Tuesday, October 4, 2011

"Splain it to me, Lucy."

More and more people are asking the same question that David Huston has presented to Jan Klein, so I thought I should post it here.   Maybe someone can come forward and explain Jan Klein's math.  I have been told that it has to do with gaming revenue, but we can't figure out how she accounts for it.  As Ricky Ricardo used to say, "Splain it to me, Lucy."

Budget forecast

From: wq3t@hotmail.com
To: jklein@mtlsd.net
CC: tsteinhauer@mtlsd.net
Subject: RE: forecast millage question
Date: Mon, 26 Sep 2011 02:43:50 +0000


Ms. Klein,
  I showed the formulas on the sheet and pointed to the answers. I have attached the same sheet to this message for your review.

Here they are again:
Audited 2009-2010
Real Estate Tax 48,362,461 divided by Assessed Valuation 2,154,641,502 equals 2.24% or 22.4 mills.
Millage rate 24.11 minus previous answer 22.4 mills equals 1.71 mills.
How do you account for the difference of 1.71 mills?

Budgeted 2010-2011
Real Estate Tax 53,570,408 divided by Assessed Valuation 2,170,447,511 equals 2.47% or 24.7 mills.
Millage rate 26.63 minus previous answer 24.7 mills equals 1.93 mills.
How do you account for the difference of 1.93 mills?

Final Budget 2011-2012
Real Estate Tax 53,806,797 divided by Assessed Valuation 2,173,384,611 equals 2.48% or 24.8 mills.
Millage rate 26.63 minus previous answer 24.8 mills equals 1.83 mills.
How do you account for the difference of 1.83 mills?
Let me know if you have any questions.
David Huston

From: JKlein@mtlsd.net
To: wq3t@hotmail.com
CC: TSteinhauer@mtlsd.net
Subject: FW: forecast millage question
Date: Sun, 25 Sep 2011 15:28:19 +0000

Mr. Huston,

I am not sure what your calculations are, so I can’t respond accurately to your question.

Respectfully,

Jan Klein

Jan Klein
Director of Business
Mt. Lebanon School District
7 Horsman Drive
Pittsburgh, PA  15228
412-344-2098

I prefer the errors of enthusiasm to the indifference of wisdom - Anatole France

From: David Huston [mailto:wq3t@hotmail.com]
Sent: Friday, September 23, 2011 1:58 PM
To: Jan Klein
Subject: forecast millage question

Ms. Klein,
  See attached pdf with question for you.
David Huston

4 comments:

John Ewing said...

The Gaming revenues are collected from the State and distributed to each house equally. Since it is an in and out total amount it should not change the millage rate.

A year ago Mr. Fraasch caught Jan Klein marking-uo the
salary account by about $1,000,000. Now it appears the millage estimate is marked-up by 1.7 mills or more and Janice Klein won't answer the question posed by Mr. Houston. 1.7 mills equals about $3,400,000 to the residents in extra taxes.

At a recent meeting Mrs. Klein said the Capital Projects Fund could go up $2,000,000 in the next budget year. That raises the questions 1) has Jan been caught overcharging residents again by $2,000,000 for the Capital Projects Fund, and 2) why is the extra $1,400,000 being overcharged charged to residents?

Five other questions are raised: 3) Is this proper conduct for the Finance Officer? 4) has the Auditor done a proper job? 5) Why does the Superintendent put up with this conduct? 6) Don't we have one honest Board Member to raise this question for a Policy change? 7) Why hasn't Jan answered this question between September 23 and October 4

Bill Lewis said...

This is a bit complicated to fully explain as I understand it, but try to follow me nontheless with sort of a personalized example :

Take a look at your own School District 2011 real estate tax bill for the 2011-2012 school year. You must have it in your 2011 tax files.

The "original face tax" indicated figure is derived from the stated millage rate of 0.02663, or 26.63 mills X the "original assessment" value of your home in thousands of $ (e.g. $100,000 assessed valuation = $100. Then, 26.63 X $100 = $2,663). The resulting calculated tax figure for your particular property is referred to as the "original face tax".

Then note "tax value of homestead exclusion" amount of $185.24, assuming your property is homesteaded. This $185.24 is the amount that each Lebo homesteaded property owner received in 2011 as a credit to school taxes from allocated gaming funds under the PA Taxpayer Relief Act. Subtract this $185.24 from your "original face tax" figure, and the result becomes the "face tax after exclusion"...the tax figure that you were charged above for the "face period" of 9/30/2011. This means that Lebo taxpayers will be paying a "face tax after exclusion" of a cumulative District total of $1.698 million less than a gross billing based on 26.63 mills would have provided, or a net of $53,807,797 in the budget that you indicate, which equates to only 24.7 mills.

The Relief Act provides that the Districts will receive from the State a payment in the total amount of the credit given homesteaded property owners to make up the tax revenue loss difference....and this figure of $1.698 million is the last Revenue line in the budget shown as "Gaming Fund Allocation".

The *problem* with the budget information detail seems to be that the "Millage Rate" indicated at the bottom portion of the budget under "FINANCIAL SUMMARY" shows the 26.63 mill figure for 2011-2012, which I will refer to as the millage rate had not the Relief Act been in effect.

Does this tend to explain the situation or just further complicate it ?

Bill Lewis said...

A couple of other factors come into play in establihing a required millage rate, which is the final number and determination in a school budget.

One involves the impact of the allowable 2% discount for early payment of taxes prior to the "face period" of 9/30 each year. Apparently the majority of taxes collected reflect the taking of this discount.

A second factor involves the fact that every year a % of taxes due are not paid in the year due, and properties become delinquent and liened. The taxes are eventually paid or recovered in property sales...sometimes only years later.

I seem to recall that Jan Klein mentioned in a budget meeting some time ago (prior to the Relief Act) that the average real estate tax collectibles are something like only 96%-97% of the gross billings each year because of the combined effect of the two factors above.

What caught everyone by surprise not too long ago was the unbudgeted receipt of $2.3 million in back or delinquent school taxes from the bankruptcy sales proceeds of the Covenant on Bower Hill Rd. This all flowed down to surplus in the General Fund at year end and ended up being allocated to the Capital Projects Fund, OPEB and/or PSERS funds by the SB. In reality, the rest of us had already paid those taxes via increased millage due to the delinquency; and, the $2.3 million *windfall* should have been reurned to us in the form of reduced millage (about 1.1 mill equilivant) for one year !

Anonymous said...

Why is it, if the district has all this cash floating around for use on the HS project that as far back as the Walton board's they've been asking department heads to find 5% reductions in their budgets???
This occurs year after year to the point where they've formed a committee to find new sources of revenue!
Something just doesn't jibe, especially when they dole out substantial payraises.
Dick Saunders