There have been a few comments in the blog concerning the building project, the PSERS increase and the financial health of the school district. I thought it would be best to answer those concerns in a blog post instead of responding within the comment section. This way, it will be easy for people to find my response...if you are interested!
The School Board is adamant that any building project should be done within the current tax structure. In other words, the current millage dedicated to our current debt gives the school district the ability to borrow up to 55 million dollars. Again, that 55 million is within the current millage structure. The high school renovation will be about 30 million dollars. The school district's current debt "comes off the books" in 2015. At that time, the bond sale the Board will approve for the high school project will come on the books. Again, this is all done within the current millage structure. Here is a link to the presentation by the school district's Bond underwriter.
There are a few "moving parts" in this equation and it is the reason the school board is moving cautiously. First is the status of PlanCon. PlanCon is where the State reimburses school districts for some of the cost of a building project (typically somewhere between 20% and 30%). If the State does not fund PlanCon that will obviously have an effect on the amount of money that is available for a project. The 55 million dollars would turn into between 40 and 45 million dollars that is actually available for a project. The second moving part is the configuration of the rest of the school district. The Board will decide in the next two years what configuration the school district will take to provide a great education and be the most cost effective. Education priorities and fiscal reality will dictate what any new configuration will look like.
Finally, there is the PSERS issue. I am not as concerned about this issue as some people because this school district has positioned itself very well for the increases coming in the future. There is a dedicated account that the board has placed money in over the course of the last few years that will help mitigate the increases in PSERS. The School Board is also researching cost savings measures that can have further impact on the budget. Penn-Trafford has a long history of fiscal responsibility and being very cost efficient. Thanks to previous Boards and administration, the school district is positioned as well as any district in the State as the PSERS contributions increase. We also must remember that in the past, school district's PSERS contributions were in the 20% range. Although our rates will settle in at about 25%, in the 1980's the rate was in the low 20's and school districts adjusted accordingly.
Thank you for having enough faith in PT citizens to make a post specifically related to the impact on taxpayers for the school board and administration plans.
ReplyDeleteAs we have stated in our posts, we are aware of the good work the school board and administration have done to position us financially for PSERS issues. We also applaud the plans to continue improving the school district including the various pilot programs, building improvements, and the blended cyber program. If there were any concerns in the soothing words in your posts, it would be related to lack of specific numbers that would further increase PT citizens’ support of our direction. In that light, a post on our Facebook site three days ago and before this blog post exist. In this post you can see there are concerns that have not been specifically addressed to date for which we are still seeking answers. We want to be on your side with good answer for PT citizens. Here is that post:
“In each of the three bond options, the district would keep its debt equal to or lower than the $2.7 million in debt payments in this year’s budget. Since $270,000 of annual district incomes comes from each 1 mil of local tax imposed, the decision involves how to spend about 10 mils of local taxes annually, a lot more if the upper end of the projects is selected. This year, anything over a 1.6 mil tax increase required a tax referendum. That’s why we just did a 1.6 mil increase, right below that max level. This $430K tax increase was tagged for PSERS and building projects. So that should take care of PSERS, right? However, future PSERS funding will require much fund funding, and maybe more taxes, as we have been warned by the district earlier this year. Some forecast using PSERS reserves, tagged tax increases, and PSERS funding forecast (PT business manager data) predicts tax increased above the limits for a tax referendum in any event. Debt decisions now could be additions to that referendum. Now consider if we're going to skinny-by without a tax referendum for PSERS, then we are now adding debt perhaps leading us to a tax referendum because of new debt. So a referendum would be created now that we could also blame on PSERS later. If any tax referendum is rejected, guess what - more debt or budget cuts. If the district has future budgets, showing what, if any, future tax increase are expected, these concerns could be shown to be anywhere from valid to ridiculous. “
If you would consider answering specific questions:
Can you state it is the school board’s overall commitment is to keep future tax increases zero? Or decreasing? Or at X%? Or below ACT 1 limits?
If the district does not know what tax consequences are at this time, can bounding cases be provided to show the range of expectations?
Without debt additions, what tax increases, if any, are expected to fund PSERS?
Is there a link between debt plans and PSERS funding that drives additional tax increases and possible tax referendums that would not occur without additional debt?
Thank you for having the faith in PT citizens to bring up delicate funding issues that most school districts would rather avoid. The devil is in the details
I will try to answer your questions:
ReplyDelete1. I cannot speak for the Board concerning tax increases. They are the elected officials and they make decisions based on what they believe is in the best interests of students and the community.
2. Again, the elected officials will make decisions that they feel will benefit all stakeholders.
3. Tax referendums are used when the school district asks for a tax increase above the Act I limits (including Act I exceptions). This school district has never (to my knowledge) even asked for applying for the exceptions to go over the Act I.
Are you saying that’s your answer, or you are saying you going to contact the school board and get back? The above does not answer the questions asked.
ReplyDeleteGut check:
Starting with $2M of PSERS reserves, the district's retirement contribution will increase next year by $442,000 to $1.34 million. That figure is expected to surpass $3 million annually by the end of the decade? But only $210K annually was tagged from this year’s tax increase. So we are looking at about $25M deficit for PSERS over ten years which has to come from yet unidentified sources? Based on what blended cyber programs have cost elsewhere, that program can be expected to cost $15M? Do our plans include this program that are now included in building cost, or is that cost incremental? A new high school complex might cost $10M to $50M? Within those ranges, that would require new debt but not an increase in debt payments? In any event, building costs can add $2 to $5M annually to the budget? But only $270K of the recent tax increase is tagged for building improvement? And we’re going to do a few other things like giving the Westmoreland Vocational Training Institute $55K/year? That’s a total of $50M to $100M of additional budget funding over ten years? On the plus side, we may get an accountability block grant each year which was $210K this year. We may get more or less state funding contributions which was $716K more this year than last. These expectations don’t address the $50M to $100M budget increases in any event? Given the state budget crisis and demands upon the state to so such things as address bankrupt school districts, it doesn’t seem prudent to assume as a base case the state will come to the rescue? Are we looking for $50M to $100M of cost reductions or tax increases over ten years? Can the business manager chime in here? Can a presentation be posted with graphs showing how this is all going to pan out? Can the school board many ANY specific committments?
As always, I welcome you to come and sit down with us to get all of your questions/concerns answered. I have always found that face-to-face meetings always work best to get your questions answered. I look forward to sitting down with you.
DeleteHow is a face-to-face meeting going to get answers for the community's consideration in a clear and easily obtainable format? This is not a one-on-one communication issue.
DeleteWe accept your offer for a sit down talk. Can we proceed this way:
Delete- We'll post a set of questions on this site.
- You take a look and those questions and confirm a meeting is still recommended, or answer some or all of them if answers are easy. You state which questions, if any, you are not prepared to answers.
- You agree to be prepared to provide quantitative answers to remaining questions at the meeting.
- During the meeting we agree upon answers to be posted on your blog and our facebook site.
- A guideline is answers should be as short as possible, without a lot of fluff, so citizens can get a summary.
Can we proceed with posting questions?
I would like to attend this meeting. I think we need new buildings. The school board and Dr Butler seem like they have a good plan but just having the time to put it in a way we can understand.
DeletePT Taxpayer,
ReplyDeleteI think that any of us would be foolish to think that there would not be an impact on taxes to cover PSERS over the next few years, it is inevitable. However, the school board has made strides to head this off somewhat. The 2012-2013 budget had a .6 mil increase for PSERS along with a 2 mil increase SOLELY dedicated to PSERS in 2011-2012, that is 2.6 mils already dedicated to fund this.Add that to the approximate 2 mils we have been paying all along there is about 4.6 mils ALREADY in the budget as it sits. The increase from 11-12 was put in a dedicated fund along with a $1m rebate the district recieved from the intermediate unit in 2011 so there should be about$1.5 mil sitting in reserve to help ease the transition.
As far as buildings/renovations are concerned
there has been 9.5 mils of debt service in the budget all along, add another 1 mil from the 12-13 budget and there is 10.5 mils in the current budget for debt service. The current debt will be retired completely in 2015 freeing up the ability to borrow $45m WITH NO TAX INCREASE for building/renovation. The board would be very foolish to use that debt service that has been built up over the years for anything other than these projects. Our buildings are old and well used and need attention, we can not let them continue to run down.
I honestly don't know why people can't understand, if only they would take the time to look at the information presented instead of jumping to conclusions. Sometimes I think people are just looking for the bad in everything.
I do believe my numbers are pretty good, maybe Dr. Butler can confirm/correct them??
We are paying hundred's of thousand of dollars in salary for a superintendent and business manager. Why can't they answer some basic questions in a simple way that I can understand? Why do Charles and the Coalition have to spend their time doing that? Give me some graphs of cash flow, a graph of PSERS funding and shortages and sources, a graph of other major expenditures, and a graph of tax impact for the next ten years. List assumptions in this best guess case, then bound the results with uncertainties for worst and best case. That's common business practice that any good business does, and if the district doesn't have that already we're all up a creek with no paddle.
DeleteMost of what you ask for has been presented at board meetings and on the district website, that is where I get my information. Come, sit, listen and learn.
DeleteI did that, and I can' find anything to disagree with the Coaltions numbers below or your numbers above. But I don't have a lot of time to hunt for information spread out in various places. I expect there are others like me that might care, but don't have the time or patience to dig. I was hoping somebody would put the whole deal into some kind of summary I can understand. The Coalition and you are the only ones trying to do that. But I don't trust you guys, you both seem like you might be biased, and even you guys don't have information about the future that Tom might have. So I'm still looking for the adminstration to help me out with some graphs I can understand and trust.
DeleteFox Mulder always said "Trust no one"
DeleteOne more option is maybe Tom's saying "bugger off Coalition". Personally I think the Coalition is doing a good job trying to address your mission of oversight. Without the Coalition, no one is watching the administration to confirm the path they want to take. More people should visit your facebook site and see for themselves. But to do the Coalition's financial oversight requires information on future budgets that the district may not want to release. One option is the Coalition prepare some budgets based on available information and make their own independent forecasts. Or, would a taxpayer petition get the administration to release the information. I just would like somebody to tell me how much more, if any, we have to pay and how we're going to pay for the district's vision. It should be simple for the administration to say "hey relax, we got it figured out and here's how". If they don't do that, then the coalition should not relax and citizen should be behind you.
ReplyDeleteWe have independent forecasts up to the 2018-2019 fiscal years (6 years). We were hoping to avoid releasing them so as not to cloud the air with possible disinformation. But since the administration might need some motivation, here we go. We have somewhat detailed excel spreadsheet forecast. Our results show a $10.3 - $12.2M million funding increase needed during that six year period just for PSERS. Our analysis includes using the current $2 million PSERS reserve and the 2.6 mil tax increases assumed to be tagged for PSERS from the last two district tax increases. With 1 mil being equivalent to $270K, the PSERS shortage is equivalent to 38 to 52 mils spread out somehow over the six years. For the six year period, we calculate a one-time 6.4 - 8.7 mil tax increase needed to fund PSERES implemented soon and continued for the six year planning period, well over expected ACT 1 limits. However, first shortage would not occur for a couple of years due to the $2M PSERS reserve. That leads to a prediction of a 9.5 - 13 mil increase implemented in two years to address the needs of the remaining six years of planning. Compare the annual PSERS need of about 6 – 9 mils to the 9.5 mil cost annually for existing debt. If our analysis is accurate, letting most of the debts expire and using that to fund PSERS appears to be one way to avoid tax increases. Alternatively, cost reductions would reduce taxation needs. Now consider the objective is to avoid tax referendums while getting the projects as proposed by the school board. If this year’s 1.6 mil ACT 1 limits exist throughout the six years - we could raise taxes each year to the max ACT 1 limit without a tax referendum, obtain another $6.5 million during the planning period, fund about half of the PSERS shortage, but would have to cut debt in about half to avoid a tax referendum. Or a plan could exist to do the max ACT 1 tax increase, find about $6M in cost reductions or about $1M a year, and keep the debt load the same. Dr. Butler has implied that a plan exist to keep taxes from increasing, find cost reductions, and maintain current debt for planned construction. However, that implication appears to be a challenge for which we are requesting additional information. We are not saying our analysis is accurate since we don’t have access to the administrations budgets. We are not saying we included the cost of all the projects desired such as the blended cyber program, or the cumulative effect of smaller objectives like vocational training. We are not saying the administration can’t find cost savings, in fact, we guarantee cost savings exist. We are saying that funding PSERS and new debt is related with respect to expected tax increases and possible tax referendums. We are not saying it is our job to do this analysis or to explain it. We did our forecast only to confirm there were issues, and because the administration did not provide an alternative forecast. If it turns out we are off base, we apologize. As said elsewhere, they get paid big bucks to figure this out and should have much more reliable information than ours. Where is it? It is a sad situation when entities like Mr. Whidmore and the Coalition have to get involved in providing budget forecast that are the responsibility of the administation.
DeleteSorry if our name change creates a problem.
ReplyDeleteThe resolution to the issues here may be apparent from Dr. Butler's text in the main section "The School Board is adamant that any building project should be done within the current tax structure. In other words, the current millage dedicated to our current debt gives the school district the ability to borrow up to 55 million dollars. Again, that 55 million is within the current millage structure." If that statement means, the school board has no plans to raise taxes for any reason including any future combination of PSERS and debt and other issues. That is, debt load will be adjusted to reflect increases/decreases in PSERS funding so that no new taxes will come from any combination of those events. Is that what you are saying Dr. Butler?
ReplyDeleteIn case Dr. Butler does not reply to the above, it is apparent his statement is focused solely on debt load and its associated millage rate remaining within the current sturcture. It has nothing to do with any type of forecast for the future milleage rate. By deciding to replace existing debt with new debt, that decision likely will increase the total millage rate since it removes the option of using declining debt load to pay for future PSERS contributions.
ReplyDelete...and what do we do about the buildings?
ReplyDeleteI'll pay for the new buildings and eat bologney because I want my grandkids to get the best. Being on social security and taxed to death on that already, help me out so I can try to figure how to do that. I liked it when the unions were asked to chip in last year for their big fat pensions, but they are a bunch of jerks and would rather have old folks like me eat boloney while they eat juicy steaks in retirement.
DeleteGiven that the vast majority (70, 80%??) of the budget is salary and benefits, there isn't a lot of room for significant cost savings, is there?
ReplyDeleteCustodial contract is up in 2013, teacher contract teacher contract in 2014, time for our school board to hold their ground.
ReplyDeleteWe treat our custodians and teachers very good. Even teachers think we are treating them good. In a national poll of teachers, PA is rated in the top five of all states in terms of quality of life. Major financial factors making union members happy are their benefits in terms of PSERS and health care that we PA taxpayers provide to union members. PT residents fund these benefits from local property taxes and PA state taxes. Citizens should support our teachers but what is the cost to our goals for the 21st century? What specific actions can a PT citizen, or a group like the Coalition, do to help the school district hold their ground? What can we do to encourage the unions to share in the costs of benefits like PT citizens do in their own lives.
DeleteAccording to this blog post from April future budgets are easy to do: The school district is basing much of our budgeting information on the five year budget model that has been implemented this year. The model allows the district to input various amounts of information to predict where the budget will be in five years. The model allows the school district to base decisions on actual forecasted projections. The model shows that there are challenges in the upcoming years as increased costs meet decreased revenues.
ReplyDeleteTo support the objectives of improving the school district for the 21st century, cost control is critical. Perhpas we need to find about $2 - $5M a year in cost reductions to balance future budgets without tax increases. What specific actions can a PT citizen, or a group like the Coalition, do to help the school district attain the needed cost controls?
DeleteIn one PA school district during a contract negotiation, hundreds of signs saying “Support the School Board” were placed in citizens yards to show the show board and unions that taxpayers were behind the school board’s positions. These signs were similar to political election signs. Perhaps the school board could allocate some money in the budget to print these signs and residents/volunteers could place them around PT.
ReplyDeletePerhaps the Coalition could spearhead this initiative to show their support for the board.
ReplyDeleteIf the school board thinks it is a good idea, and provides the signs, then we will take at least 250 signs and see to it they are placed throughout the township. More signs than that number would be needed for users outside of the Coalitoin. Recommended timing is a few months prior to the next contract negotiation which is with the maintenance union. If that works out OK, we'll do the same for the teachers contract.
ReplyDeleteWe have prices of $660 to $1200 plus shipping from on-line suppliers for 250 double-sided, wire posts, two color, political type yard signs.
DeleteWe had a telecon with a local advertising agency to get some more ideas.
Whatever text is printed on these signs can be also be advertised for a few hundred dollars in a few issues of the Penn Trafford Star.
Letter to the PT Star editor, or articles, from the school board or its designate are also an option with an explanation of your path and why.
The printed text should be a clear message with reference to an internet site for more information. Some discussion by the school board would identify various options for text. Here is a start "Support the Penn Trafford School Board's Plan for the 21st Century - See the Coalitions Facebook site (or whatever) for details. The idea is to get support for buidlings and so forth funded by cost reductions instead of tax increases. Thats another way to say pension swapout, for example, with justifications provided on the interent site.
If the board is interested, the Coalition can arrange a meeting with individuals experienced in communication, marketing, and advertising techniques to brainstrom more ideas for a process, and the content of key messages.
Can we get some bathrooms and running water in the stadium? It was embarrassing to host the band competition when we have one bathroom for tons and tons of people. This would be tax dollars well spent.
ReplyDeleteI would also suggest trying to make the negotiations a mature effort that works for both sides. "Support the School Board" signs make it appear as though there is a war taking place between the two sides. We don't need to be so extreme. All of these board vs employee battles are embarrassing to communities. And you want to talk about money wasted---printing those signs should not come from taxes....if you want them, pitch in like any other political campaign.
Let then band boosters provide port-a-toilets when they have these shows. Why should we spend tax dollars for it??
DeleteMature effort? Earlier this year, the unions declined the district's offer to consider a PSERS/pay swapout saying it would not fix the PSERS problem. Soon the school districts funding of PSERS could be 20 - 25% of the districts budgets and local property taxes could soar to meet that demand. Union costs are the overwhelming part of the budget. We need cost controls in place to get our buildings upgraded or else taxpayer will reject the necessary tax increases and all we'll be doing is funding union pensions as building fall apart. Maybe the words "support the school board" are too strong, but the message should remain the same to show PT citizens are behind the board during contract negotiations.
ReplyDeleteHow do PSERS pension benefitscompare to what PT citizens working in the private sector can expect? In summary, a person in the private sector with the same pay and pension benefits as the average retiring teacher would need to save $30,000 to $44,000 a year to have the same pension benefits as the teacher obtains for $3150 to $3900 a year. For a maitenance union person, the ratios are about the same but pershaps 50% of the dollar values. See our site for information that puts our school board visions for s 21st century education system in perspective.
You need to keep in mund that it was not only the teachers that declined to accept a pay/pension swap, the custodial/maintenance staff AND administrators both declined to accept. The administrators refusing (2 years in a row) to accept a pay freeze/swap is the biggest slap in the face that the board could take. These people are the leaders of the district and yet they refuse to lead by example. We have an administrator that is the highest paid principal in Westmoreland County and he feels it is not necessary to make a concession.
ReplyDeleteMr. Whidmore
DeleteWith all due respect, yet considering you have not stated any errors in previous blog comments, we question your statment about administrators rejected the offer. What do you mean by administrators? Mr. Lago was critical of the union's rejection in his PT Star comments, so it is hard to believe he would do that and not accept a swapout for himself. Dr. Butler seems dedicated to his dreams for the school district, so much so it seems he would do a lot more than a swapout. On the other hand, if your statement is incorrect, it seems Dr. Butler or someone else in the administration would debunk it. In any event, why doesn't the board offer the administration two options: a swapout or a staffing reduction leading to the same cost savings and let them pick? That process has worked numerous times in the private sector.
Penn-Trafford's highest paid principal makes less then 9 other principals in Westmoreland County. Stay tuned for other developments concerning the topic of pay freezes.
DeleteWhen I referenced administrators I should have clarified, I was refering to the principals that are part of I think what they call the ACT 93 group. They seem to have a common agreement weather it be a contract or whatever, they acted and voted as a group to deny the freeze/pay swap.
DeleteDr. Butler would know what the pay scales are BUT I do remember the refrence that our principal was the highest paid.
We did not know that about the administration. No wonder Dr. Butler says "I'm not as concerned about this PSERS situtation as other people."
ReplyDeleteWe believe it is important to quantify the benefits the admininistration and unions recieve in order for the community to get behind some type of PSERS solution. See our website with information that justifies the following statements. How do PSERS benefits compare to someone in the private sector. What about a school superintendent making the average Pennsylvania salary for that position of $150,000? A person in the private sector with the same pension benefits as this retiring superintendent would need to save $45,000 to $65,000 a year to have the same pension benefits as this superintendent obtains for less than $7875 to $9750 a year.
What about a school maintenance technician making $35,000 a year? A person in the private sector with the same pension benefits as this retiring technician would need to save $18,000 to $26,000 a year to have the same pension benefits this technician obtains for $1850 to $2275 a year. Take these numbers by 2/3 to get a district business manager making $100,000 a year.
So we we have two problems maybe, the administration and the unions. But we have two strengths, the school board and a strong story to take to the community and make them aware. If we (the Coalition and Mr. Whidmore) are the only cohesive entity delivering that message, then we need more input from the school board on our Facebook messages to make sure it is consistent with the school board's objectives. This blog is tainted by an administrator with a vested interested, and limited by visitors. What method would the school board support to get information out? How can we help?
While we're at it, lets go after the state lawmakers and police, and township work staff. They're all tax $$ overpaid. Their pensions are ridiculous as well. Really, all public employees should get the going rate of private workers for pensions and retirement. Who signed these laws into place anyway?
ReplyDeleteThe PT school district's problem is PSERS (PA School Employee Retirement System). SERS (State Employee Retirement System) was set up for hourly state workers, such as troopers, transportation crews, park rangers, etc. The Legislature, governor and their staffs, as well as Penn State University employees, have the option of joining SERS, and most do. Both systems are defined benefit plans with lucrative retirement benefits compared to what you call private workers. SERS beneficiaries are about 4 or 5 times the mumber of PSERS,and therefore the PSERS funding problem is that much larger. The problem with PSERS is about half is funded by local property taxes which is going to have to greatly increase unless a solution is found. The PT school board is hoping for cost reductions that are being resisted by its employees. SERS is funded by state taxes, agencies, etc and not a school district funding or tax issue. For our focus, how to fund PSERS is what matters for our PT education funding objectives.
DeleteCorrection: PSERS beneficiaries are about 4 or 5 times SERS.
DeleteAnother thing to note is PA legislators make less money than the average retiring teacher, and a lot less than most administrators like superintendents or businss manager. Their base salary is about $80K. But legislatsors do make more than hourly administratove staff or maintenance. Most other SERS workers make a lot less than administrative salaried and teahcers being cops, road crews, and park rangers.
DeleteFACTCHECK: Dr. Butler makes the following statement: Although our rates will settle in at about 25%, in the 1980's the rate was in the low 20's and school districts adjusted accordingly. " From this link, taxes doubled in the 1980's which does support the statement that our school board can adjust. However that adjustment might be painful.
ReplyDeletehttp://taxfoundation.org/article/pennsylvanias-state-and-local-tax-burden-1977-2010
Thank you for deleted the comment under the name that could be confused with your blog. Here is what the comment said but under a new name.
ReplyDeleteThe Penn Trafford School District Register (type that into Facebook searh block) has some summary comparison of PSERS in case anybody is confused about the above complicated messages and numbers. The site is in no way associated with this blog except in the sense that information is sometimes transported to that site. Please note that I am revising those comparisons and will re-post new summaries before the end of this semester.
You can read “The Story of a Prince Wolf Saving the Penn Township Christmas” by typing “The Penn Trafford School District Register” into your Facebook search block. It is a fairytale about the Penn Trafford school district’s future.
ReplyDeleteSandra
Assuming you are going to post the 2013-2014 budget presentation, could it include some plots of projected future tax increases like those just posted on our Facebook site? Type “The Penn Trafford School District Register” into your Facebook search block.
ReplyDeleteDr. Butler makes some statements here that replacing existing debt with new debt will not increase taxes. Thats not ture. Want to see a graph of what taxes as required to fund PSERS for two cases of 1) letting the existing debt expire versus 2) replacing it new debt? Type "The Penn Trafford School District Register" into your facebook search block. We all want new school buildings but lets not forget about funding PSERS in the process.
ReplyDelete