PlanConD Vote

Last night I voted against accepting the Pennsylvania Department of Education's approval of PlanConD.

Part of the purpose of part D is to determine the ability of local taxpayers to actually be able to afford the debt payments associated with the construction project. Unfortunately, due to the inability of the PDE to update their forms, our PlanCon D documents reflect old and stale data. However, if we understand the intent of PlanCon D, then we should be able to roll numbers forward and come up with our own calculation of affordability.

As an example, let's say you want to buy a house for $187,000. The loan officer says it should be no problem to get the loan as long as your payment stays below 35% of your monthly income of $2000. At 5% interest, a $187,000 loan would be about $1,000 a month.

You knew going into it that it would be close, that it would be a stretch to your budget to try to afford this size and price of a home. But what the heck, why not aim for the fences.

You fill out all the paperwork and you get approval from the loan officer. However, when the documents get back you realize that something seems amiss. The documents given to you that outline your debt/income ratio do not reflect the payment on the house you are about to buy. The loan officer did a calculation on your debt/income ratio WITHOUT INCLUDING THE DEBT PAYMENT FROM THE HOME YOU ARE ABOUT TO BUY. So now, even though your debt payments will exceed the loan officers' 35% income limit, you still walk out of that office the owner of a new home.

How does this work? Well, the Pennsylvania Department of Education hasn't updated their PlanCon D forms for a number of years. That means that when the District fills out its forms, it is entering in income and debt payments from past years and these numbers DO NOT reflect the reality of the current project. In fact, the PDE even changed the numbers for us to reflect an Aid Ratio that is no longer relevant and skews the numbers even more to look like the District can afford this project.

When I asked in June to have the District prepare our documents to reflect the current known information, we were given information that created even more confusion when some numbers were changed and some stayed the same.

The information to fill our these forms does exist. but it is in many different places on the PDE website. Please see the link here for a copy of the form that was voted on last night. Page D-18 is the one that deals with affordability. Based on my own analysis of the numbers, I believe the District will be very close to or even exceed what the State says is the maximum allowable budgeted local effort for this project. When you look at D-18 note that the Market Value Aid Ratio has been changed by the PDE to .4154 instead of our current .49. This has the effect of reflecting an increased aid ratio from the State when this is not the reality.

Note also in Section B that the Budgeted Local effort for this project shows a big, fat $0 since we have no debt service payments for this project in 2009-2010 (our payments start in 2010-2011). The intent of the form was to look a few years out from the floating of bonds to determine whether the District is putting too much stress on local taxpayers.

When the PDE changes the form to reflect an incorrect and artificially inflated aid ratio and then ignores actual debt payments that will come due for the project they are supposed to be evaluating, I am not sure how one can realistically evaluate whether this form should be approved or not.

That being said, if the District had made a determined effort to reflect TRUE numbers and the TRUE local effort for this project, I would have been much more inclined to vote in favor of PlanCon D.

Thanks for reading.

James

Debt and Deflation

I came across a terrific economics article written by Steve Keen at Steve Keen's Debt Watch website. The title of his article is, "What Bernanke Doesn't Understand About Deflation".

On this blog I have hit a number of times on the problem with having too much debt. On a national level people (Secretary of State Hillary Clinton for one) are even saying that our debt represents a national security threat. On an economic level, economists such as Steve Keen are making the argument that the deleveraging process following a borrowing and spending boom like the one we have witnessed from 1987 to 2009 will take years to play out.

Keen argues and illustrates that:

Debt reduction is now the real story of the American economy, just as a real story behind the apparent free lunch of the last two decades was rising debt. The secret that has completely eluded Bernanke is that aggregate demand is the sum of GDP plus the change in debt. So when debt is rising demand exceeds what it could be on the basis of earned incomes alone, and when debt is falling the opposite happens.

There are a number of charts and math involved that Steve uses to prove his point. And logically, it makes sense. When you borrow, you have to pay it back. If consumers have indeed increased borrowing over the last 22 years by $34 trillion and GDP has only grown by $9 trillion, then we are in for quite a period of economic staleness, especially if the deleveraging process continues. What happens when the consumer appetite for debt goes away? Surely the GDP growth cannot be sustained.

This is what part of last year's stimulus was intended to do; stimulate aggregate demand. Since consumers have clearly and demonstrably started to become net savers instead of net spenders, the government was looking for a way to increase GDP. Any kind of government spending will have a positive impact on GDP. As I have said many times before, the problem with debt is that it needs to be paid back at interest. This payment is a tax on future production and future spending.

When you max out the amount you can borrow, the consequences are long lasting and staggering. Other, normal expenses will come under stress while a less fool-hardy approach would have produced better long-term results.

Thanks for reading.

James

Zoning Hearing Board Findings

The School Board has received scores of emails regarding the outcome of the Zoning Hearing Board decision from last month.

I provide the link below as a public service. I have to reserve comment for a later date as the Board is currently considering its options with regard to the variance denials.

The full Zoning Board Findings can be found here.

Usually I would say to contact me with any questions but in this case, don't. The findings are pretty self-explanatory.

Thanks for reading.

James

2010-2011 Budget Vote

Last night the school board passed its preliminary budget with a 6-3 vote. The budget includes an increase in millage from 24.11 to 26.69 and represents a 10.7% increase in school district real estate property tax.

I was one of the "no" votes. The comment I made was with regard to questioning where people were going to find this money. In the past, the earnings of our residents would have been able to cover some of this kind of tax hike. But in the times we have today, people will be forced to cut expenditures in other areas of their lives in order to make things work out.

How do I know this? Our state income tax receipts are down this year. This is a reflection of lower earnings throughout the Commonwealth. Additionally, according to the Census Bureau, real median income has been declining the last few years.

The other comment I made was that the tax hike we are seeing now was predictable. I don't even know how many posts I have on this blog with regards to this, but there are quite a few. If this Board was serious about reducing the base budget in an effort to lessen the impact of this tax increase on our residents, we certainly had enough time to make serious changes. Unfortunately, these changes have not taken place.

This is the first of many tax increases coming your way. We borrowed approximately 2/3rds of the money we will need to complete the high school project. The next bond float is still a few years away. The PSERS spike will have a massive impact on us in 2012-2013. Again, these are expenses we know are coming. Without making significant adjustments to the base budget to lessen the impact these events will have on our taxpayers, I cannot support this budget.

Finally, I have updated my chart from the white paper I put out there in January. It is my opinion that these tax increases will put us in a difficult competitive situation with other school districts with which we like to compare ourselves. Below is a graph showing the combined historical school district and municipal millage rates from 2002-2009:



The chart above does not include the projected 2010-2011 school district tax increases.

While many people like to say that Bethel Park and Penn Hills are embarking on similar high school projects, the one major difference is that neither one of those school districts need to raise taxes to pay for their schools.

From the Penn Hills Website:

What This Means to the Taxpayers
The proposed budget presented in April and tentatively scheduled for passage in June maintains the real estate millage in the District at its current rate of 24.81. The purpose of this plan is to provide the best facilities for our children while allowing Penn Hills to be a more affordable place to live. The District is planning on accomplishing this without raising taxes, calculating that properly done and well-thought-out consolidation can reduce the District’s overall operating costs in order to offset the bond issue planned for the new construction/renovation.

As for Bethel Park, they made sure that their construction project coincided with the pay off of bonds. They collected money from taxpayers for a year (maybe two) without lowering their millage in order to build up a fund to help pay for their school. The new debt taken on to pay for the new building was similar in size to what they had been paying for the old, retired bond.

While Mt Lebanon will certainly see some savings due to more energy efficiencies (a good thing), we will most certainly be distancing ourselves from other school districts in the total tax department as long as we make no meaningful adjustments to the base budget.

Keeping a Tally

As many of you know, the Act 34 hearing for the High School project closed last Monday. The Board will be asked to vote on the submission of these documents to PDE. While I do not know if anyone will actually make a count of the documents and how many were in favor of or opposed to the project, I do know that there was a ton of material submitted. I will be stopping by the office next week to review what I can.

The close of the Act 34 comment period, as well as a comment made by our Board President last week, got me to thinking. Everyone on the Board has talked to many, many people and heard many, many opinions regarding the high school project and its affordability. The comment that caught my attention on Monday night was the one where it was said that the community is evenly divided on this project. My recollection of emails and phone conversations was much different but without the facts before me at the time, I decided not to comment.

I went back and spent some time this week counting up all the emails the Board has received since January 1, 2010. This count has been double checked with duplicate emails from residents who voiced their opinion multiple times discarded so as not to slant in favor of any one person.

I have put together a spreadsheet and present its results below:

Total/Against/ For
411/ 308/ 103
100%/ 75%/ 25%

I have broken down the list of emails by date and removed the names from the list that I used to verify duplicates.

Quite honestly, one of the reasons I put that white paper together in January was because a Board member told me that the community was evenly split. This has never been the case for this level of spending. The Republican Committee of Mt Lebanon did its own survey that showed 70% against a $114 million spend. This Board member at the time already knew about the RCML survey but chose to believe that the community was still split. My time knocking on doors in each of the past three summers had already convinced me of what these surveys proved. This is why I put out my own proposal for addressing the High School- because I didn't think we had an option on the table that adequately addressed the concerns of the majority of our residents. For me, my focus has become trying to figure out ways to save money on the existing design which is why I mentioned last Monday that we ought to consider moving the Central Office staff away from the high school in order to reduce the total square footage of the project.

I point these numbers out because this is honesty. This is transparency. Truth and transparency are sometimes inconvenient.

Thanks for reading.

James

Almanac Editorial

In this week's Almanac the editor weighs in on Mt Lebanon's High School Project. Excerpts are below with some comments:

$113 million is a whole lot of money. A whole lot of taxpayers' dollars. One hundred and thirteen million dollars could build more than 226 new homes valued at $500,000, or 452 $250,000 residences.

That is a way to think about it that I hadn't come across before. Of course, finding $113 million to build homes that were then occupied by buyers would, in the long run, return a net benefit to our tax revenues.

Considered basically landlocked when it comes to new development, the tax base in Mt. Lebanon is not expected to expand as it is in neighboring communities like South Fayette, Peters, North Strabane and Cecil townships. No expanding development, no growing tax base.

The fact about the stagnant tax base is a big one. We do not have a lot of space for more development. We will have a new hotel downtown at some point and their is the possibility that we get some development done in a few years with air rights over the T stop. Outside of that, there is not much more happening.

Food, utilities, clothing, you name it, are increasing faster than most people can keep up. It's a shame to think some residents are going to do without the absolute necessities of life to pay their school taxes.

More likely, those that would otherwise have to do without, will simply move someplace where they won't be forced to do without.

Want more proof that higher taxes lead to people simply up and leave? Check out this study done by the New Jersey Chamber of Commerce at www.nj.com:

The study – the first on interstate wealth migration in the country — noted the state actually saw an influx of $98 billion in the five years preceding 2004. The exodus of wealth, then, local experts and economists concluded, was a reaction to a series of changes in the state’s tax structure — including increases in the income, sales, property and “millionaire” taxes.

“This study makes it crystal clear that New Jersey’s tax policies are resulting in a significant decline in the state’s wealth,” said Dennis Bone, chairman of the New Jersey Chamber of Commerce and president of Verizon New Jersey.

Please see the article for more interesting information on the study and the effects that tax policy has had on the wealth of New Jersey as a whole.

Thanks for reading.

James

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

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

High School Community Advisory Board Approved

The School Board held a meeting on Thursday night to finish the discussion involving the formation of the Community Advisory Board. The motion passed 5-3.

There is a great discussion amongst community members regarding the pros and cons of the idea happening over at BlogLebo and I suggest that you get involved in the comments thread over there if you have anything to add (or subtract as the case may be).

The thing I will take issue with on that comment page is the unfair characterization of the meeting on Thursday night. This meeting was a continuation of the meeting from October 19th. Our Board President made a judgment call on the 19th and determined that the Board as a whole was not prepared to vote for the motion that was before it. Before bringing that meeting to a close he was clear to the members of the Board what he expected to happen prior to the reconvening of the meeting on Thursday night. He did a couple of things:

1) In anticipation of the motion passing on the 29th, he directed Dr. Steinhauer to advertise to the community that we would be accepting letter's of interest to be a part of this Community Advisory Board.

2) He asked all Board members to submit any changes they wanted to see to the motion in writing to the Superintendent prior to this Thursday's meeting so that those changes could all be seen and reviewed by Board members prior to the meeting. This was done in order to avoid to kind of confusion that happened at the October 19th meeting when some members of the Board made a number of motions to amend the original motion on the table.

3) He directed the solicitor to review our contract with the architect to determine if the amount that was being charged by Celli-Flynn was reasonable. At the time, Celli-Flynn was going to charge more than $30,000 for the first meeting and upwards of $20,000 for each meeting after that (see story here). This resulted in our architect substantially reducing the charges associated with this process.

When Board members received their weekly packet, it contained in it all the changes that were requested by each individual Board member. In the end, the President and Superintendent included in the final motion those changes that they thought the majority of the Board would support. For example, the two changes I requested were that, 1) the CAB have access to all previous project documentation (this was not made clear in the original motion) and, 2) that the CAB be able to continue their work if their suggestions were taken under consideration by the Board (the original motion simply said the CAB was disbanded after their December presentation). These changes along with the changes requested by a few other Board members were added to the resolution seen on Thursday night.

Some change requests were not added to the resolution. however, Board members were given the opportunity on Thursday night to get those changes in if they so desired. If you watch the meeting you will see that one of board member Sue Rose's recommendations did not make the resolution that was shown to the public. She requested at the meeting that her change be added to the motion. It did not get the votes required to become a part of the final motion. That process is good board leadership (setting expectations as was done at the Oct 19th meeting so that all Board members may be aware of changes that might be requested) and good board membership (following board procedure to get your requests heard and considered by the board). You can read the final motion at the District website here.

There are some things that I have disagreed with the Board president about in the past, however, in the case, he got it absolutely right.

My hope for the CAB is that the group will do what its purpose in the resolution says it should do:

1) Review the design according to the design criteria established by the Dejong group
2) Make recommendations to the Board that will save money (I am not talking about changing paint schemes here)
3) Determine if there was anything overlooked by the process that has been followed by the Board thus far that could potentially be costing us money

Contrary to what was said by some members of the public at the meeting, there is not a single board member who wants to start this group in order to delay the progress of the high school project. Accusations like that are just absurd. There is community buy-in on a high school project. This is something I have learned since I first got on the Board. We simply need to make sure we are collectively buying-in to the right project.

Thanks for reading.

James

Shaky Ground

It’s a position that should be non-partisan. People have said that. I have maintained for the last three years that there was a place for political parties at the school board level. This high school project was to me the perfect opportunity to be able to demonstrate the kind of unity and communication that can come from being part of a Board majority . For me, one of my most important guiding principles has been fiscal responsibility. I have tried to demonstrate this principle and vote this idea with every opportunity I have on the Board. Being fiscally responsible doesn't mean cutting programs, cutting staff, and cutting everything. It is about maximizing efficiencies and, most importantly, making long-term financial decisions that will put this Board on better financial footing in the future. These ideas to me have represented the best of what the Republican Party has to offer.

Understand that this Board is on shaky ground. One could legitimately argue that the next few years and their forthcoming tax increases will define the next generation of our residents. Under the school board’s current path the high school construction project will raise taxes between 15-20% alone. When looking out a bit further we can see more tax increases for PSERS, staff salaries, health benefits, and more. This will be coupled with possible lower revenues from earned income taxes and investments income. An unconstitutional real estate tax system here in Allegheny County only adds to the uncertainty of future taxes in Mt Lebanon. Add to all this an article by the City Manager down in Johnstown, PA where he points out that more than 50% of the municipalities in the 10 county Pittsburgh region have experienced structural deficits between the years of 2000 and 2005 and you can see that the financial footing out there is rather treacherous.

I have posted before regarding some of the effects of higher taxes here and here. I have posted on the options that potential residents have (here and here) when comparing tax rates of similar communities. The fact is that people have choices. I WANT people to choose to live here. We have a lot to like. Mike Madison over at BlogLebo has posts about what he loves about Mt Lebanon. I'd encourage people to go over there and post what they love about Mt Lebanon as well. The tree-lined streets aren't going anywhere. Snow being off the road about five minutes after it hits the ground will most likely stay as well. Hopefully, we can maintain and even increase the achievement levels of our students here in Mt Lebanon. I think we have the right superintendent in place to make this happen. Mt Lebanon is a great place to live. Will it still be that kind of place when folks are paying $7000 a year in real estate tax on a $200,000 home and 1.9% in income tax in three years? My fear is that people in Mt Lebanon and beyond will soon come to realize that living in another community with half the taxes and a similar educational experience will allow them to save enough tax money to pay for their child's college education. There are great things about Mt Lebanon but every current and potential family must weigh those positives against a tax structure that penalizes residents more than surrounding communities.

We have seen communities fall. The City of Pittsburgh has tried for years to tax its way to prosperity and to what avail? From the same article listed above there is the following line:

All the research shows a majority of the municipalities in Pennsylvania are on a path to fiscal distress, with many already there. Currently, 18 municipalities in Pennsylvania are in Act 47 status and an additional 39 in the Early Intervention Program, which means they qualify for Act 47 status but haven’t yet officially entered the program.

The City of Pittsburgh has had to resort to gimmicks like forgoing real estate tax receipts for a number of years to new homebuyers in the City to attract people back to the downtown real estate market. However, the never ending cycle of tax increases to fill budget gaps simply pushed more and more people away from downtown and out to the suburbs. The result has been a net population decrease for the Pittsburgh region that was second only to New Orleans between 2000 and 2006. The point is this; the road to prosperity for Mt Lebanon does not include spending as much as possible on a high school and asking our taxpayers to pick up the bill. Not when we are already taxed at a high rate. Not when there are options on the table that would cost significantly less and give us the same student outcomes. And especially not in an economic environment that is so severely disrupted.

These last points are the ideas that I have brought to my fellow Republicans on the Board. I have brought these ideas to them thinking that if nothing else, as Republicans they would have to agree that being fiscally responsible does not include proposing and approving a project that is less than 1% under a voter referendum limit. Instead, that is exactly what has happened. I had conversations with my Republican colleagues on the Board prior to this past budget to suggest ways to improve the budget in order to offset part of the cost of the high school project. Instead there were no changes. I had hoped that at least my Republican colleagues on the Board would agree with me when I suggested this past spring to invest all our surplus from the 2008-2009 budget into the high school project so as to avoid interest expense on 25 years of borrowing that same amount later. Instead, we set aside less. To me these suggestions were mostly common sense. It is quite possible that I am the worst salesman for my own ideas but for each of these suggestions I always had at least one other Board member who was right there with me.

I am not so sure why my expectations were much different on Monday night. But, I showed up on Monday hoping to have a good discussion about why floating the $69 million worth of bonds right now doesn't make sense. I was also willing to compromise and try to find a way to come to the middle with the rest of the Board if they could meet me in the middle on some issues as well. Instead, I got more of the same. I was against spending almost $1 million in interest on bonds that would be floated months before we actually needed the proceeds. It had previously been suggested by members of the Board that floating the bonds now would allow us to pre-buy things that we need anyway. This idea was shot down by our construction manager who suggested that doing the project this way would instead add cost. I was against floating bonds for a project that did not yet have a firm budget associated with it. I was also hoping that the Board would finally adopt a "not to exceed" number on this project. This point became particularly important as we found out that we would be able to borrow over and above the $115 million debt limit that had been previously established. The idea of setting a firm budget did not gain traction. Unfortunately, each of these ideas was shot down by the majority of the Board. In fact, tonight, not only did we vote to begin funding the project with $69 million worth of bonds, but the majority of the Board voted in favor of issuing bonds that in the long run allow us to borrow even more money (scope creep) and will cost us at least $3 million more in principal and interest payments. Between floating the bonds months before we need them and approving the sale of the premium structure of tax-exempt bonds, we just passed $4 million in additional expense on to the taxpayers that will result in absolutely no net benefit to them. I was willing to give on floating bonds earlier than we needed them but I at least would have liked to see the Board take advantage of the Build America Bond program to reduce future tax strain on our residents.

What I don't think has gotten through to some in the party is that one of the reasons Republican's were so resoundingly thrown out of office in 2006 and 2008 is because people absolutely do not trust elected officials who spend tax money recklessly. The Democrats picked up so many seats that they now control both houses of Congress and the Presidency. I, and many of my fiscally conservative friends, could not tell the difference anymore between the elected Republicans of the early 2000’s and the “tax and spend” Democrats that were the nemesis to Reagan when I was growing up. So at this point I have to say I have had enough of the party politics. If the Republican leadership on the Board cannot find a way reduce costs on this project or is unwilling to do so, then any possible argument for party membership is lost.

With that said, I will be leaving the Republican Party and joining a growing number of Independent voters in this country. It is from this position that I will bring my fiscally conservative principles to the Board and will try to govern in a party-neutral manner. This has been a difficult decision for me with the more recent actions of the GOP finally pushing me over the edge. The high school project and the inability to form a cost-saving consensus even among Republicans over the last two years has been frustrating and started this ball rolling. The straw that broke the camel’s back was the nationwide Republican political opposition to the President of the United States giving a speech to our school children about the importance of staying in school and working hard. I will never understand why there was an organized email campaign against this speech and its supposed “indoctrination”. We have ONE President folks and he has earned the right to address our children. If you don’t like what he says then you have the other 23 hours and 40 minutes of the day to “unindoctrinate” your kids. I disagree with our President as much as the next person, but I also respect his office.

Thanks for reading.


James

Tax Rates and the Local Economy

Some of the issues I pound on when it comes to the school board have to do with fiscal responsibility. With that comes the desire to reduce or lessen the growth of the tax burden on members of our community. That is not to say that the Board has the ability to reduce property taxes, I would never make that promise- not in an environment where property assessments are frozen at 2002 levels and where the District has contracts that increase every year. When I look out 2-5 years it is pretty easy to see what is coming down the pike. When you look at the more than $100 million high school, PSERs (which I will give an update on soon), and the contracts mentioned above, it is easy to see larger than 30% increases in property taxes here in Mt Lebanon. The only reason I say it probably won't be more than that is that I expect the State legislature will come up with a solution to address much of the PSERS expenses coming due in 2012. Call it wishful thinking if you like, but elected officials are in the business of getting re-elected and if they can't come to a solution on that single issue, there won't be many people getting re-elected in 2012. On many occasions I have opined about the coming tax increases and how we will compare to other Districts across the State. I have only touched on what the implications of such high taxes will be. It is those implications that I wish to address here.

To that end, I came across a speech given by Calvin Coolidge on February 12, 1924 in front of the National Republican Club. I don't know if I have ever read a speech by a President that so clearly illustrated the effects of high taxes on economic activity. While President Coolidge's speech was addressing the national economy, the effect of high taxes is the same whether at the federal level or local level. Below are some excerpts with my comments on sections that I think need highlighting:

In time of war, finances, like all else, must yield to national defense and preservation. In time of peace finances, like all else, should minister to the general welfare. Immediately upon my taking office it was determined after conference with Secretary Mellon that the Treasury Department should study the possibility of tax reduction for the purpose of securing relief to all taxpayers of the country and emancipating business from unreasonable and hampering exactions. The result was the proposed bill, which is now pending before the Congress. It is doubtful if any measure ever received more generous testimony of approval. Opposition has appeared to some of its details, but to the policy of immediate and drastic reduction of taxes, so arranged as to benefit all classes and all kinds of business, there has been the most general approbation. These recommendations have been made by the Treasury as the expert financial adviser of the Government. They follow, in their main principle of a decrease in high surtaxes, which is only another name for war taxes, the views of the two preceding Secretaries of the Treasury, both of them Democrats of pronounced ability. They are nonpartisan, well thought out, and sound. They carry out the policy of reducing the taxes of everybody, especially people of moderate income. They give to the country almost a million dollars every working day.

During World War I, taxes were raised to help fund the war effort. The United States still ended up borrowing billions of dollars to help fight the war, and we were also a major credit provider for our allies in that war. However, after the war ended, tax rates were not reduced to pre-war levels. President Coolidge in this speech is essentially calling for a return to the normalization of pre-WWI tax rates. As he said in his opening, he had no problem with financing a war with higher taxes, but in times of peace, he felt differently.

The proposed bill maintains the fixed policy of rates graduated in proportion to ability to pay. That policy has received almost universal sanction. It is sustained by sound arguments based on economic, social, and moral grounds. But in taxation, like everything else, it is necessary to test a theory by practical results. The first object of taxation is to secure revenue. When the taxation of large incomes is approached with that in view, the problem is to find a rate which will produce the largest returns. Experience does not show that the higher rate produces the larger revenue. Experience is all in the other way. When the surtax rate on incomes of $300,000 and over was but 10 per cent, the revenue was about the same as when it was at 65 per cent. There is no escaping the fact that when the taxation of large incomes is excessive, they tend to disappear. In 1916 there were 206 incomes of $1,000,000 or more. Then the high tax rate went into effect.

The next year there were only 141, and in 1918 but 67. In 1919 the number declined to 65. In 1920 it fell to 33, and in 1921 it was further reduced to 21. I am not making any argument with the man who believes that 55 per cent ought to be taken away from the man with $1,000,000 income, or 68 per cent from a $5,000,000 income; but when it is considered that in the effort to get these amounts we are rapidly approaching the point of getting nothing at all, it is necessary to look for a more practical method. That can be done only by a reduction of the high surtaxes when viewed solely as a revenue proposition, to about 25 percent.

I agree perfectly with those who wish to relieve the small taxpayer by getting the largest possible contribution from the people with large incomes. But if the rates on large incomes are so high that they disappear, the small taxpayer will be left to bear the entire burden. If, on the other hand, the rates are placed where they will produce the most revenue from large incomes, then the small taxpayer will be relieved. The experience of the Treasury Department and the opinion of the best experts place the rate which will collect most from the people of great wealth, thus giving the largest relief to people of moderate wealth, at not over 25 per cent.

This part of his speech perfectly illustrates the soundness of the Laffer Curve which was "discovered" in the 1970's by economist Arthur Laffer. The Laffer Curve suggests that there are two tax rates that will produce the exact same revenue. Think about it this way, at 0% tax, the government realizes no revenue and at 100% tax, there is no incentive to work and therefore the government again realizes no tax revenue. At various points along the graph coming down from 100% and up from 0%, there are points at which government can realize the same revenue. This is illustrated perfectly when Coolidge points out that tax receipts at the 65% tax rate were the same as when tax rates were at 10%.

A very important social and economic question is also involved in high rates. That is the result taxation has upon national development. Our progress in that direction depends upon two factors; personal ability and surplus income. An expanding prosperity requires that the largest possible amount of surplus income should be invested in productive enterprise under the direction of the best personal ability. This will not be done if the rewards of such action are very largely taken away by taxation. If we had a tax whereby on the first working day the Government took 5 percent of your wages, on the second day 10 per cent, on the third day 20 per cent, on the fourth day 30 percent, on the fifth day 50 per cent, and on the sixth day 60 percent, how many of you would continue to work on the last two days of the week? It is the same with capital. Surplus income will go into tax-exempt securities. It will refuse to take the risk incidental to embarking in business. This will raise the rate which established business will have to pay for new capital, and result in a marked increase in the cost of living. If new capital will not flow into competing enterprise the present concerns tend toward monopoly, increasing again the prices which the people must pay.

Taken altogether, I think it is easy enough to see that I wish to include in the program a reduction in the high surtax rates, not that small incomes may be required to pay more and large incomes be required to pay less, but that more revenue may be secured from large incomes and taxes on small incomes may be reduced; not because I wish to relieve the wealthy, but because I wish to relieve the country.

President Coolidge here is suggesting that allowing people to keep their surplus capital (and not the government) will lead to better economic growth. People will employ this capital in the most efficient way possible, in a way that gets them a return on their investment. His stated goal is to secure the largest possible amount of revenue to the federal government but not at the expense of stifling production. His plan to do this, under the guidance of Treasury Secretary Mellon, is to reduce the top marginal tax rates to 25%.

This legislation was past shortly after this speech and so began the "Roaring 20's". There were tremendous increases in overall GNP from just under $70 billion to over $103 billion in just over five years. And this happened without a jump in inflation, indeed, prices actually went down while GNP increased.

The point of this is to say that for decades (perhaps more) we have seen the impact that high taxes have on consumption and production. Many of those in favor of a large high school project here in Mt Lebanon like to say that an extra $60 per month is just a cup of coffee a day, or that its just one less dinner out per month. If that is the case then let me ask the obvious question. What if this actually turned out to be true? What if the residents of Mt Lebanon decided to give up their morning cup of joe or their monthly night out at dinner? What is the impact of that decision? How many people from Mt Lebanon do you think go to Aldo's or the Uptown each morning for coffee? How many people hit one of the restaurants on Washington Road or Beverly Road once a month or even once a week? What happens if all of these people actually DO reduce how much coffee they drink or how often they eat out? An increase of $60 a month in tax has the potential to take money directly from the productive part of our local economy (the coffee shops, the florists, the restaurants) and places it directly in the non-production part of local economy (debt service for a high school construction project).

This money will not go to hire more teachers to reduce class sizes. It won't expand programs. It won't make the District magically find ways to become more efficient. There most likely will not be an increase in student achievement and/or test scores due to a newly renovated building- although with our new Superintendent I hope this will happen anyway. The fact is that research does not show that constructing a new building will add anything to our ability to ready our kids for college and life after school. Isn't that what this should be all about?

The question that needs to be addressed has to do with how best to prepare our students for a constantly changing and ever more demanding future. Spending $100 million on bricks and mortar does not seem to be the best answer.

Thanks for reading.

James

August 10 Meeting Summary

There were a few interesting topics discussed at last night's board meeting. The Board was given some high school financing options and we also discussed the possibilities of relocating the 6 tennis courts that will be displaced.

During the architects update we were given a presentation on the Mechanical, Plumbing, Fire Protection, and Electrical Systems. You can find that document here. There was some good information in this presentation regarding some of the technologies we are expecting to use. Other than that, it was a nuts and bolts type presentation.

We were also presented with four options to relocate the tennis courts that will be displaced by the current design. You can view the entire document here. There are good pros and cons presented for each option. Please look through that link yourself and think of what you would prioritize. For me, the top three priorities are to 1) keep the courts on the high school campus, 2)keep the courts together as a unit, and 3) to have parking spaces next to what should be the main building entrance on Horsman.

Option One separates the courts on either side of Horsman Drive and does not allow for much parking near the new main entrance on Horsman. Option two keeps the courts together but has them facing a non-optimal direction while eliminating all parking near the main entrance. Option 3 keeps the courts on campus by moving them behind the rockpile and also allows for maximum parking spaces near the main entrance. However, this does eliminate a number of parking spaces and potentially reduces the area in which our marching band practices. Option 4 relocates the courts to Markham Elementary school.

Given the above options I would choose option 3. If this is the option chosen then I would expect that we are early enough into the design process to figure out a way to add back as many parking spaces as possible through this project while also figuring out an alternative practice space for our marching band. The combination of having parking where we need it (near the main entrance), having the tennis courts all together, and keeping the courts on campus make me believe that this option is the best one. During the meeting last night I asked Dr. Steinhauer to take the lead in figuring out alternative practice spaces for our teams during the construction phase of this project. Hopefully we will have some options shortly.

The other topic of interest was the financing options for the high school project. You can view the presentation here. As you may know, this project is too large to fit under our current debt limit. This requires us to do two floats of bonds to fund this project. In 2006 prior to Act 1, the Board passed a resolution to allow for the floating of $69 million of pre-Act 1 Debt. This means that when that bond is floated, the millage increase required to pay for that debt will not be counted against our Act 1 maximum allowable millage increase (which has been about 4% per year). The structure and payment of those bonds has already been set. The only thing about those bonds not set is what interest rate we would get when we go to auction.

The second set of bonds is where things get a little trickier. The presentation linked to above really is a discussion of the options regarding floating these bonds at a level payment (like your mortgage) versus a wrapped issuance (like an interest only loan for the first number of years). It has been my contention from the start that we ought to have a level payment of the debt. Pushing out the principal payments simply burdens taxpayers with $10 million in additional interest payments (see page 5) and burdens future boards with lowered borrowing capacity since the debt would be repaid at a slower rate.

Having the bonds wrapped simply puts us in the same position where we are now. In 2005 we wrapped the $55 million in elementary school construction bonds. To this date we have paid down very little in principal on those bonds. If memory serves me correctly we still have almost $54 million in outstanding debt on those bond floated back in 2005. This means that our current borrowing ability has been restricted by that wrapped bond schedule. It also means that our taxpayers will be paying excessive interest on those bonds because the principal has been pushed back to the later years of the debt service. As long as we keep wrapping bonds, the district will continue to burden taxpayers with millions of dollars of unnecessary interest costs.

While I have no doubt that we will have the ability to go to the market for the first $69 million in bonds and also the second $47 million, I do have concerns about the Act 1 limitations on the second bond issuance. As I mentioned before, the first bond float is exempt from Act 1. Even if millage needs to increase above an Act 1 limit, we will not be forced to referendum. However, with the second float, that might not be the case. If we did a straight float at $47 million that resulted in over a 1 mill increase, then along with any other kind of budget changes, I would expect that our 2011-2012 budget would be over the Act 1 millage increase limit. It would be the worst of all scenarios to have to go to referendum at that point in the high school project to get the final $47 million to complete a two-thirds completed project. I did ask our financial adviser about this and he admitted that it "could" be an issue. But he also said that there are ways around this. Essentially, what he said is that there are ways to avoid the Act 1 referendum at that point which would include structuring the bonds in such a way that they have minimal up-front impact on millage- essentially recommending that if we were expected to exceed Act 1 limits then we should just wrap the bonds to avoid a referendum.

Why are we trying so hard to avoid a referendum every time we turn around? It seems to me that if we know that the taxpayers would vote down a project of this size (or $500,000 more), then we ought to be planning to do a project of significantly less size and scope.

More on that in a future post.

Thanks for reading.

James

Response to Constituent Email

First, let me take a moment to thank all my friends around the area that helped with a job search that was recently completed. Losing a job is a humbling experience, however, the compassion and willingness to help shown by my friends and neighbors was even more humbling. This experience has forever changed me for the better. On to the blog.

As has been recently blogged on BlogLebo, there is much public discussion about an analysis of the Mt Lebanon High School project that was done by structural engineer and Mt Lebanon resident Dirk Taylor. The documents have been posted by BlogLebo on the link provided above.

As one of the two members of this Board that have over the last year been consistently voicing a dissenting opinion in the pursuit of such an expensive and questionable project, I have been silent about the Taylor Report in the hopes that other Board members would take the opportunity to publicly respond to its content and questions. Perhaps other members will choose to respond at a Board meeting, perhaps they will respond later, or perhaps they will not respond at all. I will take this opportunity to give some feedback on the report. As always, the opinions are mine and may not reflect the opinions of others on the Board.

First, it is important to understand who the author of these documents is. Dirk Taylor is not just a regular structural engineer that happens to live and work in Mt Lebanon. Mr. Taylor has done extensive work for the District over the last number of years. He understands the needs of the District and more importantly understands the architecture and the guts of our buildings. I believe he fully understands the risk he has taken in putting this type of a report out into the hands of the public.

On the functionality of the School:
Mr. Taylor points out some of the biggest misconceptions that I believe the public has had regarding the need for this project. Information has been given to the public that says that our high school buildings are falling down creating a safety issue for our kids and that our current building is not able to adequately educate our students. On both counts I agree with Mr. Taylor. One cannot prove that these statements are true. The public has been shown pictures of broken pipes and has been given tours of the building that show where water has been leaking and where ceiling tiles are missing and these visual anecdotes are used to convince the public that the need for new construction and huge expense is great. However, our architects came back and said that they were perfectly willing to renovate Building B at an EXTREMELY reasonable cost of about $14 million. B Building is the second oldest building at the high school and is also the building that contained some of the oldest plant (water and electric) in the complex. With proper repair and maintenance over the years we might not have some of the issues that are presented as being dire today. Despite its age and its antiquated plant, we have been assured that this building will be renovated in a “like-new” fashion that will better prepare our students for the future at a cost that is far less than construction/renovation at any of the other buildings. Think about this renovation of B Building the same way we thought about renovating our elementary schools a few years back. As for how well our students are performing in our existing buildings, what more do we need to look at than our test scores. We have consistently been comparable to other high-performing districts in both SAT and state standardized tests. While we do have room to improve in areas, I have complete confidence in our new superintendent to take us in the right direction on this front no matter what decision is made with the high school construction project.

On Travel Distance:
I went through the most current drawings and tried to figure out exactly where this design criteria has been met. I didn’t see it and this topic makes for a great question to present to the architects.

On Classroom Size:
Pennsylvania Department of Education says that a classroom needs a minimum of 25 sq ft per student. That is their standard. Apparently the renovation of B Building will meet this standard. Mr. Taylor’s description of how the walls are reconfigurable in C Building is new to me. If I did hear it before, I didn’t put much thought into it. Mr. Taylor’s description of how things can be reconfigured in this building to meet PDE standards is very intriguing and has the potential to significantly impact this project in my opinion. Mr. Taylor does address the issue of asbestos later in his report and I think it important to get the facts on what condition ALL of C Building is in from our current architects. I think many in the public and on the Board have been convinced by the architects that C Building needed to be torn down because it has too much asbestos and because it would be more expensive to renovate than it would be to simply replace it with a new academic wing. Mr. Taylor’s report at the very least raises some good questions that ought to be asked of our current architects with regards to the possible re-use of C Building.

On Building Size:
What more can I add? The building size we are being shown today is much larger than other area projects at Bethel Park and Baldwin despite us not having many more students. It is much larger than what has been recommended for the number of students we have. I have pointed this out on my blog on more than one occasion. Mr. Taylor’s comments regarding ways to manage the construction of a renovation project using underused or unused space seems very logical to me. Since eliminating temporary classrooms has been a top priority of the design team to this point, perhaps there is a way to incorporate Mr. Taylor’s suggestion into the renovation of the building.

On the Sports Facility:
There is a pedestrian walkway connecting the new academic wing to the sports wing because the property is zoned for a single building. I know, a pedestrian walkway doesn’t seem to be part of a contiguous building but according to the law it is. It is my understanding that without the pedestrian walkway the sports facility would be in violation of current zoning laws. But, that is small potatoes. Mr. Taylor’s suggestion about re-orienting the pool and then building additional levels for wrestling and fitness on top of the extended pool complex seems very well thought out. Can it be done? It’s another great question for our current architects. If by chance this solution is selected, we cannot ignore the need to then do upgrades and/or expansions to the current field house and locker rooms. I understand the design team is working on figuring out where to put the two displaced tennis courts under the current design. I have not seen if there was a similar effort underway for the softball field. If you have followed the Board and Commission closely, you know that we already have a rather serious issue with having enough field space for our athletes. Removing another practice field from the mix will simply complicate things further.

On LEED:
Again, great points on destroying a perfectly good building to build another like-use building. I can see how that defeats the spirit of LEED/Reusable design.

On Some Omissions:
One omission was mentioned above. What the new athletic complex would have given us is some new locker rooms and space that would have taken the place of the field house. Without that complex we would then need to do something with our existing field house and locker rooms. This work could end up being significant. The second difficulty is figuring out how to improve band/music instruction in the building under Mr. Taylor’s solution. While our current staff and students seem to make the current environment work, I wonder if there is any way to improve it outside of a simple stale renovation of existing space

Conclusion:
All in all I find the report very helpful in trying to determine what direction to take the high school project. The report confirms some of the concerns I have had for some time. I trust Mr. Taylor’s experience and insight and hope the rest of the Board will not take this analysis as simply another email from a disgruntled resident.

Thanks for reading.

James

High School Project Update and Thoughts

On Monday, June 1, the Board held a special meeting regarding the high school project. We went over the revised design and had the opportunity to ask questions of the architect. Please refer to the documents from the presentation here.

As I mentioned in my last post on this topic, I do like how much better the outside look of the building has improved from the original curved design presented months ago. However, over the past two weeks there have been a number of questions from the public and the Board that needed to be answered on Monday.

Let me list them in no particular order of importance:

1) Question: Did the architects plan for the moving of large musical instruments from the current pool area all the way over to the Auditorium/Little Theater Area? Did they allow for the fact that when there are performances in these areas that the students involved in these activities will need places to change and places to store equipment/clothes/personal item?

Answer: On the first question the architects responded that they will be building a large ("as large as we need it") freight elevator to move the instruments. On the second question...I don't remember hearing an answer. If someone else did, please let me know. The current spaces used as storage/changing spaces for performances are scheduled to be used as Applied Arts classroom space (see page 16 on the presentation). Is this an irreconcilable difference? Tough to tell. I have received numerous emails from parents stating that this is unacceptable and one email from a parent saying this is no big deal- that instruments are moved all the time. We do have a convoluted way of moving our instruments from one place to another now. Is it just that there was an expectation that this would be improved in this design or is this a matter that is a showstopper? I'd like some more feedback on this.

2) Question: What's up with the tennis courts?

Answer: The architects have vowed to find space for a total of 6 tennis courts. As pointed out by an experienced coach, we need to ensure that the 6 courts are located together and not across the street from one another. Having four on one side of Horsman Drive and two courts on the other would not be conducive to coaching a varsity tennis team.

3) Has there been a traffic study done on Horsman Drive to ensure that it can be a 2-way road?

Answer: No, but we expect to have one soon. For me, there is no doubt that Horsman can be made into a two way street. There is certainly space for it. But my concern is not so much for Horsman as it is for Lebanon Ave and Hollycrest Drive. Lebanon is pretty narrow at the top of the hill and I suspect that making Horsman a two way street would require the widening of Lebanon Ave from the top of the hill down to the stoplight. Hollycrest is also a very narrow residential street and one where the residents probably do not expect to have a serious increase in traffic by people/students going up their street to take a right on Horsman to drop off/pick up/park, etc. Maybe this is a municpal issue but it is a pretty serious one given the debate about traffic calming measures that have been taken by the sitting commissioners. Is this a dealbreaker? I'm not sure I can vote for this plan without a traffic study/commission meeting that says they will allow the extra traffic on those streets. Additionally, if we do need to widen the road at the top of the hill, who pays for that? If it is the District, then that cost is not included in our most recent documents.

4) What is the deal with the pool?

Answer: It appears that the Board is willing to increase the size of the pool from 6 to 8 lanes. The pool is a different animal than most of the other aspects of the school in that it is perhaps the most widely used community asset the high school has. Setting this pool up for more community use makes sense. Simply repeating the issues we have with the current pool would be a mistake. I am hopeful that the architects will take up a resident's recommendation to contact USA Swimming and talk about a design that works not only for our swim team, but for the community as well. There are plenty of examples out there of good combination community/school use pools. I believe there will be ways to reduce the cost of the pool while also building one that is a better fit for the community. Please see this link for a possible alternative. This link has also been given to our architects and design team. Here is a picture of what a possible "stretch" pool might look like. This design would not be exceptionally larger than what is currently planned.

5) Will the athletic spaces meet Title IX requirements for our student athletes?

Answer: The architects said that they would. There is a concern that, given how many student athletes we have, we would be cramming them all into small locker rooms. This is borne out by the evidence gathered by two different studies, one by Dejong and the other by RSH Architects (who were hired on behalf of the Blue Devil Club). If we are to remove the field house, we would eliminate over 20,000 square feet of field sports facility space. The new design does not make up any lack of existing space, it simply builds a newer space.

6) How much is it costing us to have a design criteria that says we are not to use temporary classrooms?

Answer: Noone knows. Director Hart first asked this question. Due to a lack of any clarity on the answer, I asked it again. I received the same answer. The architects cannot quantify how much this is costing. What is clear is that the design of this building (the "Z" shape) is predicated on not demolishing building C until the new academic wing is built. We need that classroom space if we are not to use temporary classrooms. This is the reason why the length of the building is barely shortened (another design criteria that apparently is only being mildly met by about 45 feet from one end of B Building to the far end of G Building). What would happen if we took out this single criteria? I get that there are a lot of people against temporary classrooms. Apparently people here have had negative experiences with them. As someone who grew up in temporary classrooms from 3rd grade through high school due to increasing student population and therefore demand for inexpensive additional classroom space, I can say that I really didn't care much if my class was in a well ventilated air-conditioned temporary classroom or in the main building. On hot days, it was always much better to be in the temporary room. I get that there is serious sentiment against using these classrooms here, but at what cost? The architect said that he was told to avoid temporary classrooms "at all costs". Surely, that is not a good way to think about this. At a $1 million cost? What about $5 million? What about $10 million?

To me, not knowing what "at all costs" is actually costing us is one of the reasons I am leaning towards voting against this footprint design.

As a final note, some will remember way back in January that I proposed we invest some money in the school now, pay down some debt, and plan for a major renovation/construction project for 2016-2017. I was told, as was the public, that the costs of renovating B Building alone would make this plan cost-prohibitive. In the latest architect costs, please note that B Building in now the LEAST expensive building to renovate at $127 sq/ft. Total cost of renovation of B Building is sitting at $14 million. This is much less than the $20-30 million number that was given as a deterrent to such a plan back in January.

That $14 million number is very well within the range of what I thought we could afford to do. I suggested in January that we use the Guaranteed Energy Savings Plan to invest in the existing school building which would cut the costs of this plan possibly in half and leave us with a viable option for a future new building in a few years.

Thanks for reading and please give the Board any feedback before Monday's meeting.

James

High School Update

I have been keeping quiet on the latest high school update that took place on Monday. I still have a lot of questions myself and I wanted to get feedback from people prior to me posting my thoughts here. You can see the full architect presentation on the District website here. There is also a recent Almanac article on the project here.

First, if you hadn't heard, there is a new design for the structure itself. Rather than describe it in detail, I'll link to a Post-Gazette article here that has a picture of the proposed design. This design reuses the space in Building B, the Little Theater, and the Auditorium. Building B would house multiple floors of classroom space. This change was perhaps the biggest one of all as we had been told time and again that Building B was NOT reusable for classroom space. I am sure there is a simple explanation on how this was figured out, but it would still be good to know.

This new plan gives us a brand new athletics wing that would house a new practice and competition gym along with a pool, locker rooms, and athletic support staff offices. In addition to the Athletic wing, we would build a brand new academic wing as well. This academic wing would provide for the latest classroom learning technologies and spaces.

What I found good about this presentation was that the design is maybe 100 times better than what we were originally shown. Something like this is far better at keeping with the traditions of Mt Lebanon. From that perspective alone it was a relief to see so much progress being made.

The costs for this solution right now stand at about $120 million with the architect and construction manager looking for an additional 10% reduction in the coming weeks. To be sure, bids for construction work nowadays are coming in under budget and that 10% reduction may very well be attainable.

Besides the question about B Building being used as classroom space, I came across some cost information that I found interesting. Last August I had posted some cost information from the PDE, RSMeans, and the Bethel Park high school project. I also linked to the actual PDE cost documentation here.

The new design calls for 440,000 sq ft building at $120,000,000. 33% renovation construction and 67% new construction. According to PDE statistics and various architectural sites, renovation costs should come in around $110-120/sq ft and new construction at $212/sq ft. This is before the recent economic downturn.

If we are renovating about 145,000 sq feet, then that cost should be around $16 million. If you take the remaining square feet (about 295,000) then that would mean we are spending $104,000,000 on the new areas of the school. $104 million divided by 295,000 square feet equals more than $350/sq ft. PDE says (remember, pre economic downturn) that we ought to be paying in the neighborhood of $212/sq ft. Bethel Park had their costs pegged at about $204/sq ft last time I looked (linked above). Even understanding that we have asbestos and demolition and phasing to do, such a premium seems unreasonable.

So what's this mean? Either we are paying a HUGE price tag to renovate Building B or we are paying far too much per sq ft for new construction.

Here's what I am thinking. For $212/sq foot of NEW construction, (PDE pre-economic downturn numbers), we could build a 400,000 square foot high school for $84,800,000. This is very much in line with what is happening at Bethel Park.

I asked at the meeting on Monday for the architect to provide a breakdown of cost by building.

Add to the information above the uncertainly that comes along with floating bonds year after year after year (literally) to avoid a referendum to pay for a project of this magnitude, the huge pension liabilities coming due, our unfunded health care (OPEB) liabilities, state budget shortfalls that impact our basic education subsidy, and an inability (note, I am not saying "unwillingness") of this board to delve into the base budget to evaluate the possibility of further cost savings in our budget, and I still am of the mind that we cannot afford a project like this until we pay down our outstanding debt. I also get that I am most likely in the minority on this issue. There is a mindset out there that says "we have to do SOMETHING". While I am on this Board and in the minority on this I will work to ensure that that "something" does not include paying too far over market value for what we are getting.

The next step in the process is a special meeting on June 1st. The architect has asked us to vote on this option at that time so that he can move the PlanCon process forward. So, if you want your voice heard, you need it have it heard in the next two weeks.

Thanks for reading.

James

High School Vote

Tonight we had the first in a series of votes to determine the fate of the high school project. It was decided in a 7-2 vote to further pursue Option 2. Director Hart and myself voted against this motion. This option is a combination renovation/new construction option. Honestly, without knowing exactly what Option 2 entails, I can't tell you what I think of it. Is it a phased approach? Will it require a referendum? Can a full solution for the high school like the one presented by a Mt Lebanon resident and architect be completed for under $110 million? I am not sure if the answers to these questions are available right now.

Tonight there was a large group of people at the meeting that voiced their support of pursuing option 2. The group Build Our School Now, which was vocally in support of Option 3 last week, changed to be behind Option 2 instead. Additionally, three Board members that were last week in favor of Option 3 changed to back Option 2 tonight. I am not faulting anyone for this. Opinions are formed and can be changed when more information becomes available.

As you can probably guess, the will of the community continued to be fluid throughout this process. This is why I was in support of sending Option 3 to referendum to see what the community thought about it. If the community was fully informed about the pros and cons of such an approach then it could make an educated vote in a referendum. If it was to pass then this Board would build the best facility it could for the money. If it failed then this Board would have to go back and figure out what it could do under the debt limit.

As it stands now, I look forward to working with other Board members in figuring out what form Option 2 will take.

Thanks for reading.

James

Stimulus and Mt Lebanon School Construction

The Stimulus package that just passed the US House of Representatives is getting people salivating at the thought of a possible federally funded Mt Lebanon High School construction project. As it stands today, under the current bill, construction funding for Mt Lebanon would not amount to much.

According the bill that passed the House, funding to school districts will be sent to the State first. That money then will be doled out by the State according to its "principal funding formula". Pennsylvania's funding formula does not help us out very much.

There was an article in the Post-Gazette on Tuesday that outlined how much money each school district would receive. In fact, the calculation for every school district in the state can be found here. According to this chart put together by US Rep Jason Altmire's Education and Labor Committee, Mt Lebanon would expect to receive the following funds:

1) Construction Funding - $207,600
2) IDEA Funding -$568,200 (2009) and $651,200 (2010)

Total funding would be $1,427,100 over two years under this bill.

By contrast, the City of Pittsburgh schools would receive $55,023,600 over two years including almost $24 million for construction alone. City of Philadelphia School District would receive $504, 977,700 with almost $212 million for construction purposes.

The Senate still needs to pass its version of the bill. The reality of the situation is that any bill that asks the State to disperse money for education according to their existing principal funding formula will by definition put Mt Lebanon far down the list of financially needy school districts.

We can hope for change, but I think it would be unrealistic of the Board to expect much more than this.

Thanks for reading.

James

High School Project Discussion Meeting

As mentioned yesterday, the Board held a meeting to discuss the possible alternatives for Mt Lebanon High School. There was an article in the Post-Gazette this morning outlining some of the details.

As the article mentions, Options 1 and 1A look to be off the table. It was the consensus of the Board that these options did not adequately address what it is that this community wants. While the options may very well make the building fine to educate our kids in for another 30 years, Mt Lebanon is a town that wants to be at the forefront of education while respecting its rich traditions. I agreed with the rest of the Board that the full renovation options did not get us to where we as a community want to be.

Option 2A was also taken off the table. While it seemed like a pretty good idea going into it, the cost associated with the option was too close to the option for a brand new school. The difference was just short of $2 million. I'd rather the Board spend the extra $2 million and get a completely new school.

Option 2B was introduced by Director Remely. Last night was the first time this idea came to light. Based on Mr. Remely's comments last night, the idea came about largely because of his belief that a referendum for one of the options costing over $110 million would be difficult to pass. Using cost per square foot numbers outlined by PJ Dick, Mr Remely and Mr Silhol thought there might be an alternative to renovate 200,000 square feet and construct a new building for around $85-90 million. I said that I was intrigued by the idea. Yes, it is a little late in the game, but so was the idea I presented to the full Board just a few weeks ago. I'd like to give them some time to more fully flesh out the idea and see if it is a viable one.

Option 3 was the other option left on the table. This is the option to build a new high school.

Options 2 and 3 would require voters to pass a referendum allowing the District to take on more debt than State law limits us to. Pennsylvania law says that school districts can have debt up to 225% of three year average annual revenues before they need to go to referendum to get an exception. Right now the District can take on an additional $110 million in debt before we have to send this to the voters.

I have my doubts about a referendum passing in this economy but we have had a lot of community feedback regarding going for a new school. While I will not make my decision right now, I do not feel as if I would stand in the way of sending this to a referendum. I say this only because I think the voters in Mt Lebanon will vote down the referendum and send this back to the Board.

Last night I mentioned that it might be possible to follow dual paths. If this Board votes to send this issue to referendum then it makes sense to have a backup plan in place. I do not think it is in this Board's best interest or in community's best interest to have a referendum fail and then just keep trying until we get one passed. We need to have something that we can easily move to in case of referendum failure. This is why I suggested that in combination with going to referendum that we also embark on an more full investigation of the proposal I put out there in conjuncton with a Guaranteed Energy Savings Plan. The GESP is something that was developed by the Governor's Green Building Council and allows government entities to upgrade energy systems and to pay for those upgrades using the savings generated by the more efficient systems.

The reason this may work is because if a referendum fails, the Board cannot discuss a high school renovation/construction project for five months. What happens then? Using the GESP program should not constitute major renovation/construction and should be allowed under the law. This plan may allow us to address many of the deficiencies at the high school (windows, boilers, and roofs are all included as allowed expenses) while not having to invest a lot of our own money. It would allow us to continue to educate our kids in the same building while paying down our debt and saving for a major construction project in 2017.

I think this Board knows what the community wants. What it wants can only be done by referendum right now. The proposal I put together is the only thing out there right now that can get us there without a referendum.

Thanks for reading.

James

Special School Board Meeting

From the District Website:

The Mt. Lebanon Board of School Directors will hold a Special Meeting on Monday, January 26, 2009, at 7:30 p.m. in the Fine Arts Theatre to discuss the alternatives for the High School Renovation project. Over the past two weeks, four community meetings were held to present the latest information about the project and gather public input.

The Board has spent a lot of time sharing with the community the latest information regarding this project. My understanding of how this will go is that there will be a period prior to the Board discussion for public comment regarding the project. If you haven't made your voice heard, then this may be the time. The Board will then discuss the options on the table. The actual vote to pursue a specific option is still scheduled to take place in February.

I look forward to listening to the thoughts of other school board members at this meeting. I think most people know where I stand at this point. I do not think we can afford a massive millage increase to pay for a major construction project but if we plan prudently, we can certainly get there. However, given the divisions I have seen in this community regarding the project, I would not stand in the way of this decision going to a referendum which would have to happen with any project costing more than $110 million.

Thanks for reading.

James

January Community Forum

I figured its about time to put some ideas out there regarding the forum from this past week.

There is not too much more information to share on the actual proposals outside of their updated costs. To see the entire slide show from the forum, click here. To see the video from the forum, please click here. The architect and project manager went over many of the same points that were presented in July with regards to the benefits and drawbacks of some of the plans. I won't rehash all that information here. Please take the time to review the slides from the forum above.

For a review of the July forum and my comments on it, please see this blog post.

Below are the alternatives and their related costs as presented on Wednesday night. Note that the July numbers were just construction numbers and did not include soft costs. The December numbers include all costs.

Alternative 1- $79.8 million in July/$103.2 million in December (29.3% increase). This option entails a complete repair of the existing building.

Alternative 1A- $97.3 million in July/$123.9 million in December (26.6% increase). This option is a complete repair of the existing building with a significant reinvention of building C.

Alternative 2-$118.7 million in July/$138.8 million in December (16.9% increase). This option would make a completely new front to the part of the building that faces the football stadium.

Alternative 2A-$156.3 million in December. This option was not evaluated in July. It would build a new wing to the high school that would attach to the Little Theatre.

Alternative 3- $131.7 million in July/$157.9 million in December (19.9% increase). This option would build a brand new high school on the upper parking lot.

There was not much talk about the proposal that I presented at Monday's school board meeting during the presentation. That was not surprising because of the timing of everything. There were at least a few comments from residents that referred to the plan.

Regarding the forum itself, I still feel like I need more information. I have serious concerns about "open" classrooms as discussed by the architects. This experiment has failed in the past to the point that some schools ended up simply putting up walls in practically brand new schools that were built with this "open classroom" approach in mind. The idea had a bit of a foothold and movement in the early 1970's but was largely removed from the educational vocabulary by the time the mid 1980's rolled around. Perhaps there are newer design variables in place today that did not exist five years ago that make this idea more workable. The resistance I have to this idea does not filter over to a Project-based approach to learning which I am in agreement with as long as it is written into our curriculum.

There was a great question asked by a resident about the District maintaining the B Building along Cochran Road. This resident noted the cost to keep that building appeared to be $25 million. I am looking through the information the Board received from the CM and Architect to verify this. Under many of the approaches, this building would be used as Administrative Office and Community office space. However, the details on the future uses of this building are lacking at the moment. If this building was to be used for something other than educational space then we have to wonder what sense it makes for the District to maintain/repair the building. This District is in the business of educating children, not renting office space.

As for what I think is going to happen next, I think there are three pretty clear paths. First, we can go do a renovation of the high school for $100 million and not go to referendum to do it. But does that do anything for us? We do have structural issues, not with the buildings themselves, but with how the classrooms are configured. Support columns make it difficult or even impossible to reconfigure classroom space in certain parts of the buildings. Second, we can go to referendum to try to do something more along the lines of alternative 3. The cost benefits just don't appear to be there to justify the expense of the alternatives that include BOTH renovation and new construction. Thirdly, we can come up with some solution that stops short of $110 million to avoid a referendum. This option would be something that has not yet been discussed or designed.

I still feel the same as I did in December when I posted the following:

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

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

The point is, there is a path that gets us to a new high school, I am simply very much of the opinion that that path does not include a referendum. Not only is the economy in a place where people are unwilling to take on more debt, but I believe that people do not want to be paying hundreds or even thousands of dollars per year in additional school real estate tax. While I have many times made the case that this district cannot afford a new school, I would not stand in the way of the Board asking to put the new school option to a vote via referendum. If the community votes for a new school, then build it. Those that do not think the additional tax is worth what a new school will bring will most likely leave if they are able. Those that look at a community and think the high school building itself is a reason to choose one community over another will most likely choose to live here.

That's all for now. I look forward to getting feedback next week at the next round community forums.

Thanks for reading.