Counting down to the final budget

I’m not going to say much on this anymore — the efforts of the school board are significant and I believe well researched.  I do not agree with the “one time” savings being used as part of the strategy (particularly the use of $300K from food service — as not only is that one time, that’s misrepresenting the “pay your way” nature of buying lunch).  Anyway, despite all the public scrutiny and hearings and discussion, there is still so much not available without a lot of RTK effort that I am going to rely on the people in charge.  Kind of unusual for me — but I spent so long on this board that it’s just too hard for me to attend meetings and have to wait my turn to ask questions….

The state looms on PSERS — and I hope the TESD gives us direction as to how to talk to our legislators about this problem.  Otherwise, what TESD is doing is no better than what the PSERS board did — wait and see what happens. Do your best but let the future take care of itself.  Sigh.  Good luck.  EIT / PIT/ Rate increase / negotiations for benefits….we’ve got a good district and insisting on staying inside 2.9% this year because of tough economic times is — in my opinion as an observer and one who has researched tax rates in other districts — short sighted.  But not wrong.

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Buy a house for $500,000 What else do you pay?

I am a numbers person and have been for as long as I was associated with the school board. Earlier I posted the revenue per student in several neighboring districts — but that left a gaping hole in the information because some expressed the reality that commercial/residential mix affects enrollment numbers so tax revenue per student could be misleading. We agreed to disagree. But I do have some other figures to contribute here to keep the discussion focused on what seems to be the consensus primary issue: Yes, we can find some ways to reduce costs in the district, and I wholeheartedly agree that the salary schedule has lost its way under the direction of a local union that takes its marching orders from Harrisburg — but I truly believe that TESD cannot and should not attempt to redesign its curriculum and the program of studies to respond to this. We need to look at the truly BIG picture of living in this community — and our local effort to producing the educational program which clearly plays a role in property values in this community.

Here’s some information on property values and taxes that gives you (hopefully) a clearer understanding of our level of taxes for schools:
Let’s buy a $500,000 house — in any of several neighboring districts. When we buy that house in Tredyffrin, the school district gets 1/2 % and the township gets 1% (most townships, including Easttown, only get 1/2 %). That income is the epitome of variable revenues — it only comes in when properties change hands.

Now — the State Tax Equalization board annually reviews assessed values relating to market values in every tax community (county based for the most part) and standarizes the values statistically. They produce a ratio known as the CLR – common level ratio — that reflects the percentage that your equitably assessed value is of the market value. Assessment appeals use this number in decision making.

Without bogging down here, you can go to the steb website to see these CLRs. They are done by county. Chester County’s CLR is 53. 0 Delaware County is 61.3 Montgomery County is 54.0 and Bucks County is 9.7 . In each case, the predetermined ratio for these jurisdictions is 100 — which means they would like to think assessments are at full value. The CLR fixes that annually to be sure new properties are assessed correctly.

So, our house that has a fair market value (sells for) $500,000 in the above four counties would be assessed as follows: (fair market value x CLR%)

TE, Great Valley, Unionville — $265,000
Radnor – $306,500
Lower Merion, Upper Merion $270,000
Council Rock, Central Bucks – $48,500

Knowing these assessed values on our $500,000 purchase house, (make it new construction for the sake of understanding how the assessed value is reached), school taxes on this house based on this fair assessment would be as follows:

TE – 17.47 mills – $4,629.55
GV – 18.22 mills $4,828.30
Radnor – 20.2731 mills $6,213.71
Lower Merion 21.4015 mills $5,778.41
West Chester 17.85 mills $4,730.25 plus EIT
Council Rock 107.96 mills $5,236.06 plus EIT
Upper Merion 15.24 mills $4,114.80

The mills I use come from the most recent (2009) county tax roles. If you find an error, please advise as I am relying on the information publicly available.

So — you can ignore any effort at comparing revenue and mills and revenue per student. These figures are the school property taxes paid by a resident in a $500,000 market value house across these districts. If you bought your house a long time ago, thedifficult fact is that the economy may have given you lots of equity, but not necessarily income to support your property’s value. You made a good investment but you may not be able to keep it unless you are willing to tap into your equity.

TE can and will make cuts, but families moving here are  investing in homes here to send kids to our schoolsare thinking about educating kids today and into the future. You have been rewarded for the district’s achievements in the value of your home. We need to find a balance between income (which has nothing to do with the way we tax for schools locally) and the value of your property. The issues of teacher compensation are a state wide issue — collective bargaining when combined with the power to strike (and teachers do not lose one dollar of income if they strike) does not serve an ideal purpose. PA has the highest percentages of teachers strikes in the country. Many states do not allow teachers to shut down an education system.
So, let us continue.I apologize for being long-winded, but it’s a fairly complicated topic and deserves more than sounds bites. In 3 terms on the school board, the only budget hearing that ever had a crowd was when we discussed the options of an income tax — presuming that income reflects more reliably a resident’s ability to afford schools — and we all know how those studies end up. NO MORE TAXES is a general rant — how we generate those taxes isn’t even open for debate because the immediate presumption was always to fear any additional source of revenue (income) because it would open another pocket to governmental seizure.  Maybe now with all the comments about what people can afford, there will be some discussion about using income as ONE of the ways we determine how to fund our schools. 

More on the sources and options later.  In the meantime, TESD is going quietly about changing programs to fix budget problems.  My kids are graduated — one lifer from our schools even went to Harvard without any athletic ability — so I don’t want to see the system taken apart on the altar of fiscal conservativism.  I don’t think our schools are expensive — though I do believe the teachers will need to pay for health care in future contracts.  Until they do, they will never understand that they are health care consumers — not benefit recipients.

Adding to the discussion

Encouraged to finally attend a finance committee meeting in this new budget year, I have decided it’s time to resurrect this blog.  School spending is a big deal — but this year it’s really more than a big deal.  Locally (TESD) we are in the process of deciding if we are getting what we pay for, and whether we are willing to pay for what we are getting.  I’m not going to write much now because I am putting together some information regarding our tax rates locally.  Pattye Benson has productively stepped into this arena to keep the discussion flowing, and I have no interest in debating topics originating there.  But after attending the January 4th finance meeting, and then reading Mr. Clark’s summary, I see many questions surfacing that don’t as much require debate  [read: heat] as light [read: understanding].  I made a comment at the meeting about TE millage rates being lower for education than neighboring districts (including some with earned income taxes) except for Upper Merion.  Mr. Clark suggested that we need to realize that their assessments are different.  Well — it turns out that we are both right (surprise!) but I believe this community needs to come to terms with the level of support we need to offer our educational programs.  Millage rates are apples and apples in that they represent the relative percentage of your property value that you contribute to education. 

But more on that in the next post.  I refer you to the website for the State Tax Equalization Board (www.steb.state.pa.us) to start to look at the relative values of communities and the contributions to education.  There are all kinds of factors to consider — total student population, total assessments, market values vs. assessed values….and I’m going to look at all of it and report to you here.

So — I don’t want to take readers from Community Matters — I want to add some  information on school spending here to be sure when we debate, we have answers, not just questions and ideas.  Plus, those supervisors in Tredyffrin are all posturing for political advantages.  Their tax effort may be about future election materials.   Think about it — the Tredyffrin township budget was held at 2.23 mills.  The school district budget starts at 17.47 mills.  During this past election, I got 1 mailing for the Republican candidate for school board.  I cannot begin to count the number of mailings I got for Supervisor.  Clearly we think that’s the most important position — at least the politicians do….

After serving on the school board for 11 years, I can assure you that no one decides to serve there for any amount of time with political aspirations.  People may go on to other political roles, but being on the board is simply an unpaid, vastly underappreciated task.   But it’s time to get serious folks.  TE Schools are remarkably successful.  Our property values are fueled by their reputation (then again, maybe folks move here because of our excellent park system).  The decision to take $9M out of the budget for next year will assure a dismantling of several programs.  Now, maybe we will decide to do that, but let’s not ignore the realities of getting what we pay for.  Union contracts aside (and that is another issue — truly — and moot for this time around), TE’s contribution to the value of homes in this area is not in dispute.  Sure, they cancel the FLES program – we cannot “afford” to teach elementary foreign languages.  No problem.  That’s a K-4 program and won’t be felt for years.  But what does it say about a district that abandons a program specifically designed to address  what may be one of the flaws of American education — and had a strategic plan specifically to answer the call (see the post here on FLES) 

Okay.  Time to publish this and get this started.  I encourage feedback and comments.  You have the topic.   Now, take the floor.

Check out this week’s Main Line SUBURBAN Life

I can scarcely begin today’s post because I don’t know which item to tackle first.  For those who don’ t have the paper or haven’t seen it yet — here are my choices:

1. Documents in Right-to-Know case released  – page 1
2. Tredyffrin Republicans will have a new look – page 1
3. Editorial: “We Need to do things a little different around here”  page 2
4. Chester County employees put on notice that pay raises may be eliminated – page 23

 I think what I would like to tackle today (in light of the fact that tonight is TE’s Finance Committee meeting) is the 4th one — which is sort of back there in the paper and might not get noticed.  It’s online from the Feb 15th Daily Local.    http://www.dailylocal.com/articles/2009/02/15/news/srv0000004699694.txt

The purpose of the article is to outline budget planning for 2010 — “Chester County finance officials have told department heads and elected officials they should plan to reduce their operating budgets 2 to 4 percent for next year.”  (Note:  The Chester County Finance Director is Denny Bolton, who was a long-time business manager for Owen J Roberts School District — so he knows the ins and outs of school spending as well as government spending).   It is unlikely that any school district would plan for a spending decrease (which is where the editorial about doing things different (sic) comes in),

Key comments from article:  

…the department heads and elected officials were urged to prepare two sets of preliminary budgets. One option should be for a 2 percent reduction, another for a 4 percent reduction …”This may be accomplished by eliminating nonmandated programs that do not align with the strategic goals or identifying operational savings…In either case, (2 or 4% decrease)  officials may need to eliminate any annual salary increase for employees in 2010.

As the article continues, some speculate that they do this worrying often and don’t believe anything will come of  it.  There are some sounds of indignation that county employees would not get the 3.75% raises that (apparently) some feel they are entitled to.  But there is also the comment by County Controller DiGiorgio 

“The vast majority of the over 2,500 county employees who work for our government do a great job,” DiGiorgio said at that meeting. “They deserve to be treated with respect. However, we need to consider whether it is prudent to provide them with a raise of 3.75 percent while recession-hit Chester County taxpayers will be seeing very little in the way of salary increases in 2009 and, in some cases, may lose their jobs in these hard economic times.”

 

Citizens of our community need to engage in the budget process.  T-E (and many districts across the state) see the state-mandated “cap” as the floor to their tax plans — not the ceiling.  A 4.1% increase does not have to be voted on by the public (beyond that increase, there are only specific reasons to increase taxes without triggering a referendum–so the “secret” is to stay at or below the cap line).  So instead of worrying about what to spend, boards are more concerned with how much they can increase without scrutiny.  How about a rebate?

Many school districts (and TE is certainly a leader in this) have significant “fund balances” — reserve money that has accumulated in the good times of real estate transfer tax growth and investment interest.  T-E’s fund balance exceeds $50 million.  So with a budget of $100+ million, and no plans to reduce spending, they are planning a 4.1% tax increase AND to use approximately $4 M from the fund balance to offset spending increases.

Taxes are a funny thing — people don’t talk about the tax bill — only the increase.  Hey — you pay the whole thing.  Has anyone thought about using fund balance to pay half the taxes?  Give today’s residents our own school tax holiday?  Sure that means next year (or maybe not until the year after) taxes would “double”, but it’s our money they are sitting on and not spending on these increases or costs. Future residents are not stuck with our debt — they are spending our savings.  

There are lots of reasons this would be complicated — and would require some serious  “out of the box” thinking. ( I live by the notion that if I have an idea — it can happen.  It just takes effort.)  But as our teachers sit in negotiations and see our reserves piling up, why would they ever step up and participate in the real economy — the one that doesn’t have annual raises OR tenure OR lucrative employee benefit plans OR pensions OR collective bargaining with the right to strike and shut down a community education program?  (That sounds like a knock at OUR teachers, but as I have stated previously, and will talk about again — our local organization (TEEA) is strongly encouraged [read: pressured] by the state organization PSEA….you know — the one whose goal is a starting salary statewide for BRAND NEW TEACHERS right out of college, no experience — of $50,000 — accumulating 2.5% a year toward a pension with 10 years to the top salary).  

More later.  Tonight (Thursday) is the TE Finance Meeting.  Maybe some of us should plan to be there?  Check out the TESD.net website for time and place.   In the meantime, please share your thoughts about these topics and any you want to talk about.

Jan 19, 2009 Getting Started

I am not in a good mood right now, but with the loss of the Eagles today, I now have time to focus on this blog — something I have considered for several months. I am a former 3-term member of the TE Board of School Directors, and I’m doing this blog to share my observations and conclusions about the current operation of the District. I believe the current board is working hard, but does not seem to be asking enough questions (public deliberation) about the recommendations from Administration that are becoming policy.

T-E is a very successful program — and I have no interest in tearing it down. I think it’s a rightful source of community pride. I believe the School Board today and in my time work hard to get things done and to elevate the level of discourse in the community. My motivation, however, comes from a the “tax to the cap” mentality that is bearing down on all school boards. It’s turning into an artificial floor rather than a ceiling. It does not tell the story of the increase in expenditures, which up to now has gone well beyond the cap. But those are details that will follow. This is just an introduction to why I’m doing this.

I encourage you to comment and share information that you have. I have made a formal request to the district for information on salaries, benefits, contracts, retirement contributions, capital budgets, fund balance and investment capital. I look forward to sharing that information with the public as I review and analyze it.

Thanks for stopping by. I don’t expect this to be a forever blog — but I hope it will be useful during budget seasons and as T-E reacts to a dramatically changing economic climate.

Please indulge me as I close with a quotation. I share it as a cautionary tale, not as a conclusion or a prediction:

The price good men pay for indifference to public affairs is to be ruled by evil men. Plato