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.

$uper Bowl $unday

I started with an Eagles Loss.  Today is about the winners that went on.  I haven’t been doing a blog for public consumption for very long, but long enough to be told by several folks that I needed to have a blog address that had universal appeal — so this is the continuation of what I started over on tesd2009.  It’s not just about TESD, which (for those hitting this by searching other topics) stands for Tredyffrin Easttown School District.  I’ve moved all the posts from the other site, but the comments didn’t come with us….so please feel free to post your comments again — or add a new one!

Today’s title is Super Bowl Sunday, relying on the dollar sign for the S because like School Spending…(which also uses dollars rather liberally), the Super Bowl is a big dollar event.  It’s not for fans — it’s for corporate spenders.  I’m sure there are a whole bunch of die-hard Steelers fans in bars all over Tampa — who didn’t have quite the cash to pony up for a ticket (and not many places they could buy one if they wanted).  I’m guessing since the Cardinals did not sell out their early play-off games that not a bunch of Arizona fans made the trip to (not quite as sunny) Florida.   Here’s the point — things we want seem to be getting more out of reach — because other people set the price.  A good public education starts to be out of reach, because the costs of living in a good district become less affordable.  “Excellence” in education does not come cheap.

So what does that have to do with the purpose of this blog?   Values, I guess.  School Spending is important — and it’s put into the hands of school board members who are elected to do a pretty thank-less volunteer job of attending meetings and in our local district’s case, to decide how to tax for and spend $100,000,000+  a year……….yikes.  No wonder they claim that tax increases will only cost the average household $178 a year — because when you look at the big number, $178 isn’t really that much (except that’s the NEW amount …. not the whole tax!!)

So — for those migrating here from my previous site, I have some work to do just to get the information in place to start analyzing.  I’m not going to just talk about TESD, though they are the reason I have developed the interest in the process.  I was on that school board for 3 terms — 1991-2002.  That means I left 6 years ago — and the tax rate was 12.03 .  This year, it will be somewhere around 17.66 (that would be the cap max — which they have said will be what they do) — or 47% increase.  That’s pretty hefty for a period of time that has virtually no significant inflation.  Of course, there are lots of reasons — enrollment increases, collective bargaining increases,  “time in the job” increases, infrastructure maintenance and upgrades….the same thing that affects us all.

So — I will move on from here.  I’m going to assume (and you know the danger in that word) that we all share some common values — that we want the best for our children, but that we don’t think that the “best” is always a result of more. 

I love using quotes (rely on them really) because they remind us that our observations are not all that innovative or remarkable — we’ve been there before:

If liberty and equality, as is thought by some, are chiefly to be found in democracy, they will be best attained when all persons alike share in the government to the utmost. Aristotle

Cut PA Pension Fund Increase Jan 23 2009

I received this in today’s email from a local taxpayer — thought it was worth sharing. All the emphasis (colors) are my own.

Wallace Nunn is a former chairman of the Delaware County Council

A good return was seen in ’01 for worker benefits — now a tax increase is needed

Former State Sen. Vincent J. Fumo will soon start getting a six-figure annual pension, according to a recent report. If this sounds like a bit much, that’s because it is. But it’s only a small part of the problem.

In 2001, the leadership of the General Assembly, with the encouragement of public-employee unions, approached the governor with a plan to increase pensions for teachers, state workers and legislators. It seemed, said those advocating the increase, that the state pension funds had enjoyed excellent returns for several years. Therefore, the state could increase the pension benefits of its workers and teachers from 2 percent of their salary per year of service to 2.5 percent – a 25 percent increase.

With this level of benefits, an employee who put in 30 years could get a pension equal to 75 percent of the average of their highest three years’ salary, instead of 60 percent. Most taxpayers would consider 60 percent more than fair, since most taxpayers receive nothing close to that.

Coming up short

Of course, the argument went that this would cost the taxpayers nothing, as the state would always earn 10 percent or better returns on its pension funds. There was little discussion of the possibility that returns could come up short and taxpayers would have to make up for it.

Well, a funny thing happened. It turns out the pension funds not only did not continue to gain at very high rates, but have in fact lost billions of dollars.

This is not to say that the pension fund managers have done a bad job; they are subject to the ups and downs of the economy much as we all are. But here’s the rub: We taxpayers have now guaranteed high pension benefits.

The promised returns were an illusion, but the taxes won’t be. Over the next few years, you will likely see massive increases in taxes, especially property taxes for local school districts. Estimates of the revenue needed are in the billions, and they will no doubt grow.

Day after day, we see articles about cuts in services and possible tax hikes because Pennsylvania is, like the rest of the country, suffering a huge drop in revenue. Our leaders are wringing their collective hands, trying to figure out the least painful way to surmount the financial problems they face.

Go back to 2 pct.

Let me offer a partial solution: Go back to the 2 percent pension formula. The state’s original assumption – that the pension funds would earn enough to pay for a substantial increase in benefits – was wrong. Given that, Gov. Rendell and the legislature should rescind the increase.

This would reduce our pension liabilities by billions of dollars and shrink future budgets. And if the funds are ever in surplus territory again, let’s consider giving the break to the taxpayers. After all, they put up the money in the first place.

The leadership in Harrisburg today is not the leadership that enacted this shortsighted scheme. That should make it easier for them to stand up and say it must be changed. With 2 percent of the courage shown by our troops in Afghanistan and Iraq, our state officials could show some support for the people.

---

E-mail Wallace Nunn at wnunn@aol.com.