In attendance: Committee Chair Sean Carpenter and members Ed Coyle, Karen Miller and Maureen Snook. Also in attendance were Board President Vince Murphy, Linda Raileanu, and Sue Tiernan. Heidi Adsett did not attend (nor did she attend the prior week's Education and Pupil Services committee meetings of which she is a member).
Well, I thought I was attending the March Property and Finance Meeting, but apparently I was attending a political campaign kick-off for board members Sean Carpenter, Ed Coyle, and Maria Pimley who are seeking reelection. More on that in a moment....
It was a large agenda, but the majority of the items were housekeeping related and did not require a lot of discussion. They fell into the categories of partial roof replacements for Glen Acres Elementary and Stetson Middle schools, ongoing renovation work at Penn Wood and East Bradford, and selection of an architect for the upcoming Fern Hill renovations. All costs came in less than projected and all passed 4-0. We also learned that due to this work Stetson, Westtown-Thornbury, Penn Wood, and East Bradford will be closed over the summer.
The PlanCon process which is the means by which public school building projects are reviewed, approved, and subsidized by the state is slated to remain in moratorium for new applications for yet another year. As a result, it will be at least another year before the district can submit reimbursements for the Westtown-Thornbury, Penn Wood, and East Bradford renovations. We don't qualify for a large subsidy due to the "wealth" of our district. Furthermore, the amount allocated for reimbursement of those projects already in the State’s pipeline is insufficient, so it will not be possible to subsidize all current projects.
An updated Budget Forecast Model was presented, although not much time was spent discussing it. There were no changes to the 12/13 projection and negligible changes to the 13/14 forecast. There are a few inconsistencies in the model presentation, however the P&F committee is unwilling to give the business manager the direction to make those changes—explanations were that this is how the model works and this is how the Board wants to see the data. I have a background in financial management so have significant experience with the presentation of numbers to various audiences. If you want to see a LOT of detail on the WCASD financials, this model will give you that. However, if you want to give your average taxpayer a high level, easily understandable look at the financial health of the district without making their eyes glaze over, I'm not sure this is the best approach. This model is too detailed for high level dialogue that a board meeting is meant to solicit, and additionally could use some reengineering to ensure consistency and thus confidence.
And then the Campaign Kick-Off commenced during the "Approval of Board Budget Goals" agenda item. Sean Carpenter stated he would like to see the board pass a 0% tax increase this year, and he and the other board members then explained their support of this proposal (they were all very well prepared so clearly this had been discussed in advance). These included:
- positive economic indicators (higher employment, more home sales) driving increases to Earned Income Tax and Transfer Tax; I am not certain whether these revenue increases are currently reflected in the forecast, and the current projected increases in transfer and earned income taxes do not fully fund our expense growth with or without the PSERs expense
- continual tax increases may result in more home reassessments and the result could be a decrease in tax revenues; to this Mr. Carpenter asked to see appeals data at next month's meeting
- businesses will be hard hit when healthcare reform takes effect in 2014 and as a result there will be less discretionary spending
- Dr. Scanlon just happened to have some achievement data readily available for the 2009-2012 time period which just happens to be the period the board members up for re-election have been on the board; this data showed increases in state rankings, AP Honor Role recognition, and SAT scores above the national and state averages
After the speeches, Dr. Scanlon was asked for his opinion; he was clearly weighing his words very carefully. He confirmed that yes we can create a balanced budget this year with no tax increase, but we will not be able to afford to do this for more than one year. A Daily Local article stated the following: "At the same time Scanlon pointed to the ongoing academic successes in the district and cautioned that may not be possible in future years without tax increases. "I can almost guarantee I will be recommending a tax increase next year in order to maintain those level of rigor and academic standards,” Scanlon said" (http://www.dailylocal.com/article/20130319/NEWS01/130319545/w-chester-school-district-mulls-no-tax-increase-budget#full_story). Dr. Scanlon also reminded the board of the need to bring on some middle school math specialists to address the requirements of the Keystones and Common Core, as well as the desire to maintain class sizes. Mr. Carpenter acknowledged his points, but somehow I doubt we'll be hearing much about the Superintendent's warning that this cannot be sustained during the campaign, only the fact that this group secured it (as they also coincidentally did 2 years ago when 6 board seats were up for election, yet did not do last year when they raised taxes 1.7% and it was not an election year).
Many things impacting our long term financial health were not discussed:
- with no property tax increase we will need to take $4.3M out of the district's "bank account" to balance our budget
- while our fund balance is currently healthy and that $4.3M is only about 20% of the portion we could use for this purpose, it does not take the next several years into account when the PSERS expense is projected to grow exponentially and our shortfall forecast to grow from $4.3M in 13/14 to a combined total of approximately $41M for the 3 years after that; thus, using this amount of fund balance without at least trying to make any cuts or find any alternative revenue sources this year is very short sited, akin to kicking the financial problems down the road as has been done with the unfunded PSERS balance; Act 1 limits property tax increase so we could find ourselves in a position where we cannot raise enough money to address our shortfalls and thus will be forced into cuts that might have been avoided with a more forward thinking approach to budgeting and transparent dialogue with taxpayers
- we have no contract in place with the teachers; while salary increases and healthcare savings have been factored in for the other employees based upon their recently settled contracts, no expense changes have been factored in for teachers which could be considered risky
- We have recently lost 3 top level administrators and cannot be sure there won't be additional costs required to cut off the exodus of critical management skills
- the state's budget will not be finalized until the end of June, so we will be solidifying our budget based upon an aggressive approach by the Governor that must be vetted by the state legislature; as discussed in last month's blog, this could result in a negative shift in our budget of as much as $1M
- it was recently reported that the sale of the state liquor licenses will now go into a special fund instead of being dedicated to education initiatives, resulting in an increased burden to the local taxpayer
- there was no discussion of the impact of PSERs reform on the budget, nor consideration of the significant post 13-14 projected shortfalls