Economics Driving TESD’s Budget Woes . . . EIT to Be Explored

Ray Clarke attended the TESD Budget Workshop last night and provides the following commentary.  I am fascinated that the school district is bringing EIT out of hiding.   There is much misunderstanding about Earned Income Tax – we need an open and thorough airing of EIT.  I would suggest that the TESD and township partner for the discussion, have an outside expert give a presentation (like Easttown Twp did for its residents).  The presentation should be taped and then shown repeatedly on both the school district and township cable networks.  Some people hear ‘tax’ in the Earned Income and then simply shut-down. 

Whether it is the township or the school district we are talking about — we are currently facing tremendous economic hardship and all revenue sources must be explored.  Personally, I don’t want to pay more taxes and my personal household will suffer with EIT (my husband works for Unisys) however, . . .  there is also a reality to the situation.  I applaud the School Board for recognizing the need to explore Earned Income Tax and would hope that the Tredyffrin’s supervisors would be likewise motivatedit’s called exploring options.  Both the township and the school district have been faced with major deficits in their budgets that have required cuts in personnel, services, programming in an attempt to close the gap.  But to what end can we continue to make these cuts?  At what point do we weigh the quality of life that all enjoy in this community vs. increase in taxes?  I do not see how continuing to say, no new taxes  is a long-term solution to the problem.  Comments?

A quick report from the Budget workshop. Only 25 or so residents tonight, probably reflecting that there was little discussion of program changes. The occasion was used mostly to lay out a framework, stake out some board member positions, and set up the important April 12 Finance Committee meeting where the next level of expense reductions will be discussed.

However there were some really significant outcomes, worthy of full attention.

The basic parameters being positioned to balance the budget are:
– Implement the $4 million of expense reductions already discussed
– Tax to the full 2.9% cap
– Use $2 million of fund balance
– Find at least $0.7 million of 2010/11 reductions from $1.5 million of mostly non-educational strategies
Round numbers, subject to tweaking up or down.

The principal dissent came from Dr Brake, who is not thrilled with the proposed changes to the Middle School program. He seems to be the only one on the other side of this.

Dan Waters and Kevin Mahoney lost few opportunities to highlight the fact that these 2010/11 actions leave the structural problem untouched (shades of Tredyffrin’s “structural deficit”!). And they are right: 50% of the $4 million is one year only, and of course the fund balance use can’t continue for ever. The deficit for 2011/12 after the above programs would still be $7.5 million (8.2 – 0.7).

So, the administration is going to do the following:
– Deepen the study of the $2.6 million of class size, CHS period changes, etc. that – practically – can not be implemented until 2011/12. (Strategies 47-56, approximately.) If all were implemented, the deficit would be down to $4.9 million.
– Study the implementation of an income tax. Taxing to a likely 2% Act 1 property tax cap next year would still leave the district $3 million short, so this – to me – seems inescapable.

Some EIT information that’s new to me, and definitely has a major impact on the revenues for TESD: Kevin Mahoney stated that there is the potential to reclaim not only taxes paid to neighboring municipalities, but also to Philadelphia (which would apparently get reimbursed from gaming revenues).

Kevin Grewell has posted a lot of helpful EIT information here. Important features confirmed tonight appear to be that this would be implemented under Act 511, which is coordinated with the Townships. Resident tax is split between School District and the townships, non-resident money is collected by the Township (which turns out to be looking at fire department funding).

Debbie Bookstaber (from the last TSC) asked that the study include a comparison of an EIT and a PIT.

The Board took pains to emphasize that program changes must be fully vetted, particularly in the Education Committee, and subject to public input. Back to that April 12th meeting. Also, decisions will need to be made soon on the health insurance funding and bond issuance as part of the $4 million 2010/11 programs – the former in particular being highly susceptible to assumptions. I’d like to be convinced that all aspects of utilization risk have been thought through