School superintendent Dr. Tim Steinhauer explained that given a .55 mill tax increase, he believed the district could find the necessary cost savings without significantly impacting student programming. Staff attrition, adjustments to data warehousing and reductions in travel expenses for school board, teachers and administrators would all help close the budget gap.Pay freezes for Tim Steinhauer and Jan Klein would also help close the budget gap, as their USC counterparts did last year. But nooooo, that will never happen. The board will continue to give them increases. Instead, the board continually bad mouths Governor Corbett, never taking responsibility for the mess we're in. I rolled my eyes when Bill Cooper said that .55 millage increase is like no increase at all. Huh? It would put us over 28 mills, Bill. An increase is still an increase.
Dale Ostergaard and Scott Goldman would like to see a zero millage increase.
The preliminary, a.k.a fake, budget presentation made by Jan Klein and Tim Steinhauer is available here.
67 comments:
I am copying and pasting this comment from another thread, since it pertains to the school board meeting from Monday evening. My comment is that the school district may be saving $20,000, but they are losing their $23,000 which was reduced from $30,000 from YSA.
Elaine
Anonymous said...
Anyone watch the SB budget discussion last night?
The board discussed the possibility of hiring a private firm to take care of it's field maintenance and Dr. Steinhauer said the district could possibly save $20,000 compared to what they paid to the municipality.
That's good right? $20,000 is a nice savings.
BUT... a $20,000 savings for the district turns into a $65,000 loss of revenue for the municipality since they won't be getting paid for doing the maintenance any more.
This might be bad or it might be good, it's to early to tell. Perhaps the municipality was losing money on the field maintenance deal and will be happy to get it off their back. But, maybe the $65,000 field maintenance helped fund public works and now there's a hole in the budget. It looks to me like the two liasions have a lot to work out before the board votes next week.
Several solutions come to mind.
One: maybe the district is into something. If they can save $20,000 hiring a private firm, maybe the municipality can too. Plus without all the work they can downsize public works.
Two: to make up for the lost revenue the municipality could raise fees by charging the district more for the use of the rink and middle field.
Three: both could raise taxes and do things as they've always done.
This could get interesting. Especially since in all likelihood the Sports Advisory Board is going to recommend a million turfing project on somebody's field.
March 13, 2013 at 11:46 AM
The municipality will make up any difference by charging fees for field use. At least that is the direction I understand they have taken.
Its a little tough to hold to a zero millage increase when you voted to increase your largest line item (payroll and pension obligations) by 4.5%!
Funny that they also discussed adding another staff person with all the healthcare and pension cost to run the capital fund raising campaign. A position that Posti suggested may be a permanent position even after the capital campaign ends.
Talk about bloat. They should be talking about eliminating a PIO position and merge the school and MTL magazine ala USC.
Don't you wonder how the tax increase will play for Remely's campaign? As we used to say, "That'll go over like a lead balloon!"
I was outraged when I read
this article on the front page of today's Almanac.
Is there no stopping this speeding train wreck? Is there no one on the board who realizes that increasing taxes at this time is a grievous error, especially on top of last year's assessment increases?
Contrary to what some school directors think, Mt. Lebanon is not the envy of other districts; in fact, many are laughing or gloating about our fiscal irresponsibility.
2:24 another municipal tax hike disquised as a fee.
Who will pay the fees for field use-the Sports Consortiun Tooth Fairy?
I guess there is some consolation that those households without kids involved in recreational sports shouldn't see an increase. Though the households that do may want to keep the field fees in mind when there is talk of turfing a field for a round a $1,000,000.
Lets see YSA claimed about 2,500 kids involved in youth sports. That $1M turf will add about $400 over the course of each kid's invovlement in a youth sports career on top of the fees they already pay.
No where do I see the information on to two important issues:
1) How are we doing this school year - will there be a surplus?
2) When will the other shoe drop - what size will it be - and what is the budget impact? (the other shoe being the 2nd bond issue.)
Interesting article. I thought the letter to the editor was a more critical issue for the community.
http://www.thealmanac.net/article/20130313/OPINION02/130319965/-1/opinion
A thought on 3:22's critical issue.
The Almanac Opinion is interesting and may apply to this topic.
Could it be with all the control we do early on in our kids lives that we have left them incapable of dealing with life problems.
We arrange play dates, their sport activities, everything all under the watchful eyes of doting parents. We give them the best, we make them think they are on their way to be the next star Big Ben, Crosby or Tiger.
Then when they arrive at middle school or beyond where we let them venture away from the nest they are incapable of dealing with social situations.
Could this be where drug and alcohol problems start. Why we have shooting rampages?
I don't claim that the above is the cause or the solution. Just wondering if anyone else might be thinking the same thing. Maybe we don't need more adult supervised sports or adults telling the kids who to like or sit with at lunch.
Maybe they need to become their own person starting in grade school?
Maybe we need to quit telling them "you're better, you're special... because you live in the bubble".
Just a thought.
Bill Matthews is absolutely right!
They should be basing the 2013-2014 budget on 2012-2013 actuals YTD (6 months of the 9 month school year) and an estimate for the last 3 months and year-end, including fund balances. Excess general fund balances can be applied to some 2013-2014 expenditures to reduce the necessity of 2013-2014 millage increases. What are the expected 2012-2013 year-end results ? The budget year to budget year approach is baloney.
Will the 2nd. HS bond issue occur during the 2013-2014 school year or not ? If so, what are the details ? If not 2013-2014, will it be 2014-2015 when interest rates might be increasing once again ? How will the second bond issue affect millage ? And no, we don't want a repeat of the 2009 bond issuance fiasco where we borrowed $60 million at premium rates for up to 2 years before we actually needed it, during a period where interest rates actually declined further.
Beyond Bill's questions, here are a few more that have not been addressed or revealed in the 14 page 2013-2014 budget power point :
1) what is the assumption on teacher retirements and replacements ? No replacement amounts to over $80,000 /yr./teacher savings and replacement amounts to at least $40,000/yr./teacher replaced.
We are left to conclude from the power point that the District is thus far assuming no retirements even though personnel reports are indicating retirement notifications ;
2)what "final" property assessment value is the District assuming for Mt. Lebanon in the budget ? Is it the value the County released in the Fall of 2012, or the current value as of end-February ? Is the District assuming that outstanding appeals by property owners will be settled favoring property owners, or is it otherwise ? Whatever it is will become the basis for a revenue-neutral millage adjustment (before they vote on a second ordinance increasing the revenue neutral millage by the allowable Index Limit of 1.7%, or about 0.46 +/- mills) ;
3) will a teachers arbitration settlement of about $900,000 +/- be included as a 2013-2014 expenditure at the last minute if such an expected settlement is announced in the next 60 days ? Will this settlement receive the PDE "rubber stamp" approval as an allowable "exception", thereby sidestepping an otherwise electoral referendum requirement ?
Stay closely tuned taxpayers. We will not be happy with the results, whatever they are and however they evolve.
Bill Lewis
What if the Municipality does not respond to the RFP ? A private sector landscaping company can walk from a contract if they receive a lot of interference from the client or suffer unresolved disputes, while the Municipality would not.
The Muni's private landscaper walked a couple of years ago, for other reasons, and left us in the lurch.
The Municipal fee for field maintenance under the former Agreement was unchanged from 1998 through 2011 at $90,000/year. Anyone think Steinhauer's statement that someone has or will bid $20,000 under that, or $70,000, is truthful, or is it a "red Herring" ? Of course, the District may have eliminated some of the work required, in which case he's comparing apples with oranges again. He's such a smooth talker.
Notice to in the presentation Bill that they make a compaison on the number of staff.
For instance they show a reduction of administrators from 30 in 2009 to 25 in 2012.
They conveniently don't show the '09 administrative payroll vs the '12 payroll.
I'll bet the increase in payroll and pension obligation for the administrator far outpaces inflation or cost-of-living.
7:38 Thanks for your keen observation. Historically, District compensation for several employment categories has increased at about twice (2X) the rate of historical inflation measured by the CPI-U. The teachers 4.15% contractual salary increase is about the norm historically since about 1994.
The 2009 to 2012 kind of factual data you refer to is available in CAFR's accessible on the District website. It is all very alarming.
Bill Lewis
Here is the link to the CAFRs.
http://www.mtlsd.org/district/finance.asp
Elaine
Here's another one.
In every discussion on the HS project updates or change orders, one board member or the other brings up "how much of the contingency fund have we used to date?" I think this week it was 27%.
Then they ask "how far along on the project are we?" usually a percent or two more than the contingency fund rate.
Everybody smiles and pats themself thinking they're doing a great job keeping the project on budget.
Except they conveniently forget they sold the public that this project would like come in under $100 million and wouldn't result in any cuts to curriculum or programs or cause tax hikes.
So where are we at today! Cuts, tax hikes and a desperate move to find $6 million in gifts.
They could also appeal the assessments of some of the hundreds of houses that are underassessed by $50,000 or more. So much of the budget is tied up in construction that any real cuts will to be painful for the people who are directly affected. But my tax bill is also painful, so I say cut away and appeal assesments so that everyone pays their fair share of this garbage. Spread the hurt. It's the right thing to do.
They won't do that.
I sympathize with you, 11:21 PM, but righting this sinking ship will also involve replacing some school directors with residents who have common sense and an awareness of reality.
The community can't sustain this constant spending.
Elaine you wrote "Bill Cooper said that .55 millage increase is like no increase at all."
A college English professor really, really said that? If he indeed believes that a .55 mill increase is like no increase at all I hope he'll give us a detailed, specific explanation as to why he doesn't join Goldman and Ostergard and vote for a zero mill increase budget.
Sorry Mr. Cooper, a college professor should well understand that only a zero increase is like "no increase."
I just heard Cooper say again, that looking at the rate of inflation and our historical tax increases, it is still under the inflation rate. It is like no increase. [Mass eye rolling]
Elaine
Yes, so in Bill's mind we should increase taxes to the CPI every year.
He assumes, of course, the following:
1. Wage rates for all Mt. Lebanon residents has kept up with CPI
2. Those wage rate increases were distributed equally amongst all wage earners
3. Mt. Lebanon wage increases in the recent past have diverged from national trends where wage rates for the upper class have exceeded inflation while wage rates for all other classes has stagnated at best and declined in most cases. (thanks to Federal Reserve Policies and current US tax policies).
Maybe Mr. Cooper has access to data that the rest of the world does not. Or perhaps he is clairvoyant.
Or perhaps Mr. Cooper's plan was to stick it to working families and the middle class all along.
On page 12, which apparently our illustrious college professor didn't read, of Steinhauer's and Klein's budget presentation the difference between a zero mill increase and a .55 mill increase is--
"If no millage increase - Budget is approximately $1.8 million out of balance"
"If an increase [notice the word increase Mr. Copper] in taxes to the historical average millage increase of .55 mills, budget is $870,000 out if balance."
These aren't the calculations of some crazy person, Mr. Copper, these projections are by the people you allow to run our school district.
So once again, tell your constituents how a .55 mill increase is like a zero mill increase! The difference is approximately $1,000,000 in an additional tax burden to your constituents, Mr. Cooper!
That's nothing like zero.
The millage history data presented on page 8 of the 14 page budget power point indicates that the average annual millage increase over the last 8 years has been 0.55 mills per year, which in turn represents per the document an average annual percentage increase of 2.3% per year.
The question is, is 2.3% per year a higher, equal to or a lower average percentage rate over the same time period than "inflation" measured and reported by the U. S. Bureau of Labor Statistics (BLS) ? Suggest that the BLS category of CPI-U be the yardstick. You can Google "inflation rate" to obtain the BLS data bank. You, someone out there, take the time, get the facts, be the judge and tell us what you find.
How many of us have had salary or income increases equal to or greater than the rate of inflation over the past 8 years ? That's the real underlying issue here.
Bill Matthews prepared and presented graphs a couple of years ago to District and Municipal bodies showing the growth of School District real estate tax revenue compared to that from earned income taxes (EIT) over a 10 year or so period. Would it surprise anyone that the rate of growth in real estate tax revenues was twice that of EIT revenues ? The data clearly indicates that local income growth cannot cover or pay for the continuing growth in school taxes indefinitely. He told taxing bodies that this trend was unsustainable, that it was a serious threat to our survival as a viable and desirable community. Anybody listening ?
Bill Lewis
Let us not forget that Mr. Cooper is a retired school teacher and consultant to teachers colleges, apparently a double-dipper at the public trough.
Regarding assessment appeals, the Municipality has set aside $25,000 in the 2013 budget to appeal residential properties that they determine are underassessed based on past 2 years sales and resulting common level ratio measurements.
Commissioners were advised Tuesday that 400 or so Mt. Lebanon single family residential properties (apartment buildings, condo's, coop's & commercial properties have been excluded) meet criteria for appeal by the Municipality. Of that list of 400 residential properties, the $25,000 budget will allow for appeals of only 125 highest on the list.
If this goes forward as intended and the Municipality "won" on all appeals, at say an average of a $25,000 increase in valuation per property, or $3.125 million, it would not serve to even begin to influence the school budget gap.
Bill Lewis
For those ready to go on the attack and chide us for our criticism of poor old Mr. Cooper.Let's approach this from another angle.
When you pay your school district taxes deduct .55 mills from your payment. When the penalty and interest notice arrives from the tax office telling you that you were short in your payment... tell 'en to kiss off!
A school director said .55 mills was like zero.... so you deducted nothing.
The amazing thing is when Cooper made his outlandish claim no one on the board saw fit to correct him. One of which wants us to send him to Harrisburg to participate in running even bigger budgets! Why does he think he deserves our vote?
There was silence after Bill Cooper made that statement.
Timmy said that we need to "Do better with less." Of course, that doesn't apply to him, Jan, or the board. He wants custodians, teachers, and secretaries to take the hit. Jan said that the district has been frugal.
Do better with less. Ha!
Elaine
Bill, sure enough... But a win of $3,125,000 in increased assessed value @ 28 mills would mean $87,500 in revenue to the SD.
Carried over year after year for twenty years that annual increase in revenue would pay for the rifle range and more.
I would suspect that the highest under assessed properties would yield more than $25,000. There is one that just sold for more than $400,000 of it's assessed value.
0.55 mills is over $1,000,000 of NEW taxes. Cooper must be a victim of the Mount Lebanon math program.
Remember what the USC teachers agreed to a year ago?
http://upperstclair.patch.com/articles/upper-st-clair-teachers-agree-to-new-contract The agreement will have saved the Upper St. Clair School District more than $3.7 million in its first two years.
USC's commissioners reduced their taxes twice this year. The teachers agreed to a new contract. Their finance director and super super agreed to price freezes.
Don't give me that crap that our school board made some difficult cuts!!! They gave Klein a 6.9% increase. They gave Timmy a 4% increase. Jan's own numbers show that 4.3% of the budget is for administration. 57.8% is for teachers. Teachers received a 4.15% increase.
On top of that, we will have the second bond and an annual $900,000 grievance bill.
Come on, school board. Stop buying into the crap that Jan tells you how you have been frugal.
Elaine
Can someone here explain to me - in all seriousness - how a taxing body can raise millage rates in a property re-assessment year? Aren't there laws against "windfalls" put in place to supposedly protect againt this very thing? Now that property assessments have gone UP .. aren't millage rates of each taxing body - school, municipality and county - supposed to come DOWN - so that taxes do NOT significantly increase for the homeowner whose property has just been re-assessed at a higher value? This bill of goods was sold to everybody in Allegheny County, "don't WORRY about the re-assessment, millage rates will be decreased to take the new values into account, your tax bill will barely be affected, etc., etc, etc." Again, in all seriousness, what am I not understanding here? How can the school district get away with RAISING the millage rate in 2013 - just as the new assessment values take effect?
3:22 if you had paid attention to James Fraasch audit & finance committee meetings you would have your answer.
He asked Jan if the high school project would cause problems and she replied something like "there are exemptions and exclusions that will allow us to exceed the Act 1 restrictions."
You see we could deal with the budget as the #1 district has done (see Elaine's post above but the board won't have any of that.
Dr. Steinhauer and Jan could easily show the way to "doing more with less", but talk is cheap.
The other thing the district could do to balance the budget is to go after underassessed properties.
But apparently once again Dr. S doesn't want to do with less by sending the $150/appeal watchdogs to insure that homeowners don't get away with winning their assessment appeals.
Frugal, she says frugal!
How does increasing your expenditures on average
$2 million/year qualify as frugal?
Want a real laugh.
As you listen to Remely and Birks blame Harrisburg for increased PSERS, pay attention to Jan tell everyone that the Fund Raisers position will have pension and healthcare benefits just like any other full time employee.
Guess one more staff will be Harrisburg's fault too.
Actual (audited) SD expenditures were a tad over $73 million in 2008.
Today, what are we looking at $84 million?
Man that frugal.
How long will it take the Fund Raiser to bring in enough of the alleged $6 million potential out there to make up for the budget revenue shortfall ?
This was going to be part of my next post, but it makes more sense to me to mention it now.
The School Board discussed hiring a campaign manager. According to Dr. Steinhauer, the cost will be 14% + $21,000 cap in expenses. This will be drawn from the $6 million campaign. If no money is raised, the cost to the District is $184,000 over two years. The campaign manager salary would be $120,000 for two years plus benefits. An administrative assistant will be hired. $200,000 from the undesignated funds will be allocated as seed money. These two positions will be at-will District employees. PK will have a 90 day "out" in the contract.
This will be an action item next week.
Elaine
The original target for donations was $30 million.
It took them almost 6 months to figure out that mark was impossible to reach, so my guess ACTUALLY bringing in $6 million is going to take quite awhile.
But hey what do I know, I'm one of those dummies that warned $30 million was a pipe dream.
The $43,000 initially paid to PK to evaluate the potential for funding raising. Isn't that supposed to apply to PK's cut of the $6 million?
I think if they reach the $6 million goal the district will only net $5.1 million.
If the District has trouble getting donors to pay up, it will offer them a 10 year tax abatement.
It's a win-win proposition.
How many property owners, both residential and commercial, are delinquent in their township and school taxes?
Before the rest of us are asked to pay more, school and municipal officials should be willing to spend some time making sure the delinquents pay their share.
After all, that's only fair.
Good luck with that. They wouldn't even disclose who the parking tickets scofflaws were. They did though give a number of how many delinquents there were.
So how many delinquents are there? And how much do they owe?
Paying taxpayers should be up in arms! Every effort should be made to collect ALL taxes owed before any millage increases are enacted.
The school district prepares an annual report every July identifying Mt. Lebanon liened & delinquent property owners and amounts of back taxes owed, including municipal real estate taxes, residential and nonresidential. Full disclosure.
It's public information. Go for it !
Bill Lewis
I am in a meeting right now, but I believe I published that list here, Bill.
FYI, one of the lebomag bloggers is a delinquent property owner.
Elaine
http://lebocitizens.blogspot.com/2012/07/with-mixed-emotions.html
Elaine
Instead of paying taxes, the delinquent property owners will donate to P-K. That way, they won't have to pay interest, penalties and legal fees.
Thank you, Elaine.
If I'm reading this right, the amount owed to the school district from 2011 is almost $900,000. So whatever is owed to the municipality is on top of that, plus there's unpaid stuff for both entities from 2012 now, too.
I think we should get these accounts paid up before we dump more taxes on those who pay. Yes, I understand some people may have hardships; that's what payment plans are for.
Raising taxes should not be an easy process, especially for frill projects. Can you imagine what our millage would be if the voters had to approve it?
Yes Elaine, you certainly did post the then latest listing (2011) in July, 2012. And I stand corrected - the list does not include liened, but only delinquent properties, and not municipal tax delinquencies. Past due taxes become delinquent after a year, and then become liened in a formal court filing after that.
The most egregious finagling example of liened tax collection by the District occured in the case of the former Covenant senior citizens facility on Bower Hill Road a couple of years ago. Keep this in mind, those of you who are concerned about taxes as well as those who believe that the District is your friend and can do no wrong.
When the Covenant entered bankruptcy, it had lost a Muni/District appeal of its exempt tax status....liened taxes due the District alone amounted to $2,300,000 ! When Concordia purchased the Covenant assets out of bankruptcy, $2,300,000 of the proceeds went immediately to the District. Great, the delinquent taxes were recovered.
What we were not told is that because the Covenant had not paid those taxes when they were due, the school budget had already budgeted for those taxes and someone had to fork up the money -- guess who ? Why, the rest of us poor fools !
What happened when the $2,300,000 came into the District coffers - was the millage rate adjusted downward to compensate, or did we receive tax refunds ? Of course not ! The $2,000,000 was booked not as real estate tax revenue but as unbudgeted "Other" revenue, which in turn flowed immediately down to an unrestricted surplus general fund balance, which was then allocated (spent) the next year for a one-time expense that would not have occurred or would have required a tax increase. The millage was not adjusted to reflect receipt of the liened taxes. It was baked in forever. Remember that the very last number in a District budget is real estate millage - it is the final balancing step in school budgeting.
The same procedural process occurs for all District liened taxes.
So the point here, for those who believe that collection of delinquent or liened taxes will reduce the "need" for millage increases and/or the SB is your fiscally, taxpayer responsible friend who can do no wrong, take note of how the system really works, and your SB goes merrily along for the ride with its no questions asked, rubber stamps of blanket approvals.
Bill Lewis
Thank you, Bill, for the very informative post.
Obviously, it's time for a change!
Mr. Lewis, thank you for that great post and PLEASE consider running for the school board!
I can think of some other residents who would make great running mates, too. WOW!
When Jan Klein was reminding us of how frugal the school board has been, she told us that the budget is never fully spent. It gets dumped into undesignated funds. She never talked about refunds. It is part of the shell game which is "typical for this time of year."
Elaine
Here's another example of how things work in the school district.
When Celli was asked about the change order in the amount of $10,544 for water feed lines to the boiler and chiller, he out and out admitted that the lines were omitted from the drawing sinister for bids. The contractors couldn't include them in their bids because they weren't specified.
How did the board respond to this oversight. A shrug, an oh well.
For those of us in private industry how would your boss react to a $10,000 oversight? How would you react to a supplier that told you your bill was going to be $10,000 because they overlooked something?
This is the mentality at work here on everything. Oh well!
We can always raise taxes. In 4 or five years we'll see wheteher student math grades get better or worse. We dip into residents wallets and maybe, just maybe if we take too much out, we might give some money back. Or we'll keep it and use it for something else.
WHAT ?! Mr. Lewis, that would more than cover the budget shortfall this year with no millage increase ! Is it showing up any where in the budget ?
Yop have to remember that the elected officials take an oath to protect municipal and resident assets. Is the school board remiss in this aspect?
7:57 PM That surplus situation occurred a couple of years ago...the money is either already entirely spent or a portion of it may be included in what is classified as a Reserved, Designated category in the General Fund balance in order to maintain a particular dollar level (i.e. 6%-8% of General Fund expenditures) for bond rating purposes, or designated to what is called a "carry-over" expenditure budgeted in a prior year.
The key question to ask here, as one previous comment suggested, is will there be a General Fund balance surplus for the 2012-2013 year that will classifiable as Unrestricted, Undesignated, and if so, how much might it be and can it be used to help fill the 2013-2014 budget gap ?
And here is the official answer you will receive : We will not be able to determine if such a surplus occurs at year end until we receive the results of the official independent audit of 2012-2013 which will not be approved and released until November of this year. We must have a SB approved final 2013-2014 budget by May 31, 2013. We cannot amend a final budget later to incorporate changes in revenues or expenditures, and tax bills would have already been issued. Etc., etc.
Nice way to run a business, huh ?
Bill Lewis
How does the muni do it, Bill? Does the district have the power to do it, just chooses not to?
I loved how Jan said that they would start a separate account for the campaign manager and it wouldn't be included in the general budget.
Figures don't lie, but liars figure.
Elaine
The Municipality is on a calendar year basis and their audit is completed and presented by April. But the Municipality can open and amend the budget at any time and sometimes do, Elaine.
The PA Public School Code prevents Districts from opening budgets once final and approved, and you can thank our succession of state legislatures for that. It makes no sense.
Bill Lewis
Another aspect of tardy real estate tax payments in District budgeting that is not well understood is how the District budgets for the likelihood. A previous comment described what they do with delinquent and liened tax payments when they ultimately arrive. This will cover how they plan for it in the first place. See if you think there is a "double whammy" here, and we taxpayers are being taken.
As I mentioned in a previous comment posting above, the very last step in deriving a balanced budget is the determination of the real estate tax millage necessary to balance the budget. Sounds relatively simple, but the devil here is in the details, and here is how the devil plays the game - it's a bit detailed, may be even "tedious" for some, but bear with me, for some of us may be suffering from TERC Investigations math :
Total budget expenditures less all revenues except real estate taxes equals the number of dollars real estate taxes must cover to balance the budget. That dollar figure divided by the number of dollars one mill of real estate taxes will generate (a separate calculation not covered here) equals the millage rate required to balance the final budget. Simple, straight forward, no problem.
However, the District budget wizards know that a number of tax bills will not be paid during the coming school year, perhaps not for years, but they will ultimately be paid. So they then factor into the initial calculated millage rate a provision for nonpayment or non-collection. The factor or provision used is 3% or 4% of the tax dollars required will not be paid for more than a year. In other words, a collection rate of only 96%-97% of what is required. So, the initial calculated millage rate is then divided by 0.96 or 0.97, and that becomes the final budget millage rate that our actual tax bill is based upon. In other words, we are all billed for between 3% and 4% more than what is actually required. Even if only 96% or 97% of billed real estate taxes are collected for the school year, the District actually receives all the dollars needed to balance the budget in the first place. And even the delinquent and liened taxes that will eventually be collected will be 3% to 4% higher than really necessary at the time they were billed, compounded by the penalty and interest charges also imposed !
So the District gets all the money they need on time from those of us paying up front more than is actually required from us; and, the eventual collection of delinquent & liened taxes plus penalties and interest is all gravy, not booked as real estate tax revenue that can fall to the bottom line as a surplus fund balance and spent later beyond the public's knowledge or memory of the origin or source.
So here is another "ace up the sleeve" the District can and does play in the 3-Card Monty game of budgeting. Just keep in mind that 3% of say $50 million in real estate taxes is $1,500,000....no chump change. And year after year it can really add up !
Bill Lewis
Bill:
Thank you for yours of 2:52 PM today. I had always suspected that the District was hedging on real estate tax collections; but I wasn't sure about the percentage. My original estimate was 5%, so I guess I wasn't too far off.
Would it be fair to say, given your explanation, that unless incomes rise at sufficient rates to cover the projected shortfalls the District will continue to increase the dead weight loss in order to cover the gap? In other words, as taxes go up faster than the necessary rise in income to cover them then by the laws of proportion I would expect the number of people defaulting to increase - causing the District to raise their tax estimates to cover the loss - causing millage to rise - causing - well, you see what I mean.
Would it also be fair to say that the District is gambling that the economy will not only recover, but will go up like a rocket, thus giving them a large surplus to crow about?
The math I understand very well - the School Board I will never understand.
RG
Bill shines a bright light on the finances of the district, but with one of two incumbents practically guaranteed to return all this information will get us nowhere.
One director thinks a .55 mill increase is like a zero mill increase. Another gets excited about almost everything, The sitting president co-lead us into a renovation where the initial bids were millions over expectations. An ex-president claimed he knew a majority favored the project but was afraid of a referendum vote. Then we have one that seems to see what's going but with one vote if they do go against the majority can't change anything.
The new crop of SB candidates looks like more of the same at first glance.
It's a shame.
There is no true planning in the District by the SB or staff, RG. There is a Klein budget projection in published budget books that goes out 3 or so years (or used to), but it is basically an extrapolation of history. Considerable scheming, no planning other than an annual 1-year budgeting exercise. The Districts so-called strategic plan is a farce, loaded with nothing more than feel-good platitudes and unremarkable goals for which there are no penalties if not achieved. They all have blinders on and circle the wagon at the first hint of challenge of their mind sets by the local citizenry.
Taxation of real property as the primary funding source for local districts will not convert to income and/or sales taxes, at least not in most of our lifetimes. The underlying reason in PA is entirely political. The simple and rational reason is that income growth at "X" rate cannot fund public school expenditures growing at "2X" rate, along with health care costs at "2X", food at "2X", etc., etc. indefinitely.
And no one seems to recognize, or want to, that the vast majority of taxable real estate in places like Mt. Lebanon is not income producing (i.e. owner occupied residential) and that this form of taxation, here at least and for that reason, is actually repressive. Yet, an electoral referendum question only a few years ago(2005/6) suggesting a very minor conversion of only a portion of school taxation from real estate to income was soundly defeated by voters. Go figure.
We have met the enemy and it is us !
Bill Lewis
Josephine Posti wrote about the budget on Center Court. Here is the link.
http://jposti.blogspot.com/#!/2013/03/march-madness-board-budget-brackets.html
Her last paragraph states that the board wants our feedback. She writes, "...we need input from the community to help us make decisions that reflect the values of our community. We're looking forward to hearing from you."
I do have a poll up about the budget, but that would never be considered by the board as feedback. Certainly none of the comments here on Lebo Citizens would be viewed as feedback.
Elaine
4,000 people, the CAC gave them feedback on the HS project and they went ahead and bid their project anyway.
It didn't come in close to $95 million as they likely believed it would, but rather closer to $127 million.
They then gutted their 'Taj Mahal' to get under the limit that would've kicked in a referendum vote.
Now their putting everything in that they cut and students, programs and curriculum.
The teachers union didn't say a word thru the process, but now they want $900,000 for people that should be happy they have a full time job.
Missing text in 10:24 comment.
Now they're putting everything in that they cut and students, programs and curriculum will pay the price for it all.
Bill:
Yours of March 16, 2013 at 7:55 PM is excellent. My position on property taxes has been posted on this Blog (and Blog-Lebo) many times in the past, and I believe we may have similar, although not necessarily identical, views on the subject.
To other Blog readers:
Unlike an EIT or sales tax, which are taxes on the transfer of money, a residential property tax has no correlation to the income out of which the tax must be paid. Thus quarter-million dollar homes owned by "rich" lawyers and an elderly widows receiving a modest pensions and social security are billed the same; on an asset that produces no wealth while it is owned ("equity" in one's property is not wealth until a property is sold - and taking a loan against its "value" is a debt, not income). The property tax is a throwback to a time when most people derived their living off the land - farmers, loggers, etc.
What is ironic is that by eliminating the property tax and replacing it with a flat tax on incomes (admittedly not my favorite idea, but one that is logically consistent) derived from all sources the "poor" homeowner would see his total tax liability go down while the taxing bodies would see their incomes go up. The "rich" would pay more, but in proportion to their incomes. In addition, the value of residential property would skyrocket!
The residential property tax does have one "advantage" as far as local governments are concerned; it permits discrimination. High property taxes weed out the "undesirables" and insure that only the "right kind" of people populate a town - in theory, anyway.
Correction on mine of 12:05pm today:
"..owned by "rich" lawyers and an elderly widows.." should read "..owned by "rich" lawyers and elderly widows.."
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