Cycle Repeats for School District

In the summer of 2013 we wrote a blog about a budget proposal in the Plum School District that would have furloughed teachers in order to eliminate a budget deficit.  Instead the decision made by the school board was to raise taxes and dip into reserves to not eliminate jobs.  Taxes did not increase in 2014-15, but have gone up in the last two years.

We noted “One thing is for sure: as long as [the board is] taking guidance from the union and the students who do not have to pay the bills, the board will keep making bad decisions that will come back to haunt them later.”

Forward to the budget deliberations for the 2018-19 and 2019-20 school years: as of now, subsequent years of tax increases (an eighth of a mill each year) and furloughing an additional 14 employees (beyond twelve teachers that are to be furloughed as part of the closure of an elementary school) that would come from the ranks of administrators and teachers are possibilities.

Since both administrators and teachers are mentioned in the news article that sounds like the District plans to utilize the new language in the school code added by Act 55 of 2017 that allow for economic reasons for layoffs.  The Act requires administrative layoffs at an equal percentage of teacher layoffs unless the state Department of Education grants a waiver.  There are then a number of steps that have to be taken as spelled out in the Act when teachers are furloughed for economic reasons.

That 2013 blog also noted ” Plum taxpayers (and others across the state) will now begin to learn the reality of the underfunded pension mess as it appears the state is in no mood to make the serious reforms that will reduce the unfunded liabilities.”  And what did a consultant tell the District a few months ago?  That there would be “no financial problems if it were not for a yearly payment of about $10 million the district must make to the Pennsylvania Public School Employees Retirement System.”

 

 

School Association Survey: Pension Pressure Now, Relief Long Time Away

The PA School Boards Association released its State of Education report for 2018 today.  The report combined available data on K-12 education with survey responses from school officials serving K-12 districts, intermediate units, vocational-technical centers, etc.

There is plenty in the report; budget issues/pressures are prevalent with administrators identifying pension costs (82% of the responses) as a major budget issue (the report says “chief school administrators once again identified pension costs as the most common source of budget pressure”, which likely means that at least in 2017, if not earlier years, pensions and pension funding have been at the forefront of school budget preparation and attention.

Page 35 of the report shows that following the 2010 legislation on school pensions the percentage of pension costs of total expenses has risen from 2.2% to 10.1%.  And school district contribution rates are going to continue to climb until about 2034-35 and then will start to fall.

That’s what we noted in a Brief last year and PSERS funding ratio should begin to climb between 2030 and 2040 from 72% to 96% if projections hold.  There really was not much difference between forecasts of the Act 5 reforms and the 2010 pension changes because it takes a long time to have current employees be replaced by new hires, and the new hires will have three pension options from which to choose, one of them a pure defined contribution type plan.  If they don’t make a choice, they fall under a default hybrid plan with both a defined benefit and defined contribution portion.

School District Scrutinizes Spending

Staff at the Moon Area School District in Allegheny County are sharpening their pencils and taking a hard look at its spending to see where it can reduce expenses.  In a news article the superintendent of the District said that “we are really focused on our budget” which is a good thing since the fiscal year starts on July 1st.  Transportation, printing, travel, and contracts are being reviewed.

That’s likely welcome news for taxpayers in the District; since 2013-14, property taxes have increased 12% to 20.3028 mills this year.  In three of those years tax increases outstripped the Act 1 index for the District as determined by the PA Department of Education; exceptions granted to the District permitted the increases above what would have been the allowable hike.

Moon was involved with a merger discussion with the neighboring Cornell School District in 2014; it also closed a school building two years ago.  At that time the District had an interim superintendent (different from the current one quoted above) that spoke about furloughing staff for economic reasons, which was prohibited by state law at that time.  The law has now changed and there is a detailed process for how economic furloughs occur.  Could that be a provision that the District explores as it tries to avoid a tax increase for 2018-19?

Bill Would Put a Lid on Soda/Pop Taxes

A bill introduced into the General Assembly would prohibit any political subdivision from imposing a “fee, surcharge, sales tax, tax on gross receipts, excise tax, or other tax” on food and beverages, food and beverage containers, and the supply and distribution of food and beverages and food and beverage containers.  This was prompted by the Philadelphia beverage tax, the legality of which is currently in the hands of the Pennsylvania Supreme Court.

Philadelphia raised the idea over a decade ago, and Pittsburgh considered it in 2010 but it was only in 2016 when Philadelphia went through with imposing the tax. Philadelphia collects the tax on the 20th of each month from distributors of sweetened beverages and the first payment of the tax was due in February of 2017.  Court consideration of the matter began in the fall of 2016 at the Philadelphia Common Pleas Court level.

Much like a legislative effort to prohibit municipalities to enact paid employer leave requirements after Philadelphia had actually created one, the proposed legislation regarding soda/pop/sweetened beverage taxes would prohibit municipalities from enacting such a tax and would end Philadelphia’s as well by making the tax expire on the effective date of the legislation should it be enacted.  In the City’s five year financial forecast covering fiscal years 2018 through 2022 the tax is forecast to raise over $90 million per year.

 

Can a Czar Make Local Governments Share Services?

Last week a topic we have blogged about previously, a possible merger of police departments in the Allegheny Valley communities of Cheswick and Springdale Township, was the topic of discussion between officials of the two communities. While there won’t be a merger, a working agreement on patrols could possibly deliver savings of $100,000, the details of which are unspecified and if the savings are to one or both of the municipalities is also unspecified.

Pennsylvania offers grants for municipalities to explore share services through its Municipal Assistance Program, and neighboring New York has established shared services panels that directs county officials everywhere but New York City to come up with plans to share services at the local level that will translate into property tax savings.  If there are demonstrable savings, local governments could be eligible for a one-time match in state money (an idea we offered for Pennsylvania close to a decade ago).

But in New Jersey (566 municipal/township governments) the Governor of the state is pushing the idea of having a “shared services czar” that would oversee efforts to make local governments work together and deliver savings.  An article on the proposal notes that there are plenty of examples where municipalities are working together, and sometimes even with special purpose governments like school districts and special districts (authorities).  But with someone at the state level directing the efforts, one can see how there could be tension and pushback from the communities who feel they are doing something to save money.

Gaming Board Halfway Through Category 4 Auctions

The state’s Gaming Control Board awarded the fifth license for a Category 4 casino to be located in Lancaster County, maybe.  The municipality identified as the center point is West Cocalico Township, has opted out of hosting a facility, but the casino can go anywhere within a 15 mile radius of that point.

The winning bid was placed by the owners of Penn National, a Category 1 facility in Dauphin County, which bid just $3 over the minimum threshold of $7.5 million.  An article on the winning bid indicates that the owners had an interest in creating a buffer area to protect the Category 1 facility from competitors.

The winning amounts have definitely fallen since the first auction that will place a casino in York County (also won by the owners of Penn National).  That amount was $50.1 million.  Subsequent winning bids for Category 4 casinos in Westmoreland ($40.1 million), Lawrence ($21.8 million), and Cumberland ($8.1 million) have combined to raise $127 million including this week’s winning bid.  If the next five bids come in at the level of this week’s bid it would be expected that another $37.5 million would be raised until the end of the bidding period.

With the existing casinos these five will mean 17 of the state’s 67 counties will host a slot/table game facility.

 

ICA is Still Around

Maybe it will take a resignation en masse to end the existence of the remaining overseer for Pittsburgh’s finances.  The Intergovernmental Cooperation Authority (ICA) has asked the General Assembly to put it out of business immediately by amending a 2016 law that changed its term of existence.  There is legislation in committee which has not moved since it was introduced in mid-February, a few days after the state rescinded the City of Pittsburgh’s distressed status.

The ICA board met yesterday (four of the five voting members were present) and, according to a news account, a 2-2 vote on distributing the local share of gaming money would require another meeting, which the ICA would have to make happen with the $186 left in its account.  The ICA received no state appropriation for FY 2017-18 and was not even in the budget for 2018-19, so it had to request $37,000 from the City to pay outstanding expenses earlier this year.

At the ICA’s January meeting there were also four board members present (a motion to approve September 2017 minutes passed unanimously, a motion to approve the resolution asking the state for immediate dissolution and the request for City money passed 3-1, and a motion to adjourn passed unanimously).  At that meeting the executive director of the ICA stated that the office that was being utilized would be vacated at the end of that week and a temporary office with the law firm of the ICA solicitor would be provided and business operations would essentially cease.  Even the ICA’s files were being transferred to the City per the 2004 law that created the entity.

But now there has to be communication with the state and the City over how to handle the distribution of the gaming money (once the ICA is dissolved the money is to go directly to the City for funding pensions) and possibly another request to the City for money to operate on until the ICA is finally dissolved.  Maybe this latest meeting will prod some action on the proposed legislation.

 

 

 

Teacher Strike Ends; What Comes Next?

Teachers in the South Butler County School District returned to work today after going on strike March 15th.  The District provides K-12 education to students in five municipalities in southeast Butler County.  Based on our 2013 report on teacher strikes there were two strikes in the 1997-2013 time period covering a total of 30 days.  The contract between the District and the teachers’ association expired in 2014.

The fact-finding report under Act 88 was completed in August of 2017, and it addressed District and association issues that were in dispute, including the length of the contract, length of school day, healthcare coverage (including a switch to a health savings account in 2018 for medical expenses), and wage schedules through the life of the contract.  It should be noted that fact-finding was also undertaken in 2015 and showed there were thirteen issues in dispute from the District and thirteen from the association.  In both cases the report was accepted by the District and rejected by the association.

Now that the strike has ended (in order to get 180 days of instruction completed by mid-June as required by Act 88) the parties are proceeding to final best offer arbitration, according to a document posted by the District and by the terms of the Act in section 1123-A.  Arbitration is limited to unresolved issues and if rejected by either party there could be another strike, the District may hire substitutes, or the District could have a lockout.

Goodbye, Town Hall? Part IV

A few weeks ago we wrote a blog on legislation that has been introduced in the General Assembly to permit municipalities in Allegheny County (of 10k or fewer residents) to voluntarily disincorporate and have the County administer services.

The process as currently proposed would go like this: the governing body of the municipality would pass a non-binding resolution of preliminary interest; that would be forwarded to the County Manager’s office and the two parties would begin discussions, focused on crafting an essential services plan.  The plan would have to be completed in 180 days, and there could be a mutually agreed upon 90 day extension.  If the plan is not completed by then, the idea of disincorporation ends.

If a plan is crafted, it is back to the municipality, which would then have to take up an ordinance adopting the plan.  If approved, it goes to the County Council.  If disapproved by the municipal governing body, the idea of disincorporation ends.

It them proceeds through the County government, with again consideration by the legislative branch and the County Executive, with a chance of approval or disapproval at those points, when finally, if it makes it past the County government, it comes back to the municipality for a referendum by the residents of the municipality that could dissolve.  If approved, the municipality becomes an unincorporated district.  If disapproved, the municipality stays intact and the question of disincorporation could not be considered again for five years.

School Board Referendum in Philly

We have written about the change from the state-appointed School Reform Commission overseeing Philadelphia’s public schools to a locally-appointed school board that will take effect at the end of June.  Prior to that voters in Philly will have a question on the ballot to amend the City’s Home Rule Charter that involves the relationship between the office of Mayor and City Council on appointing people to serve on the board of education.

The current language in the Charter states that board appointees serve at the pleasure of the Mayor, unless the City transitioned to an elected board (which is not happening).  The ballot question for May asks:

“Shall the Educational Supplement to the Philadelphia Home Rule Charter be amended to restore local control by confirming the Board of Education’s independent responsibility to administer the School District of Philadelphia, providing for public participation in the Educational Nominating Panel process, revising eligibility requirements, requiring City Council confirmation of School Board appointments, requiring a stated reason for removing a School Board Member and establishing a Parent and Community Advisory Council?” (italics added).

Apparently in February there was a bit of friction over the transition back to a local board (here and here) and one observer noted “…Council wants to be an equal partner in the formation and composition of the school board,” but in the pre-SRC days, “it was never the intention for Council to be an equal partner”.  The language that was originally proposed by Council is now the “stated reason for removing” compromise that will go before the voters.