has since appealed and is awaiting a ruling by Judge James about the status of the variance request. As I said before, there are some legal issues here that cannot be commented on until the case is over. The reality of the situation is that it is rather embarrassing for me to be in the position of suing my own Zoning Hearing Board. Both sides have "lawyered up" (the ZH Board attorney paid for by the Municipality) and we are now using tax dollars on both sides of the issue to fight a no-win situation in court.
Still sticking with the high school project, we have recently talked about a deduct alternate list. To be clear, there has already been some significant value engineering when it comes to using materials in the school. As an example, we are going to use a vinyl composite material for the flooring. This decision will result in savings based on the materials we had previously planned to use. There are a number of decisions like this that I consider to be part of the value engineering process. What the Board has started to consider on top of these types of changes is alterations to the design of the building itself. The architects and project manager are preparing more information for the Board regarding larger possible deductions to the project. These possible deductions include eliminating the second auxiliary gymnasium, altering the number of air handlers in the athletic wing, changing the scope of the renovations to the Little Theater and Auditorium, and moving the tennis courts off-site. There was even discussion about leaving some parts of these deducts alternates to be completed at a different time so as to reduce the overall cost and scope of the current project. The Board will decide in August which, if any, of the deduct alternates should be bid. Please be sure to give your feedback to the Board regarding these possible changes prior to August 9th.
Finally, there have been some recent policy changes and discussion that are of interest. In June, while I was away on business, the Board took up policy BBAA, Board Member Responsibility and Ethics. We added the following text to the policy:
Individual Board members shall refrain from publishing, distributing, releasing or disclosing any documents, records or information containing or reflecting the predecisional deliberation of the Board relating to matters such as budget recommendations, legislative proposals or any contemplated or proposed policy or course of action. This preclusion includes any research, memorandums or other documents used by the Board in its predecisional deliberations.I would have voted against this policy. The thing is, this is how I do my job as a Director. When we get a packet that is filled with information and recommendations, it is important for me to try to understand each issue as best as I can. Often times I will seek advice outside of the District and central office when it comes to certain issues. One example would be the bond issue from October of 2009. After reviewing the information given to the Board from the central office and our bond advisor I decided to go outside of the District to get more information. I called other financial advisors to other school districts and I called friends of mine who work in the bond industry. It was these people who led me to ask our bond advisor to compare costs of both the Build America Bonds (part of the federal government stimulus package) and traditional municipal bonds. Prior to my research we had only been quoted information about traditional bonds. Armed with new information on Build America Bonds, I was able to get our financial advisor to present the BAB bonds and traditional bonds side by side for comparison purposes. The result was that the BAB bonds would have saved the District taxpayers over $2 million dollars. Unfortunately, as mentioned previously in this post, our bond advisor was ultimately given the advice to maximize the proceeds of our bond sale as opposed to maximizing the savings of the bond float to our taxpayers. The bond information that was given to the Board would have been classified as "predecisional" or possibly even "research". This means I would have been in violation of Board policy if I went outside of the Board and District to get additional information regarding items in my packet. I wholeheartedly disagree with this policy and I promise you that I will violate the policy at least once a month for the rest of my years on the Board. If I didn't then I wouldn't be doing my job as a Director. Think about this for a second. Two weeks ago we were given the State Auditor's report on the District. There was some interesting information in there on a number of topics. Our solicitor said in our discussion meeting that because we had not yet voted on the report, that it was considered pre-decisional. That means that I could technically not even talk to a neighbor about the auditor's findings about bus drivers or about the Marge Sable incident without violating board policy. I would have had to have waited until after the vote to make comment. If we withhold this type of information from the public prior to a vote, then how in the world can we expect our residents to come up to the microphone before a meeting and comment on any number of topics on the agenda? Is this the kind of board our residents expect?
The other policy that has been part of our discussions has been regarding right-to-know requests. Director Remely first suggested a few months back that we post the names of people making right to know requests on the District website. While we have had a number of right-to-know requests, I am not sure that the best way to deal with it is to post people's names online. The idea here should be figure out WHY we have so many requests and then address THAT issue. If we post the names of requesters then we are not addressing the issue, instead we are simply appearing as if we have something to hide. Posting names on the district website will end up having a "chilling effect" on our residents and may inhibit them from doing something that they would otherwise do quite freely. This action would only reinforce the idea that the Board and District is trying to hide something. Rather than taking this route it is my belief that the District and Board need to increase transparency in all things that we do. If the Board decides to follow through with this idea to post names of RTK requesters online, then it is only fair that the information requested in the RTK request also get posted online. If the District will not post this information on the District website itself, then the RTK information should get posted on a publicly available website open to all Mt Lebanon residents for review and inspection.
Thanks for reading.
James
