Understanding the Tredyffrin Easttown School District Budget Process

I attended last night’s Board of Supervisor Meeting and the Public Hearing for the Patriots Path Plan — more about that later today.  However, as a result I was unable to attend the TESD’s Finance Committee meeting held at the same time. Local Malvern resident Ray Clarke attended the Finance Committee meeting and provided his notes and personal observations from last nights meeting.  I appreciate Ray’s attendance at the Finance Committee and his remarks are provided following this posting. 

I admit to not fully understanding the school district’s budget process and unfortunately, the information available on the TESD website is limited.  With a potential of a 7.2% tax increase, I think that we need to all do our homework and get involved in this process.  I have been doing a bit of research about the actual school district budget process. I thought that the following questions and answers would benefit us to better understand the Tredyffrin Easttown School District school board budget.  I was able to find this information on PA state websites; if any of the details are incorrect, I would appreciate clarification.

Q. Is there a difference between the preliminary and final budget?
A . The preliminary and final budgets are distinct documents since the passage of Act 1 of 2006. The preliminary budget is the document that is adopted in January and the final budget is adopted not later than June 30th . Both Budgets may reflect the same amounts but the provisions of Act 1 of 2006 require the district to adopt either a preliminary budget or a resolution which binds the district to a tax increase of no more than the index.

Q. What is the proposed budget?
A . The proposed budget applies to both the preliminary and final budgets. The proposed budget is the budget that is put on public display prior to the board taking action on either the preliminary or final budget.

Q. What happens if the district does not adopt its budget by June 30th?
A . The budget is the district’s authority to incur expenditures. If the district does not adopt its budget on time then it may not make any expenditure for the new school year until a budget is passed. The district may however, continue to issue payment for items that were part of the prior year expenditures.

Q. The district is considering action on the proposed final budget but it does not contain a major expenditure item. Is the district permitted to increase its budget after it introduces the proposed final budget?
A . Yes. The district may increase the amount of spending during the public review and comment period. The limitation of the increase is to the index plus any approved exceptions.

Q. The district is considering action on the proposed final budget but it does not contain a major expenditure item. Is the district permitted to increase its budget beyond the adopted preliminary budget?
A . Yes. The district may increase the amount of spending during the public review and comment period for the final budget. However, the limitation of the increase is to the index plus any approved exceptions.

Q. May the real property tax mill rate be increased after the proposed preliminary budget is introduced?
A . Yes. The increase is subject to the index plus any exceptions that the district may qualify for, or proposed referendum question.

Q. May we introduce any of the budgets more than 30 days before adoption?
A . Yes. Act 1 of 2006 establishes a minimum time requirement. The district may introduce the preliminary and final budgets earlier if they choose.

____________________________________________

The Following notes are from 4 January 2010 TESD Finance Committee Meeting as provided by Malvern resident Ray Clarke  

The Finance Committee took the next step in the process to get state approval for a potential tax increase in excess of the Act 1 index, requesting approval for exceptions that – if implemented – would lead to a property tax increase of 6.63% – 1.16 mills – half the township total millage!  Without the increase, the deficit would be $9.2 million.  Even with the increase there would be a $3.9 million deficit.  

There was no change in the administration cost reduction proposals presented at the last Committee meeting, which would reduce costs by $2.35 million, leaving the deficit still at $1.5 million. 

The Committee asked the Administration to come to the next Finance Committee on February 8th with a list of potential expenditure cuts that would erase the entire $9.2 million deficit, thus setting up the discussion in the other TESD Committees and the community to find a tradeoff between tax increases and program cuts.

Any tax increase for 2010/11 would have to be funded from property owners.  If the School district wanted to implement an EIT for 2011/12 it would have to give notice to the Township by November 2010 and would share the revenues with the Township.

The discussion suggested some emerging Board strategies:

  • Expect the state to come up with some kind of fix to the $7 million increase in pension contributions that contribute to the growth in deficit from the baseline $9.2 million in 2010/11 (above) to $25 million in 2012/13 (and beyond).  (Note: $11.5 million of the $29 million General Fund Balance is designated for PSERS Rate Stabilization.)
  • There are no overarching principles (tax increase caps, expense reduction goals) for dealing with the remaining $7-8 million a year increase in the deficit, beyond the general commitment to maintaining the quality of the district’s education program.
  • One target is for significant reduction is benefits costs in employee contracts beyond 2011/12.  (One commentator thought current benefits might be subject to Obamacare’s excise tax on rich programs!).  In the meantime, the Board would consider dipping into reserves to fund short term increases that are contracted. 
  • The idea of fees received a lot of traction.  For example $5-10 per day parking fee for CHS students.

Other new ideas (with no $ assigned) included: 

  • Outsourcing maintenance and janitorial and special education (to the IU)
  • Reducing legal costs (how?) 
  • Eliminating non-contract employee salary increases (4.5% in the preliminary budget)
  • Considering more actively the Teacher Early Retirement proposal (perhaps applicable to 6-7 staff with the right combination of age and longevity, worth $30-50,000 per retiree -but the net impact of course loaded with assumptions) 

The critical point was made that while small savings are indeed important and must be pursued, the district’s expenses are driven by compensation.  Since the rate is contracted, that can only be impacted by FTE reduction.  It is indeed possible that some reductions can be implemented with no reduction to quality (eg FLES, the Middle School curriculum changes already proposed, perhaps a 7 period day at CHS and the outsourcing programs), but we may be past much of the “low hanging fruit”, and reduced FTE will translate to a reduction in many prized programs.

So back to the ultimate question: what programs/class sizes does the community want and how are we prepared to pay for them?  There is an opportunity to get engaged as this process unfolds, and indeed to vote!

Note that, although our property tax millage may be low compared to some adjacent jurisdictions, the amount we pay is a combination of the rate and the assessed value, so just looking at the rate alone does not tell the whole story.  Our neighbors also differ greatly in residential/commercial mix.

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9 Responses

  1. I also attended last night’s Finance Committee – Ray’s notes are excellent. One small correction – the high school parking fee being discussed was more like $200-300/year ($1-2 per day).

    The full Board was in attendance (not just the Finance Committee) and there was open discussion and input from the TESD Administration and community members in attendance (I counted 14 people). The Board wants virtually everything “on the table” at the next Finance Committee meeting on 2/8 and as Ray reports, they intend to consider options for eliminating the entire deficit through cost reductions, although that appears unlikely – it would require cuts to the educational program that the community likely would not accept. Also, the Board reiterated that it is committed to long-term thinking, understanding that things change, rather than a one-year fix.

    • Sorry, even after the Sewer discussion last month, I forgot to use the proper terminology (and Ray did, too) – it’s not an increase in the high school parking FEE, it’s an increase in the high school parking TAX ;).

  2. Non-contract employees getting a raise? During a deflationary recession? Only in government….

    How about instead of a raise they get to keep their jobs.

    And as for the teachers, who “negotiated” contractual raises of 4% per year, and who refuse to re-“negotiate” their gold-plated contract: Let’s pay for their raises with layoffs proprtional to their raises. I.e., if they insist on a 4% raise this year then pick 4% at random and fire them. Would you keep a 4% raise if you had a 4% chance of losing your already exceptionally comfortable and lucrative job?

    • Lysander:

      Both of your points, which are excellent, were raised, discussed and duly noted at last night’s meeting.

  3. It’s 4% on the base, not on individual salaries. You take 4% of the whole teacher wages and you add 4% to it and that’s the pool of money. The increase in benefit costs is simply a major salary increase without any recognition or control. Mr. Mahoney’s suggestion that the board consider using reserves to pay benefits and get it back at the next negotiation was said in passing, but this community needs to understand just how powerful the teachers unions are in PA. Any effort to control them WILL result in a strike. Not sure this community would manage that action very well….but your points need to be made over and over again.

  4. It’s a cold, hard world out there, isn’t it, Lysander? And
    it’s every teacher for him/herself. Unions only distort the free market economy. And there should be no such thing as a public sector job, right?

    As a former teacher, I assure you that teachers -good teachers – work very hard for their money and constantly work to improve their skills. On the whole, this district’s teachers are particularly well-educated and could make higher salaries working in private industry. They teach because they think it’s important work, and they enjoy helping kids learn.

    To suggest that the District play Russian roulette with teachers’ jobs to force them to give up salary increases reflects your lack of respect for the profession. If you don’t want to support our schools, why not relocate to the wilds of Montana. I’m guessing that property taxes are a lot lower there.

    And people wonder why professionals choose to belong to a union…..

  5. Kate
    The complexity of the issue cannot be as simple as Lysander’s offer nor as easy as “good teachers work very hard.” Education is not made up of just “good teachers” and the notion that in today’s economy they could make more in the private sector is simply not proven. Teachers are tenured with pensions — rather generous pensions — and if they believe they can make more money elsewhere (and risk termination without cause), I would ask why they want unions to protect jobs/seniority and aggressive pay and benefit increases without regard to merit.
    There is no lack of respect for professionals. There is lack of respect for a claim of professionalism while limiting contract terms to 7.5 hour days, refusing any discussion of copays, and failure to recognize when salaries have gone well beyond market driven numbers with hundreds – perhaps thousands – applying for openings. There isn’t a good teacher in any district that can get their work done in 7.5 hours (those prep periods in the paid time help though), but union negotiators stand firm in refusing to accept an 8 hour contract day. WHY?
    There is no real suggestion that the District would reopen the contract, but the PSEA meets annually to develop contract goals for the state, and boards get elected for staggered four year terms that typically result in a learning curve that never quite gets the board on a level playing ground. Labor peace is important and seems moreso when at the bargaining table — but the teachers right to strike in PA is a threat that generates far more generous salaries and benefits than the market would provide. I’ve used the phrase too many times — “keep a good job, lose a great one.” The PSEA (not necessarily the TEEA by the way — but they have ever-changing relationships with the state reps) has sacrificed many lesser employees to furloughs because seniority and tenure protect all by the most egregious violators of professional standards.
    We have to stop whining and start to recognize that 2.5% vesting annually in a tenured position toward a pension is beyond anything that most taxpayers can relate to. Professionals in a Union — ask the auto industry how that’s working….or the steel industry….do it affordably or lose the job to outsourcing. It can happen in classrooms too. Distance learning — electronic learning – charter schools. There are signs out there. FInd me other industries that will pay roughly $50K for 182 work days of 7.5 hours each with a bachelor’s degree and no experience.
    Here is the fact: Check it out:
    Starting salary 2010-2011 bachelor’s degree no experience $48,700 . Second year 2011-2012 that teacher will make $51,250. That is a 5.2% increase for someone who doesn’t even work here yet….

    I’m back to blogging myself. http://schoolspending.wordpress.com/
    I’m about light, not heat — but we need to debate with facts, not just ideas.

    Sigh.
    Keep talking and asking questions. AND SHOW UP FOR MEETINGS FOLKS.

  6. Kate,

    As Andrea points out, your generalizations about professionalism do not apply to every teacher. But the union prevents the administration and taxpayers from rewarding exceptional teachers or penalizing or removing substandard teachers — even negligent teachers for anything short of criminal misconduct.

    Your generalizations about compensation certainly do not apply to the TESD teacher union: Their contract gives them salary and benefits so far beyond anything else in the market that there are literally thousands of applicants for the few positions that become vacant each year.

    Getting a job covered by the TESD teacher union is like winning the lottery: In addition to job security that is unparalleled elsewhere in the free world they get guaranteed pension benefits. Gold-plated medical benefits and other perqs further cost the taxpayers a large portion of teachers’ nominal salaries. When teacher compensation is adjusted for hours worked per year the figures are positively jaw-dropping: Even a new teacher with no experience and meager private-sector job prospects is approaching the equivalent of a 6-figure private-sector salary. With seniority — regardless of performance or any other qualification other than not getting fired — TESD teachers are taking annual compensation well into 6 figures.

  7. Lysander and Andrea HF,

    I respect and agree with much of what you have written. I did not mean to imply that teachers – good, mediocre and sub-par, deserve the gold-plated packages they receive, nor do I think it makes sense to pay teachers based only on length of service and professional credits.

    In the current job market, young teachers hired with only minimal teaching experience and a bachelor’s degree are indeed hitting the lottery when they get tenure in TESD or any of the surrounding school districts, and they are highly motivated to stay regardless of their suitability for the job.

    The issue of the union’s not budging from a 7.5 hour day seems less costly than its insistence on maintaining the level of benefits and pension contribution they now receive. These are simply out of line with almost every other sector. and need to be adjusted.

    When the township’s teachers have a better deal than most of the district’s taxpayers, it is understandable that something will have to give.

    I never meant to suggest the problem of school funding is simple or can be resolved by simply raising taxes. But I remember the days when teachers made little and were expected to be on duty in some capacity for almost evey minute of the school day. Prep time was minimal and the profession did not receive the respect it deserves.

    Teachers have come a long way since then and are understandably not anxious to give up their gains.

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