posted by Tom Moertel at 11:47 PM /
At last night's school-board discussion meeting, the agenda was packed. But one topic stood out: the preliminary budget for the 2010–11 school year. In short, it's looking grim.
Property taxes for the district are projected to increase by about 14 percent, from 24.1 to 27.5 mills, this year alone, with similar increases expected for the next few years. The increase is nearly 40 percent larger than the school district's most-pessimistic forecast from last April.
What explains the unexpectedly large increase? Salaries are up by 2.5 percent; fringe benefits by 17 percent. A big part of the increase comes from the district's newly increased pension-funding requirements. With the state government paying less, our district's share must increase from 4.8 percent to 8.2 percent. (Our share is expected to increase again, climbing to 10.7 percent, the following year.) And there's the high-school renovation: it's in there, too. But part of the explanation is that we weren't pessimistic enough in our past projections.
How bad is it? Janice Klein, Director of Finance, ended her presentation of the preliminary budget soberly: "Unfortunately, balancing the budget [takes] a huge millage number... There's really nowhere else to get the money other than through real-estate taxes... I know that [the budget] wasn't very pretty, but that's where we are right now."
Okay, so our property taxes are going up again. What's the big deal? The big deal is that our school district can no longer afford its current spending habits. These tax increases, as large as they are, aren't going to be enough to pay for everything the district wants. Something has got to give.
Addressing the need to start cutting, Board President Ed Kubit said, "We are looking at very serious discussions ... on how we're going to be able to afford a lot of these things. We need to sit down and talk about programs, and understand the value of those programs. Staffing positions. Closing schools. We need to have those very difficult discussions to decide what we are going to be able to afford as a district... We are going to have to very carefully look at our budget not just this year but over the next four to five years, as well."
Indeed, something has got to give. And now the board knows it.
UPDATE: School-board director James Fraasch has posted a summary of the January 11th meeting.
Property taxes for the district are projected to increase by about 14 percent, from 24.1 to 27.5 mills, this year alone, with similar increases expected for the next few years. The increase is nearly 40 percent larger than the school district's most-pessimistic forecast from last April.
What explains the unexpectedly large increase? Salaries are up by 2.5 percent; fringe benefits by 17 percent. A big part of the increase comes from the district's newly increased pension-funding requirements. With the state government paying less, our district's share must increase from 4.8 percent to 8.2 percent. (Our share is expected to increase again, climbing to 10.7 percent, the following year.) And there's the high-school renovation: it's in there, too. But part of the explanation is that we weren't pessimistic enough in our past projections.
How bad is it? Janice Klein, Director of Finance, ended her presentation of the preliminary budget soberly: "Unfortunately, balancing the budget [takes] a huge millage number... There's really nowhere else to get the money other than through real-estate taxes... I know that [the budget] wasn't very pretty, but that's where we are right now."
Okay, so our property taxes are going up again. What's the big deal? The big deal is that our school district can no longer afford its current spending habits. These tax increases, as large as they are, aren't going to be enough to pay for everything the district wants. Something has got to give.
Addressing the need to start cutting, Board President Ed Kubit said, "We are looking at very serious discussions ... on how we're going to be able to afford a lot of these things. We need to sit down and talk about programs, and understand the value of those programs. Staffing positions. Closing schools. We need to have those very difficult discussions to decide what we are going to be able to afford as a district... We are going to have to very carefully look at our budget not just this year but over the next four to five years, as well."
Indeed, something has got to give. And now the board knows it.
UPDATE: School-board director James Fraasch has posted a summary of the January 11th meeting.
Labels: budget, mt lebanon school district, mt. lebanon school board, school board
18 Comments:
"Not pessimistic enough in our past projections"? Sounds familiar to me Tom.
I wonder when we might have been questioning a certain board's decisions to only look at the here and now instead of having the vision to consider the impact of their decisions on future residents of our community
I truly hope that NOW, FINALLY, the folks who want to build an expensive new high school ASAP can step back and see where the rest of us are coming from. We aren't anti-kids, anti-safety, anti-green, anti-home values, anti-technology or even anti-taxes.
In fact we're probably in favor of all of those things when done sensibly. However, those of us outside of the "build it now" camp are also in favor common sense fiscal planning, that takes into consideration ALL of our expenses, limited (shrinking) revenues, challenges and wish-lists. We have been asking these same questions for a long time now -- how do we commit to borrowing beyond our means for a new school, when our current revenues can't even maintain what we have? How can we agree to choke ourselves with debt when even our worst budget projections for this year have fallen short? How long can we continue to raise debt and taxes and still hope to have people view Lebo has a great place to live?
Think about it - this budget includes a tax increase at a level that no one projected, but at the same time this budget contains NO increases for supplies, programs, or maintenance. Nothing!!
So, if the plan was to increase debt and/or raise taxes solely for the high school project, I could probably get behind that ideal so long as everything was covered. However, it is now apparent that the fears some of us have been raising are reality. We can't even afford what we have with this new debt and higher taxes. So when does it end?
If the proponents of the new school believe that Lebo will be a better place and their property values will increase by accumulating mountains of debt AND increasing taxes by 14% every year for the foreseeable future, I guess we'll never see eye to eye.
However, I'm optimistic that those on the fence and those who have been standing on the sidelines will - upon reading this very troubling news - get in the game and say "Enough is enough."
At Monday's meeting, documents were being reviewed for the HS project's Act 34 Hearing. I was impressed with Mr. Kubit's assertion that the materials to be presented to the Community need to include the best available information at the time of publication. This was not so obvious to all directors.
Of greater concern was a Board member's position that the Act 34 materials are "just paper" and don't mean that much. The hearing was just another "hoop" we had to get through on the project. In other words - we have to check the box and keep moving.
The Act 34 hearing is more than a hoop, it is the an important opportunity for the Community to weigh in on the project.
Act 34, more commonly known as the Taj Mahal act, has part of its roots right here in the bubble. Building C, which was built in the 70's and is scheduled for demolition, was considered a Taj Mahal at the time and was one impetus for the legislation.
I was not impressed with Kubit's statement that he did not remember the 15% reimbursement percentage that was clearly stated in the Janney Montgomery bond analysis. Kubit is a two-year Chair of the Audit and Finance Committee and should have read his packet to find out what the percentage reimbursement was. He said he didn't remember the percentage last night. Is he really responsible enough to hold the Presidency when there is a $24,000,000 mistake in the debt service over the next 24 years.
The President serves at the pleasure of the Board. Do we need a forgetful President and a financial advisor and finance officer who allow large mistakes to happen?
If the state reimbursement rate is now assumed to be only 8%, then someone has a lot of explaining to do. In October, around the time of the first bond issue for this project, the financial analyses produced by the district and our financial advisor all indicated a 15% state reimbusement. A change from 15% to 8% has a huge material impact on the affordability of the project, as its currently designed.
This change couldn't have happened overnight, and shame on anyone for not carefully understanding its financial effect on the cost of the project to the taxpayers. Use whatever term you wish: malfeasance, fraud, incompetence, negligence, etc. It adds up to addtional $MILLIONS in new costs to the community.
I fear that this is just the beginning of bad assumptions on the project...
Mark Hart
So the cats out of the bag... now how are we going to deal with it?
Early there was a post about rising foreclosure in affluent communities like MTL. Will excalating taxes bring more, and force business closures in the district, further reducing district income.
Mr. Kubit mentions reducing staff, a solution, but I wonder how many of those employees are Lebo residents, if they're out of work then that reduces EIT and their abilty to pay property taxes!
Compounding the problem!
This is going to be interesting!
Dean Spahr
I don't share Dave's optimism that now, finally, everyone gets the big picture. The picture was in front of us a year ago. See this post, which I wrote almost exactly a year ago.) I and a lot of commenters here sobered up then and have been sober ever since. But the rest of the community, and much of the School Board, continues to imbibe. Metaphorically, of course.
I received the following from a close friend. I've elected to post it here because I think it accurately reflects how we got here - at least from a planning standpoint. I know that anonymous comments are not accepted here, so I'm happy to claim his words as my own:
For me, the “school-build” issue comes down to a simple two step process that underscores the lack of general leadership within this community.
First, the Board should have LONG AGO clearly identified for the community what the District definitely “NEEDS” in terms of facilities over the long-term. By now, the public should be able to site, verbatim, the needs of the district (from a facilities standpoint) as if simply repeating the A,B,C’s. Are any of us capable of doing so? Quite simply, a high school Math, English or Social Studies teacher does not need much more than 4 walls, desks, chairs, a chalkboard and perhaps some computer/video support to be effective in the classroom. Obviously, there are other disciplines that may have more significant needs in the classroom setting but, in general, I can’t believe the classrooms themselves – which are the FOCAL POINT of the high school - require a whole lot in terms of overhaul. As a result, I believe the community at large is still struggling to understand (and, rightfully so) what is NEEDED. Unfortunately, little consensus has been built by our community leaders to unite the general public on simply agreeing to addressing the “educational needs” in terms of the District’s physical plant and long-term strategic plan. While we are, no doubt, generally lacking on the facilities side of the equation within Mt. Lebanon (when compared to rival districts), I’d like to know where we stack-up comparatively from a programming, curriculum and teaching staff basis. All of us might feel a lot better about the community's “commitment to education” if we also knew that those three areas could actually be strengths of Mt. Lebanon and, as such, something to rally around (instead of against) and rely upon/lean on while we attempt to work through the challenge of updating our facilities.
Again, no one needs to panic - as long as we have great programming, innovative curriculum and quality teachers, the District can continue to progress in the area of most importance – EDUCATION. We can promote our strengths - and our home values will not tank. If, however, we’re compromised in the areas of programming, curriculum and quality of staff, then I would have a more serious concern about the overall “direction” of the community and viability of our homes to hold their value.
Second, once the “NEEDS” of the District had been clearly identified (and some type of consensus built around supporting such needs), then we could reasonably address and discuss COST. Contrary to popular opinion, I believe – old, young, and middle-aged in Mt. Lebanon – will pay for that which is NEEDED for education. Once the cost for addressing the “NEEDS” were identified, there should have been an honest explanation of funding options to meet those NEEDS. What can we afford now and what can’t we afford? Can we afford anything right now? Apparently, not. In terms of what we can’t afford, is it an immediate educational priority? If not, does it make sense to “save” for it?
In my opinion (and it’s only my opinion), when it’s all said and done, the “NEEDS” of the District (from a facilities standpoint) were not necessarily IMMEDIATELY pressing and renovating/building at the high school should have been more thoughtfully framed as “long-term strategic initiatives”. Under such a framework, the educated general public of Mt. Lebanon would understand how CAPTIAL INVESTMENTS must be planned for in advance and would have been willing to commit the financial resources to do so.
We had the advantage of time (over 3 year ago) to start meaningfully working on saving for and funding this project . . . although, that is somewhat funny now because I’m not even certain what the “school project” is really all about at this point.
Bill Matthews's comments suggest a factual, painful and very expensive history lesson about the 1970 - 1972 high school expansion (ie. bldg. C, etc.)that could also serve as a warning that *if you don't learn from history, you might be doomed to repeat it*. This is a lesson of what can happen if a School Board does not do its own homework and due diligence, and concentrates on merely *going forward* along someone elses sometimes bad information, advice and timeline.
In 1970 the then Board accepted, without question, someone elses enrollment forecast that enrollment would exceed 9,000 students by 1978...a then $17 million expansion of the HS was contrived, seriously opposed by the electorate, ended up in court, the Board side-stepped the challenge and the necessity of an electoral referendum by using a state shool Authority for financing and built what Bill refers to as the Taj Mahal...except that it had to be refinanced at $20 million in 1972 due to cost overruns.
By 1978 the actual district enrollment was -get this- 2,600 students LESS THAN the 1970 forecast had indicated it would be ! Because of gross under enrollment, we closed Jefferson JR. in 1986 and put 7-8 in the HS, and did likewise with Mellon Jr. in 1990...and rented part of Jefferson Jr. to non-profits (plenty of parking).
The cumulative cost of this fiasco had to be in the millions ! The current HS project is loaded with errors, omissions, bad advice and an artificial timeline...and a Board who seems to want to "check the boxes and move along". Will history repeat itself ?
I just went back and looked at the Janney Montgomery Scott presentation that was made when the Board voted to move forward with the bonds. Their presentation specifically states "For preliminary structuring purposes, the new project bonds are assumed to carry an effective reimbursement from the Commonwealth of 15%."
See for your self here:
http://www.mtlsd.org/highschoolrenovation/stuff/mtl%20mtg%20081009.pdf
Something stinks . . . . .
And then just before the Bonds were finally considered (09-21-09), the finacial advisor reviewed a report with the Board on 09-14-09 that indicated the local share of debt service was "Based on estimated state reimbursement of 8.35%"
See the footnote on page 2 of the document found at:
http://www.mtlsd.org/highschoolrenovation/stuff/hsprojectedfinancingsummary.pdf
Should Dr. Steinhauer have brought this 11th hour change to the Board's attention, rather than just dropping it in a footnote? Indubitably!
(Don't even tell me nobody told him.)
Econ 101. Supply and Demand. Lots of supply of anything coupled with low demand for said item equals falling prices until equilibrium is reached.
People can (and truly do) love Mt. Lebanon all they want. But, at some point, the magical "tipping point" is reached and people throw their hands up and say "enough is enough." They then talk with their feet.
If this high school project goes forward (barring a huge corporation setting up shop in downtown Mt. Lebanon) the market is going to be flooded with homes. The only way they will ultimately sell is if the prices drop dramatically. The lower home values (less real estate taxes) coupled with the fact that the families buying these now affordable homes have smaller incomes (less EIT) spells nothing but doom for the future. Maybe that's what Ms. Klein has now figured out.
You cannot spend yourself into prosperity. Why nobody ever seems to get this, after so many hundreds upon hundreds of examples, is beyond me. You want solutions? Find alternative revenue streams. Big revenue streams. Offer huge incentives to corporations and builders to open up shop here. A couple of years ago so many of you were against the TIF for Washington Commons and all your opposition did was delay and ultimately prevent (due to the recession) the construction of hundreds of good looking new housing units that could have attracted tons of new capital to the community. But, no. You'd rather look at an empty damn lot that brings a couple grand into the piggy bank because, wah wah, "it's not fair". And, by the way, how are things coming on the new hotel that was supposed to be built on the lot across from Rolliers? Oh yeah. Let's piss them off because their building was designed a few feet too wide. Huh?
The best quote I ever read about Pittsburgh was in that story in the New York Times a month or so ago. "Pittsburgh is the most livable, loveable and leaveable city in America." Repeat after me, tipping point, tipping point, tipping point.....
Several of the posts in this chain reference leadership and I think that is the biggest issue that we have right now here in Mt. Lebo. I have been back in this area for just over 4 years now and I am increasingly concerned that I have moved to a dying township. We have a high school improvement debate that is at times occurring in full public view and then often being waged in the streets and coffee shops. We have a public pool that is about to explode and/or slide down the hill it looks over, we have a rec center that includes a skating rink that I am told is in rapidly deteriorating shape. We borrow money to rebuild our sidewalks and streets hoping but not acting to make the community more financially stable. Worst of all we have a failure to think short and long term about the needs of our community. This is where leadership is most important. Leaders must make unfavorable short term decisions and set long term visions that cause a stir. I have seen very little of either in this community and it saddens me. I believe in what many outside of this township view as the 'bubble' of mt. lebo. A community strong in values, passionate in its focus on education and amenities and committed to staying ahead. Have we lost all of that? Has changing demographics, economic transformation and ego replaced those fundamentals? Time will tell. For me, I am losing patience with our community leaders. I hope only that someone with vision and thick skin will take the reins and move the agenda beyond these squabbles and into what really will defines our community for years to come.
I spent two hours at the high school tonight at curriculum night, much of it in Building B. Other than the roof and old ventilators that the board just voted to work on, what exactly is wrong with Building B as it currently exists? Building A? Oh, that's right, Building A must go because Facilities stores gas-powered snow-fighting equipment near a main electrical panel. So many of the reasons given for needing "like new" renovation and tearing down Buildings A and C are nothing more than ephemeral pipe dreams.
Pam Scott
As I have said in the past, I don't think there is a lack of leadership. We have several elected officials - Dan Miller on the Commission and James Fraasch on the SB - who for some time have been warning of the very scenario we find our selves in. Sadly though, their voices have been drowned out by single issue voters and fellow elected officials who can't come to grips with a sinking Mt. Lebanon. And even if there were more on these govt bodies who are concerned, the public just isn't listening. Walk across your own street and ask your neighbors if they know what was included and excluded from the recent Muni budget. Sure, there was no tax incease they might say, but when they realize that we aren't doing anything either, the tax issue doesn't seem as important. Same for the proposed school budget. People think the tax increase is necessitated by a high school that they have been told is about cave in on itself. Nonsense! We are going to get hit with double digit tax increases for the foreseeable future, but experience no improvements or increases in programming, staff or maintenance. We're raising taxes in large part to cover expenses that we didn't plan for and to cover debt.
Our leadership has proven itself willing to listen to the masses. To date, not enough of us have said to them "Enough is enough!"
We can't keep paying for gas with a credit card, when we should be taking the bus!
Dave, I am not sure it is just the public isn't listening. I broke the news to my elderly dad who has been a Lebo home owner for fifty years and he had no idea. He has a computer, but only uses it to play Solitaire and has no idea what a blog is. He has mastered the art of forwarding jokes though. Double digit increases EVERY year? Remember the magic of compounding, he says? I think all the comments have been spot on. Now, how do we get out of this mess? It has to come from leadership. The power is in their hands. Dan Miller and James Fraasch can't do it alone.
Elaine Gillen
For the most part anyone that knows me, knows that I often disagree with my husband. From time-to-time (or shall I say often) our views are far apart, however, I have stood by him on this topic for a very long time. Sometimes not 100% sure about the detailed financials he was talking about, but that is his strength. That is why I voted for him in the election. Believe me he worked for my vote as he did for anyone else. I have found through working with others that you have to rely on their area of expertise when a certain topic develops (especially when it isn’t your strength) and through that working relationship some times that means having faith in the board as a whole that each person brings value. The ideal scenario would be to have our school board members be civil and work well together but we don’t have that. Our community has elected board members that aren’t willing to work with the team. So we sit here as communities members and wonder why we are facing a financial crisis.
As a Democrat, I have often been disappointed to see some of the elected officials make this an issue about politics. However through the past years Republicans vs. Democrats…yada yada yada some have missed the point that these aren’t political party issues. We are facing a huge financial crisis that needs to be controlled. I know the same holds true for the commission on the other end with party lines. For the past couple of years, I have watched on tv two of the top financial people that MTL have ever had on the school board talk about this very scenario that we look at today. James developed a plan that was a draft. He requested input from the community and his colleagues on the board. NO ONE from the board even attempted to reach out to James. ONLY one from the board would listen that James might be right about our financial situation. Another said they agreed with James, but didn’t want to ruffle feathers. One board member said it was visionary, but the high school project was clearly too far along for consideration of his proposal. James and Mark Hart may not be actively involved in the PTA at MTLSD, but that does not mean they don’t understand the needs of the students. They are fathers that have children that are school-age and are both active in their child’s education. Because they are not Democrats, does not mean they don’t have a compassionate heart and are only out for helping the rich in this town. Actually it has been quite the opposite, they know they would like to see better enrichment programs for our students and that costs money. They see that the district will need to update the curriculum to become competitive with our neighbors in the future. It costs money. They know that this school district could be leading the region in positive outcomes for children with special education needs, but that means money. And, they know with this specific project and our financial crisis we will not be able to say yes to our students when it comes to their education. In addition, our citizens on a fixed income (young and old)need to stay if they want to. Even on a fixed income, they bring value to their neighbors and the community. From my view, “the financial people, conservative, the bad people that don’t want the best for our students”-are truly the ones that have done nothing but moved forward with the best interests of ALL the members of our community. Even if it isn’t a pretty financial scenario, if anyone was listening we could have stopped this long ago. I wholeheartedly agree with the notion that we have to learn from our past to ensure a better future. Our past has put us in the place we are today, and our future lies in the hands of the school board members to work together and make some drastic changes to our financial status and that may mean taking a look at the administration that has brought us to this point. K. Fraasch
So do I have this correct: we are considering staffing cuts and possibly closing a school or two, but we are still looking to build a sparkling new high school?
It seems that in light of these new and disturbing financial projections, any school board director should be reconsidering the wisdom of the high school project at this time? At the very least it gives them some political cover for reversing their position...should they feel they needed that cover.
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