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

Further School Budget Discussion . . . How will the District fund the gap?

Tonight is an important TESD Budget Workshop — 7:30 PM, auditorium at Conestoga High School.  Yesterday, I posted the agenda and materials for review.  This is our school district and our taxpayer dollars . . . how do you want your dollars spent and how do we fund the district deficit?

There have been many budget-related comments today on Community Matters — several of which were focused on EIT.  For further discussion, below is a commentary received from Ray Clarke.  In the past, Ray has offered his opinion on EIT but has updated his remarks based on TESD’s  current 2010-11 budget information.  Here are Ray’s comments — let’s use this as a starting point for discussion:

I’d like to get away from history (except as a guide to the future) and ponder what needs to be done to secure our kids’ education going forward. I think much of the evidence supports John’s advocacy of an EIT. I’ve posted it here before but here goes again, starting with updated budget numbers:

1. After one round of proposed program changes that have been vehemently opposed by many in the community, plus a 2.9% property tax increase, the school district will still be in the hole by $3 million in 2010/11, $8 million in 2011/12. (Note that it is relatively easy to squeeze expenses for just one year…..). No official word from Tredyffrin yet, but the township will need to fund contracted compensation increases next year, too.

2. A 1% EIT would raise $9 million for both Tredyffrin township and school district, of which $2.7 million is already paid by residents and $2 million would be paid by non-residents. (Easttown would also have to implement the tax.)

3. Perhaps a 2010 Tax Study Commission would ask a question like: “Would you prefer that property taxes increase 15% for all, or that the township residents not now paying a 1% EIT do so and the township gets a 1 for 1 match, worth $4.7 million a year now and increasing with inflation?” Might there be a different answer than to 2007’s question, which referenced only shifting taxes from property to income?

4. There will be in 2011 a county-wide mechanism to collect an EIT at low cost for all the other townships with this tax.

5. An EIT diversifies the tax base among all income earners and wealth holders.

6. The TSC stated that: “Had we been presented with compelling funding needs by the school board that could not be satisfied by the present system we may well have endorsed a change in the manner in which our schools are funded.”

So, given that …

 – There is no willingness by the TEEA to consider deferring accelerating teacher salary increases (6.9% in 2009/10 over 2008/9, and more contracted each year until 2011/12) and sharing health benefit cost increases

 – We need to fund $4 million a year in replacement capital and the capital fund is running dry

– There is no willingness to unlock capital tied up in unproductive properties (note: enrollment is projected to decline in the short and medium term)

 – $2 million of the $4 million proposed expense savings have only a one time impact

 …it seems to me that the need is indeed compelling. Whatever views one might have of past School Boards, it seems to me that the current one has to operate in a very different economic environment and that their actions should reflect that.

Monday, March 15 — 2010-11 School Budget Workshop

Budget Development Workshop
Monday, March 15
7:30 PM
Auditorium, Conestoga High School

Budget strategies for the 2010-11 school district have been discussed at the February and March Finance Committee meetings.  Those budget strategies are reflected in a draft budget which will be discussed in greater detail at the Budget Development Workshop tomorrow night. There will be slide presentation; click here for meeting’s agenda and a review of the slides.  There is much information included on the slides and I would encourage everyone to review.  One slide that caught my eye was the following:

Professional Staff (TEEA)
2009-2010
Teachers, Guidance, Media Specialists, Nurses

• Average years of service in T/E is 10.3 years (10.5 for 2008-09)
• 77% hold advanced degrees (74% for 2008-09)
• Average salary $74,581 ($69,788 for 2008-09)

How does the District intend to close the remaining gap in the 2010-11 budget?  We know that there will be a $2.9% tax increase and the suggested budget cuts total approximately $4 million.  There remains a $2.7 million gap . . . how will that deficit be funded?  floating a bond?  more programming cuts?

In the review of the Looking Ahead slide (pg. 26) we note that the 2011-12 school year budget indicates a deficit of $8.2 million (most of which is not attributed to PSERS increase). When the PSERS increase fully kicks-in for the 2012-13 school year, the deficit sky-rockets to $18.5 million! It continues to climb from that point — seriously, have a look at pg. 26, the numbers are staggering!

The draft budget includes budget strategies from the February and March Finance Committee meetings.  These strategies include:

• Contribution from Food/Nutrition Service Fund to General Fund
• Education Service Center Disposition
• Outsource Print Shop
• Restructure 7th and 8th Grade Program Delivery
• Eliminate Elementary FLES Program
• Restructure Middle School Special Area Classes
• Reduce Number of Regular Education Aides/Paraprofessionals
• Eliminate all Conestoga High School Classes with Fewer than 15 Students
• Eliminate Supervisor of Special Education Position
• Reduce Number of Extra Duty Responsibility Positions and Club Sport Contribution
• Reduce 2010-2011 Budget Requests to 2008-2009 Levels
• Issue Debt for Capital Expenditures/Long Lived Assets
• Explore Self-Insurance for District Medical Coverage
• Hire an E-Rate Consultant
• Reduce Information Technology Budget by 10%
• Reduce Use of IT Contracted Services by 20%

Although I previously provided the budget strategy information, I think it is important to re-post that link for your review.  These informational materials were used for the March 8 Finance Committee Meeting.  The consensus reached by the School Board and Administration was to tentatively use budget strategies #1-12, 14, 31, 39 and 40 for a savings of approximately 4$ million.   What budget strategies would you suggest to fund the remaining $2.7 million budget gap? 

Tomorrow’s Budget Workshop represents one of the few remaining opportunities to let your voice be heard in regards to the 2010-11 budget.  Whether you are a teacher, parent or taxpayer . . . do your homework by reviewing the materials and come to the meeting prepared.  Offer your opinion to the Administration and School Board; speaking up could make a difference in programming and jobs for next year.

TESD Budget Process Continues at Finance Committee Meeting on Monday, March 8, 7:30 PM

The TESD 2010-11 budget process will continue with further discussion at the Finance Committee Meeting on Monday, March 8.  Due to the expected turnout, the meeting has been moved to Conestoga High School and will begin at 7:30 PM.  Here is the Agenda for tomorrow’s meeting.  The agenda includes goals for the Finance Committee.

Finance Committee Goals:

1. Review and update the 5 year plan incorporating the new known factors (i.e. new contracts, PSERS, determine level and use of fund balance) impacting the plan.  

2.  Formulate the 2009-2010 budget identifying expense cut opportunities with an eye toward protecting the education program.  

3. Continue to explore opportunities for co-op with other local districts for non-public school transportation.    

4.  Study implications and impact of converting TE school district to a charter school district.    

In attempt to make it easier for the public to understand the process, the TESD Finance Committee has put together background materials for the March 8 Finance Committee Meeting.  The document details the proposed budget strategies and includes lists of those strategies that were reviewed and recommended as well as ideas that were reviewed and rejected.  

The School Board will adopt the 2010-11 Preliminary Budget at the May 10 TESD Meeting and the final adoption of the 2010-11 Budget occurs at the June TESD Meeting.  I’d like to applaud whichever school board member(s) responsible for making these details available online for the public.  The information is well-organized, color-coded and easy to follow.  For planning purposes, the future dates of the Finance Committee are: March 8, April 12, May 3, and June 7.  There is a Budget Workshop scheduled for March 15.    

We understand that the school district is facing a looming deficit in the 2010-11 budget. There are miles to go between now and when the preliminary budget gets approval in May.  I encourage parents, teachers and residents to attend tomorrow’s Finance Committee.  This is an opportunity to voice your support and/or concern about programs that may be headed for the cutting block.  Discussion and exchange of information can be useful to the school board as they may critical decisions for the school district.  There will be discussion on the update of the 5-year plan which includes contracts.  I know that Dr. Waters, the district superintendent, recently renewed his current contract for 5 additional years (at his current salary).  When do the district teacher contracts expire?

T/E School Board Meeting, 2/22/10 . . . Meeting Highlights from Malvern Resident Ray Clarke

In addition to the Board of Supervisors Meeting last night, at the same time there was a T/E School Board Meeting at Conestoga HS.  As usual, my friend Ray Clarke kindly attended the School Board meeting and took notes.  Here are the notes . . . thank you Ray!

Selected highlights from the School Board meeting, chaired last night with a light hand by Jim Bruce:

1.  The extension of Dr Waters’ contract for a further 5 years.  The last item on the Agenda, but given ample discussion.  Strong support from the Board, led by Kevin Mahoney, and from community members.  There is no salary increase for the full term, and it was emphasized that there are no “side deals” and that effort was made to ensure that this is a “clean contract”  It will be available on the district web site soon.

This support seems to me well-deserved (taking the administration’s response ot the budget deficit elimination challenge as one recent example) and it says much about the Board’s commitment to transparency (a word much used last night) and to fiscal restraint, with its benchmark for future contracts of all types.  One downside to leadership longevity (Dr Waters will have been the Superintendent for 16 years in 2015) is that you might miss the fresh ideas that an outsider can bring.  That perspective can come in part from the Board, and it’s encouraging that we continue to see probing questions from Rich Brake. 

2.  Bill DeHaven reminded us of the times he climbed the fence at Teamer Field to play football, but more significantly spoke of the Citizen Soldier project that has compiled into a book the names of all T/E residents who served in all the nation’s conflicts up to World War II.  The book, available at the CHS and township libraries, is dedicated to its prime mover and my good friend and open space visionary, the late Neil McAloon.

3.  Nothing new on the budget, except that – per the Finance Committee discussion – the strategies are being regrouped to link related items, and this list will be available on the web site likely late this week.  I had hoped we might hear about substantive discussions of the TEEA offers alluded to at the Finance Committee meeting, but it seems there is nothing to report.  Kevin Mahoney emphasized that the Board is taking a 3-5 year perspective on the finances – clearly critical when one element of the near term solution is to use the fund balance, which can only go so far.  The Board has recently met with local legislators about the PSERS problem

4.  Three items related to our district going digital:  a) On line course options will be increased for 2010/11 to 25 courses not currently offered at CHS; b) acknowledgment of the role of blogs like Community Matters as well as all community input (a long list of correspondence to the Board); and c) next year CHS will submit its part of the college application materials electronically – should be a big time-saver, quality improvement and stress-reducer!

Conestoga High School Grad Offers Personal Experience of Seniority in T/E School District

The following comment was received from a Conestoga High School graduate in response to ‘Last In, First Out’ discussion on teacher seniority.  Some people would automatically assume that the more experienced teachers make the ‘better’ teachers.  I don’t know if his/her personal experience is typical . . . but it certainly offers another viewpoint. Comments?

CHS Grad, on February 22, 2010 at 6:53 AM

Seniority is also what allowed my history teachers throughout my years at Conestoga to be completely inept teachers, and the reason why I didn’t learn one thing about history during my years at high school. Not sure if I should name names here, but specifically I had a history teacher in 11th grade that literally did not do anything but show film strips, to which no one ever paid attention. The class was a joke, and the teacher didn’t care at all. He would have us grade each other’s tests, and then we would line up and enter our own grades into his grade book. Of course everyone gave themselves passing grades. Maybe he was a great teacher when he was younger, he seemed like a nice guy and everything, but he was milking the system that had absolutely no accountability.

Another teacher I had at Valley Forge would literally fall asleep in the middle of class in the middle of his sentences. I don’t think he even really graded our tests because people would just write nonsense in their fill in the blank tests and most of the time it would be graded as correct.

In my view, seniority represents a division between generations, where older workers hold onto their positions with a death-grip as they begin to slow down, milking the system for all its worth. All the while, young, motivated teachers are left out on the sidelines. THAT is the foundation of unions in this country.

After 86 Comments re $600K Offer to TE School Board, Community Matters is Starting a New Thread

The following post received 86 comments and I was just asked  to start a new post, same topic.  I guess it was becoming difficult to page through the comments.  So here you go.  We can call this one Part 2.  If you click on the title below it is hyperlinked and will take you to the original post and the 86 comments.  But all new comments should be made here and we can close out the other thread.

Question . . . Has our Local Teachers Union Made a ‘No Strings Attached’ Offer of $600K to the TE School Board?

New thread starting about the TESD budget, Teacher Union offer of $600K, Finance Meeting, program cuts, possible teacher layoffs.  Teachers, residents, administrators, union leaders . . . let’s keep the good commentary going.

TESD Finance Committee Meeting . . . reporting by Malvern Resident Ray Clarke

As we know, it is impossible to be 2 places at once . . . and last night was one of those nights.  I attended the Board of Supervisors meeting but I knew that I had coverage at the Finance Committee meeting with my friend Ray Clarke.  The Clarke family was busy last night, Ray at the Finance meeting and his wife Carol attended the Board of Supervisors meeting!  I thank Ray for providing his notes from the meeting and would encourage other readers to add their comments.

The TESD Finance Committee played to a packed house in the CHS auditorium last night.  We got through about 15 of the potential deficit-closing strategies, with the next session slated for March 8th, where the plan is to complete a pass through all of them.  My take-aways:

– There was great passion from parents and students who had benefited from, or who would be impacted by, the programs slated for change.  Hopefully, understanding the concerns will be helpful in finalizing the new program designs.  Although the majority spoke against change, particularly in the Middle School programs, there were some with experience (for example, of the proposed Advisory period) that spoke to the benefits experienced in neighboring districts.

– The Board expressed confidence in the Administration and, based on their performance, that seems to be well placed.  In particular I thought that Rich Gusick, Director of Curriculum and much else, was knowledgeable and made reasonable arguments.

– The Administration believes that the programs in the first “reference code” (those for the most part previously discussed, although you would not have thought so!) will result in the reduction of 19.3 FTEs, and that reduction could likely be met through retirements (7 known so far) and resignations rather than lay-offs – but this will depend on certifications needed and available.

– The drama came with a prepared speech from TEEA President Ciamacca.  She was very concerned that the possible increase in High School teaching periods from 5 to 6 would leave little time for the many functions performed outside the classroom.  (Note that we were progressing systematically through the strategies from #1 on, and had not reached that – #47 – yet).  She did, though, state that the TEEA wanted to be part of the solution and outlined an offer to work the last three days of 2010/11 for no pay (claimed impact $600,000) and also an early retirement offer (claimed impact $1,000,000).  She handed a letter to Board President Fadem, which I took to contain those offers (and from comments made, I was led to believe that this was the first official communication from the TEEA, and that written offers had been requested before).  Finance Chair Mahoney responded for the Board, welcoming the TEEA as a stakeholder, but sternly chastising the “grandstanding and unfair” tactic of presenting an offer for the TV audience rather than “sitting down across the table as in the past”. 

The devil is always in the details.  Is there in fact a mechanism for forgoing 3 days of pay?  For 2010/11, or for 2011/12 also?  How much would the district have to pay to save the $1 million from early retirement and thus, what’s the present value of that proposal?  Things that do need to be analyzed in a dispassionate way.  There’s clearly a communication problem, and from my perspective, since the TEEA is the only beneficiary of the situation here (compare the salary matrix for 2011/12!), they need to step up to the bigger role that I have advocated to them since last year.  If the objective is to increase compensation to a certain parity level, perhaps it might just be OK to get there in 5 years rather than 2?

– The 15 or so strategies reviewed so far have very real impacts – fewer middle school specials, fewer aides, fewer low enrollment CHS classes, reduced admin position, reduced contribution to clubs, etc. – but it seemed to me that for the most part the impacted areas are spread around, and plans are in place to mitigate the adverse effects.  (But still only the savings, not the costs, of closing the print shop are listed!).

A big issue for me is that many of the big strategies impact only next year: the $1.2 million supply/materials cost deferral, the $0.3 million food service fund transfer (but maybe make food service a profit center?), the $125,000 mothballing of the ESC (why one time?), the $0.3 million from issuing debt for capital items (next month’s meeting will start with an explanation of that (accounting wrinkle?)), and so on.  So the expenses will pop right back up, on top of the next round of contracted compensation increases, and we’ll be right back in the CHS auditorium, but with fewer options. One commentator mentioned a likely 2% Act 1 cap next year.  (And remember, the country is a whisker away from a foreclosure crisis, and school taxes are over two months’ typical mortgage payments…..).  The one time programs account for $2.6 million of the $8.3 million on the table (excluding programs not recommended).

The event seemed to me a good way to get the community engaged and to indicate the amount of thought behind the ideas (although there can always be more!).  We heard, too, about the 800 member Facebook group for students engaged in the dialog.  There could be a lot to learn from, and demonstrate to, that constituency.