Thursday, May 3, 2012

A dollar not borrowed is not a dollar and 77 cents saved.

Yesterday's Almanac captured the essence of the District mentality. Mt. Lebanon resident, Bill Matthews submitted this letter to the editor.   Intent to spend a dollar still the same (Saved in Google Docs) Bill pointed out the twisted logic that Jan Klein shared with the Almanac.  Ms. Jan estimated that for every dollar the district did not borrow, it would save about $1.77.  The implication was that by raising taxes and preserving squirreled away funds for the renovation we can avoid buckets of interest expense. But the underlying intent is still the same - to spend a dollar.  Hence the savings is only 77 cents, not 177 cents.

Now go to the headlines of the May 2, 2012 Almanac. USC needs more cuts (Saved in Google Docs) USC still needs to cut $520,000, after teachers' union concessions totaling $3.7 million over the next two  years. The new budget deficit would amount to $520,000.  USC is trying to hold their tax hike to .41 mill, not taking advantage of the higher exceptions granted by the state.  Mt. Lebanon has indicated that we will be getting a .5 mill increase.

The Board plans to continue budget discussions at the May 14 Discussion Meeting. The budget will be approved at the May 21, 2012 school board meeting. Send your emails to schoolboard@mtlsd.net.


At the bottom of both online articles:

Posting on Almanac website suspended

Beginning Tuesday, May 1, The Almanac will temporarily suspend the posting of reader comments on stories on the newspaper's website.

The move is necessary as the newspaper prepares to install a new content management system and launch a redesigned website this summer.

The comments feature will be restored at that time.

5 comments:

Richard Gideon said...

My congratulations to Mr. Matthews for his correct and lucid observation. "There's nothing so apparent as the obvious" (thanks, Casey!).

Funny thing about numbers; in the end "the math" works on them the same way, regardless of the political affiliation or philosophical proclivities of the one doing the calculating. And a contradiction cannot exist; you still can't have your cake and eat it, too.

Anonymous said...

Richard,

What Bill Matthews has revealed is similar to what he has revealed repeatedly about the wrapping of bond issues....the sophistry (my characterization)of wrapping is that the resultant millage increase required to amortize the bonds will be less than that required for serial or conventional bonds. While technically correct, what taxpayers are not told is that the cumulative interest cost, and therefore total tax payments, over the life of bonds that are basically interest-only for say 14 of the 25 years, will be significantly higher. For example, the $50 million bond issue for the elementary school renovations required $10 million in extra interest cost to retire over what would have been required for serial bonds. To me, that constitutes deception.

Anonymous said...

Richard...my name should have appeared on the 5:37 PM comment. Sorry.

Bill Lewis

Bill Matthews said...

Another thing about using capital fund savings vs issuing debt...

The District went to market, issuing millions in bonds in October 2009.

One of the justifications was to stop using our savings for the project and reimburse the capital fund for dollars spent to date on the renovation, with bond proceeds.

Merrily trotting off to market, we got the lowest rate in 40 years: 3.94% (don't know this characterization is true, but it makes the point to explain the smiles on our School Board's faces).

Had we waited exactly 2 years until we almost had had a project - we would have sold the bonds at the lowest rates in 42 years: 3.84%.

10 basis points on a mega-million dollar issue is real money.

We also could have delayed a substantial tax increase, leaving more money in our pockets for our families.

But the smarter than the rest of us bunch had to go to market.

Bottom line - Had we done then what we say we should do now -- we would would have been better off then -- and now, 77 cents and all!

Lebo Citizens said...

Bill, I have had more problems with the title of this post. With the double negatives, I think it is saying something different every time I look at it. Leave it up to Ms. Jan to make something more confusing than it needs to be!
Elaine