Letter to the Editor
The annual budget ritual on Horsman Drive is underway. As the Board and
Administration have done for the last few years, they will likely refuse to acknowledge and address the realities of our Community.
They will grimace ... They will offer up quarters like they are manhole covers ... They will lob grenades at “other” public officials ... They will diss those whom they feel are questioning their nobility.
I will be the first to admit we cannot save our way to prosperity. But spending our way to oblivion is no more of an acceptable proposition. The District’s budgets and forecasts (available on its website) project our “per pupil cost” will have doubled by school year 2017-2018, since 2001-2002.
This increasing encumbrance on the Community is simply not sustainable. The long term trajectories of “per pupil cost” and “earned income revenue” are clearly divergent, with the former far outpacing the latter.
Per pupil costs will have grown 4.59% per year.
Earned income revenue 2.74% per year.
Earned income while growing the least; is hardly the least important metric of our economic wherewithal. Earned income revenue is, in my opinion, a good proxy for the buying power of MTL taxpayers, yet it still does not tell the whole story. It is an average, which means by definition, not all families may have experienced even this modest growth. Many of our residents have no earned income to start. And, many are still recovering from double-digit setbacks in savings and investments.
The Board needs to get serious about cost reduction and stop dreaming about revenue enhancement. We are accountable for our own fortune. Immediately, we should chart a course where the average growth in total expenditures is less than the projected increase in earned income!
Yes, this may sound hard to some … but in the real world … leaders do what cannot be done … all the time.
40 comments:
I wish someone would say something during citizen comments so that it goes on record. I can't attend the meeting tomorrow, due to a work conflict.
I know that it can be intimidating to speak at a meeting, but if folks would state their name and address and a simple "I am against any millage increase," it would help.
Elaine
Thank you very, very much Bill !
Will the school board and administration view Bill's material ? They should be required to do so and take a blue book exam that would pass the taxpayers smell test. At the moment they seem to need hot showers.
Bill presented a lot of material in his letter to the editor. After studying the marvelous graphs and string of budgets, I came up with a few trends that may be of additional interest, measuring changes from just this school year, 2012-2013, to the final projected year 2017-2018 :
~ Per Pupil Costs increase 26.2%
~ Real Estate Taxes increase 24.2%
~ EIT taxes increase 15.9%, and
~ Total Budget $ increase 21.1%
These are enormous increases over just 5 years, but Bill hit the mark by comparing Per Pupil v. EIT in his graphs. Keep in mind that Per Pupil costs are increasing 26.2% over a period where enrollment is projected to decline from 5,301 to 5,081 students. And it shows that budget balancing will increasingly be dependent upon millage rate increases (the budget projections on page 10/10 are dated 5/21/12 and do not reflect results of the 2013 County reassessments and tax adjustments...and Assessed Valuation is held constant).
A few other observations on the budget projections may be worth noting as well :
~ notice how many of the Revenues & Expenditures line items remain constant or barely change over the next 5 years...and then take particular note that increases in Real Estate and EIT revenues seem to be the only funding sources for all the increases in Salaries and Fringe Benefits in Expenditures, and eventually debt service increases. Doesn't appear to be any reductions in teachers & staff due to enrollment declines ;
~ the second bond issue necessary to pay for the HS is not identified as such. However, we can presume it will be issued at the very latest possible date, and that issuance will probably include up to 2 years of capitalized interest, and it may very well be "wrapped" to delay and minimize the amount of initial debt service and millage increases required....in other words, "kick the can down the road". This of course would actually increase the cost to taxpayers over time ;
~ note the line item Budgetary Reserves near the bottom of Expenditures. This $200,000 item is included every year and is never used or expended for what was intended...it is financed with our taxes, and falls to the bottom line as a surplus to eventually fund some other "thing" later. It's a budget "slush fund" to squirrel away money. A past SB fell for the story that since the school budget, once final & approved, cannot be opened and amended, a small fund should be established to cover unforeseen but unbudgeted expenses. Sounds good, but Jan Klein can always seem to find unspent monies in other line items to cover such things.
The next few weeks of budget crunching will be very interesting.
Bill Lewis
Bill M.and Bill L., I sent a link to your letter and comment to the school board, for those directors who do not read this blog.
Elaine
Let's not forget this is an election year. Can't wait to hear all the promises and declarations from the candidates prior to the primary, and then see the final budget by late May.
An interesting article from the PA Dept. of Education titled School Finance 101. It's copyright is 2001 but much of info is pertinent to today's issues. Be sure to look at the graph on page 4!
http://www.tmsd.net/tmsd/District/School%20Finance%20101.pdf
Good information ... How have we done here in the Bubble compared to the Consumer Price Index?
CPI +30% (Jan '02 - Jan '13)
Earned Income Revenue +33% (2002 actual - 2013 budget)
Per Pupil Cost + 62.4% (2002 actual - 2013 budget)
Imagine where we might be if we were not frugal?
Yes Bill, its hard to imagine where we'd be if they weren't being frugal.
Also, check page 32 on auditor independence. The last sentence suggest it's not uncommon for a district to change auditors every 5 or 6 years, suggesting that is one way to assure taxpayers that everything is operating "according to Hoyle."
Wonder how many gatekeepers of the household budget - moms or dads - would say they were being "frugall" if their expenditures and income went up similar amounts?
Especially considering that those families don't have the luxury of tapping their employer for more money through the threat that if they don't get a raise the 'family' will take over the company!
Let me remind everyone that Mr. Remely is on record as saying that two of the biggest drivers of the District's expenses are pensions and benefits, and that if one factored out those items historic budget increases would be quite modest. He then laid the blame for these increases on Harrisburg.
He is correct to point out that pensions and benefits are huge expenses, but suggesting that we ignore them in order to make the District's budget look good is like suggesting that taxpayers should factor out payments of taxes of all types and health insurance premiums from their personal budgets; a nice distinction, if you could get away with it. I know that doing so would certainly improve my bottom line!
A required expense, regardless of where it comes from, cannot be ignored. Mr. Remely may ignore pensions and benefits if he wishes, but I still get a bill for a proportional share of them, and therefore am unimpressed by his argument.
I will say this: Real reform of our school system will not start in Mt. Lebanon - it will start in Harrisburg.
The school taxes are increasing so rapidly they are imposing a tax on your bank account in addition to your earnings.
I wouldn't place too much stock in what Mr. Remely recommends. Isn't he the board member that put on that wonderful demonstration that a renovation only would be about the same amount as Celli's design?
Plus we were led to believe that his experience in building management would help keep the cost of the project in check?
Seems we have bollers and chillers without water feeds, concrete floors where tile was suppose to be, duct work in elevator shafts, equipment rooftop sheds without access panels and on and on.
Plus, what are proposals on the table to keep the runaway budget in check? One suggestion is to cut back on maintenance staff. Years of healthy investment in school buildings and we now go down the same path of neglect that made them so deplorable in the first place.
But we will spend countless hours pursuing million dollasr plastic athletic fields that will require bigger and bigger future replacement cost.
Unbelievable, and these directors get indignant when someone questions their judgement!
Besides which, Mr. Remely fully supported every teacher contract that has come before him!
To blame salaries means that he is trying to distance himself from said salaries!
You can not off-put blame if you are indeed the one TO blame, Mr. Remely.
Show me something he has voted against when it comes to spending.
Does the budget and the budgeting process have anything to do with the District's Strategic Plan ? Of course it does ! It has everything to do with Strategic Plan "Goal Four : Fiscal Responsibility".
In a previous comment I was critical of the Strategic Plan in this regard without being specific. Someone asked me to explain my reason(s). Here goes.
The Plan explains Fiscal Responsibility as "..the District wants to maintain the community's confidence that tax dollars are well spent. This is accomplished by establishing fiscal policies and practices that safeguard District assets, while being transparent and collaborative with constituents".
The Plan then establishes a series of "Desired Outcomes" and measurement or metric "Data Sources" to determine if overall "Goal Four : Fiscal Responsibilty" has been achieved. Here are a few actual Plan examples - see if they impress you :
"Desired Outcomes -
Mt. Lebanon maintains high standards for fiscal responsibility"
"Data Sources -
~ Financial audit (Unqualified Audit Opinion)"
WOW! Does that rock your boat as a major accomplishment and measurement for fiscal responsibility ? Unqualified would occur if the District would be judged as not being a going concern, about to go under, taken over by the State. Really !
"Desired Outcomes -
Mt. Lebanon School District monitors spending throughout the year and provides reports on revenues and expenditures to the School Board and the community "
"Data Sources -
~ Regular Year-End Financial Analysis reports"
Are they kidding ? Year end only, and if audited-based, 5 months after the school year is over ? They must think we're stupid.
"Desired Outcomes ~
Mt. Lebanon follows fiscally responsible financial practices in order to manage costs"
"Data Sources ~
~ Adjustments to debt financing as applicable
~ Cost reduction proposals
~Employee numbers and associated costs
~ Partnerships with Municipality and other organizations"
These are merely check lists...yeah we did that...not whether the results were actually measured and on a target. And they get to grade themselves ! Exceeding expectations, no doubt whatsoever!
This pass your smell test for determining fiscal responsibility ?
Bill Lewis
9:41 and the District auditor is the same one that did not find and disclose the the Parking Authority had not collected over $800,000 in parking ticket fines since 1997 ! They even permitted an accounting change from accrual to cash just for tickets without including what any CPA with auditing experience would tell you was necessary to disclose past dues in accounts receivable.
12:52 I'm assuming you didn't mean to suggest that 9:41 and the district auditor are one and the same?
It might confuse some people.
You meant to say the parking authority and district auditor were the same, right?
11:24- I think though I'm not 100% positive that Remely suggested cutting back some fine arts and extracurricular budgets in a budget dissuasion during his first term on the board.
Hopefully someone can confirm or prove my memory faulty.
12:52, who's responsibility is it to audit the auditors?
How does one know if accounting procedures are being followed and what happens if they aren't?
Here is the latest Jack Wagner audit:
http://www.auditorgen.state.pa.us/Reports/School/schMountLebanonSD011413.pdf
2:05 Maher Duessel has been the outside auditing firm for the district, municipality, parking authority and library in Mt. Lebanon. And still is for all but the parking authority, now rolled into the municipality.
2:20 PM ..auditors are subject to periodic formal, required peer reviews and must pay for those reviews by their peers. that's one of the reasons auditing fees have increased so much. another is liability and E&O insurance premiums.
If Maher Druessel has been an outstanding auditor for the municipality how did unpaid parking fines go uncovered for so many years and eventually totaling over $800,000?
At the very least shouldn't some have asked where the 200 or 300 sequentially numbered ticket envelopes went?
2:11PM In what I believe was his first or one of his very earliest school board meetings as a board member, in an early discussion of the budget process, read a prepared statement that he intended to examine certain large budget categories, like Fine Arts, in detail to see if any cost savings could be realized. Seem to recall it was the 1st. meeting of the month, a second Monday.
Well, he must have thought the world was coming to an end for the next few days because the Fine Arts leaders and followers called out the shock troops and Remely was inundated with phone calls, letters, e-mails raising hell with him. There were even printed notices nailed on telephone poles that the orchestra, etc were going to be cut out of the budget.
Remely appeared at the meeting a week later with a prepared statement once again, this time apologizing for what he said or was misinterpreted the prior week.
And he has seldom challenged any budget proposal since, and always votes aye when the vote is called.
Gee something like what this school district did in Peru, Indiana is apparently beyond the capabilities of our outstanding district staff and teachers.
http://m.kokomotribune.com/kokomo/pm_102764/contentdetail.htm?contentguid=p725ZfCM
"Peru schools take new software to the bank
By Carson Gerber03/18/2013 12:08 AM
PERU — A computer program developed by the Peru school district that tracks students’ academic development has started generating revenue for the district after officials decided to sell the software to other Indiana schools.
The AMP software is currently being used by 26 districts, including Northwestern in Howard County, and will bring in $125,000 to Peru schools.
Morris said the goal is to have around 20 districts signed up to use the program at an annual rate of $7,500, which would generate $150,000 a year.
He said having more than 20 districts using the software would strain the technology department, which monitors the software for other school districts and helps with installation and upkeep.
Morris said there are currently programs on the market similar to AMP, but most come with an annual price tag of around $50,000.
“We’re selling our program for pennies compared to other companies,” he said.
Morris said he’s never heard of another school district creating and selling a program designed by its own employees, and he said AMP has been a financial boon for Peru schools."
Our administration and board apparently finds spending thousands on a fund raising firm to figure out how to collar people for free money is far, far easier than selling their professional expertise to other school districts.
The budget was unanimously approved. Conveniently, Mary Birks was absent. http://www.mtlsd.org/district/stuff/may%2021,%202012%20board%20meeting%20summary.pdf
They are all to blame, not just Remely.
Elaine
You're right there are 9 of which only 2 are running for re-election in the primary.
If one is happy with the way things have been run so far vote for them again.
The school board thought about forcing the big boys to take a paycut but that is inconceivable. Instead, they will escalate their campaign of repression against taxpayers.
Bill, it's hard to tell if the 2007 tax shift vote was the right decision.
These articles leave me more confused than ever:
http://articles.mcall.com/keyword/tax-shift
I sense our school officials, including the board, think Mt. Lebanon has an open checkbook. Guess what? We don't.
I also think they believe this district is beyond reproach and sets the standard for others to follow. We don't.
It's time to get off your high horses, get out your pens and start slashing costs. That's your job...please do it before it's too late.
Jan Klein's 6.9% increase is not indicative of frugality. Her recommendation to stay with Maher Duessel for 25 years is not in the District's best interest. Eliminating the Audit and Finance Committee was a bad move. I think Ms. Klein should do us all a favor and retire. She did enough damage to this community.
Elaine
Since I never got a response from any of the school board directors, I sent another email with a link to this post.
Elaine
5:47 PM The 2007 tax shift was poorly handled by state and local governments. There was both a lack of definitive information about the possible shift, and that which was circulated was not trusted by the public. Opponents put forth a lot of scare and bogus information, and the general public ended up not trusting government. Many believed it was not tax shift but a bait & switch to something worse.
Something somewhat similar to this was tried many years ago by PA during the then Gov. Milton Shapp administration. It was in fact proven to be a bait & switch deal just prior to the electoral referendum, and it too was rejected by the voting public. Electors sometimes have long memories.
I personally believe the 2007 voting outcome was unfortunate. Even though I am long retired and have no "earned income" as such under the prevailing definition, I agreed to the option of PA's inclusion of all investment income (interest, dividends, capital gains)in the tax shift. Since I retired now 20 years ago, my cumulative real estate tax payments (county, school, muni) alone now amount to about twice what I paid for our house 40 years ago. Think about this as you plan and try to finance your retirements.
Bill Lewis
I am looking at page 110 and 111 of the 2012-2013 budget and am a bit concerned.
It is here that we see that plan for the next round of high school bonds.
Note the increase in debt service starting in 2014-2015 at a cost of $697,636 and then $1.4 million in 2015-2016, and then $2 million in 2016-2017.
The good news is that we have roughly $2.5 million in debt service coming off the books in 2016-2017.
The bad news is, the district will likely need to pay the high school construction bills prior to 2016-2017 so this makes a bond float prior to that a likely event.
Well, let's put it another way, unless the district and the board decide to capitalize interest and/or wrap the next round of bonds at huge additional taxpayer expense, there will be a referendum on the next set of bonds. That is, assuming the Board doesn't want to lay off 10 teachers in two years.
Before I go too far, I wonder if the readers here can predict what the board and administration will do. The options are as follows:
1. Float the bonds when they are needed and scheduled to float in 2014-2015 (rescheduled from the Act 1 documents from 2009) and go to an Act 1 referendum due to exceeding Act 1 millage increase limits.
OR
2. Float the bonds in a way that will cost taxpayers a great deal more in the long run by pushing payments on them into the 2017-2018 school year thereby avoiding an embarrassing referendum.
The question we should ask each of our candidates is whether they will opt to go to referendum to save taxpayers money or they will opt to wrap the bonds to avoid said referendum.
I know which answer will get my vote!
Did I hear Mr. Lebowitz say that they are in the business of education?
Then in his next breathe did he say they needed to raise revenue through fees and such.
Every business I've ever been associated with the last option to be selected to fix the balance sheet was raising prices on customers. That is a sure fire way to drive your customers to your competition!
Right now our competition - USC, North Allegheny, Peters are cleaning our district's clock in the "best bang for your buck" competition.
Come to think of it, according to the Business Times they are also beating us in the "best performance for the buck" race too.
Perhaps Mr. Lebowitz would better serve the district if he took a closer look at the underassessments in his neighborhood.
12:42 PM, we all know which answer needs to be given to get the votes. They will pick the other option after they win.
Elaine
Elaine, you're absolutely right they will ! All of them !
If we can cut $800,000 out of the budget last year and $600,000-$800,000 can be cut this year, why was that money in the budget in the first place?
Maybe it was put in so the board could look frugal.
It's all smoke and mirrors, Elaine.
The board has yet to answer any of my emails.
David Huston
David, it is tragic how the school board treats you. I understand that you and one other resident stayed until the end of the meeting last night. Plus a reporter from the PG.
If it makes you feel any better, I have sent two emails to the school board and not one has had the courtesy to respond to either of my emails.
Elaine
Mr. Cooper justified the .55 mill increase as saying that the district has to at least keep pace with inflation (currently running at a 2% rate inccrease).
OK, sounds fair, but then why did Jan get a 6.9% raise and
"The board will approve superintendent Tim Steinhauer's salary sometime in the coming months. For the 2011-12 fiscal year, he earned $151,420 -- an increase of 3.5 percent from the previous year."?
Read more: http://www.post-gazette.com/stories/local/neighborhoods-south/mt-lebanon-school-officials-given-raises-646316/#ixzz2O1QIWRju
Keep in mind for the last 2 years the USC superintendent and finance director accepted a pay freeze and the teachers' union rolled back their pay to previous years. I guess being the #1 district has muddled up their math and business accounting skills.
Mr. Cooper on the other hand seems to have a special knack with numbers and rounding. First he says a .55 mill increase (equating to $1,000,000 in new tax revenue) is the same as a zero mill increase.
He truly believes the taxpayers must keep pace with the inflation rate but apparently the staffs' compensation does not.
The second bond issue is of great concern.
My anticipation is that the District will massage the debt service in any way possible, including bond wrapping and capitalizing interest, to minimize the budget impact.
They have done this on earlier issues and it cost MILLIONS in additional interest expense.
Maybe they will blame the legislature for the Act 1 limits to which they must subscribe -- the "we had no choice defense."
Then again the Board could have issued electoral debt (approved by the voters), avoided the Act 1 limits and saved big money -- in more ways than one.
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