The Octorara Board of Directors and Finance Committee met on Monday, September 19, 2016. All Board members were in attendance.
This is a wonderful opportunity to remind people if all you do is either attend the Board Meetings (the 3 or 4 of you) or watch the videos, you are missing 95% of the discussions and information. Yes, Mr. Ganow did mention the Debt Refinancing in the Facilities Committee Report, but you received very little of the information detail. This is why I have repeatedly asked that we start broadcasting Committee Meetings and posting the minutes online. What could it hurt? But, I digress…
The Committee received a Debt Service Presentation from Ken Phillips and Rhonda Lord of RCB Capital Markets. Thanks to historically low interest rates, the School District has the opportunity to save $1.1 million over the remaining years of our current debt service. However, this is a bit different than the refinancing we did in the past.
Previous, debt refinancing gave the District lump sum savings that we typically realized over two budget cycles. We don’t have the ability to do that this time. In fact, this refinancing is a bit unexpected and only because of the historic low rates of the U.S. 10-year Treasury. As a result, the bulk of the saving will be spread over the next 6 years and then dwindles off from there.
However, this is all based on “live rates”. All these actions take time, and rates can change a between now and then. The positive is that there is a possibility (small as it is) that rates could go down more, and we would then save even more. The only problem with this, as has been pointed out, is these refinancings have become part of the District’s funding strategy and have helped the Board to kick tough decisions down the road.
Relitigating the Track
This needs some setup. So, bear with me….
Last September, after 18-24 months of monthly discussions in the Facilities Committee, the Board voted to split the cost of renovating and upgrading the track with the Field Development Task Force. The Board would agree to pay up to 50% of the cost, with a hard limit of $210,000. Additionally, work could not start until the FDTF had $134,000 in-hand. This was to cover the costs up to the basic, black rubber surface. They then had 2 years to raise the balance. Once their remaining funds were in-hand, they could then install an optional red protective coating.
There are several reasons for all the requirements and limitations. First, during the months of discussions,we were never able to pin down the cost. The agreement of 50% with a hard limit of $210,000 was to protect the taxpayers from unforeseen or undisclosed costs. The reason for waiting until there was cash-in-hand was also to protect taxpayers. The District could not be left holding the bag if fundraising started to fizzle.You with me so far?
In March 2016, Dr. Newcome informed the Board that the FDTF had commitments and was expected to have cash-in-hand by June. However, at the time, they did not technically meet the agreement or the terms of the vote. Therefore, he asked the Board to vote to give him permission to seek bids. If we waited until the Task Force was able to actually meet the terms set by the Board, they would have had to wait until next summer to start construction. The Board gave the authorization. Agree or disagree with the action, this was the first fundamental change.
Last week, Nelson Stoltzfus approached the Facilities Committee about a conversation he had with a still unnamed “concerned citizen” who is involved with Track and Field. This “concerned citizen” asked the District to consider loaning the money for the balance so that the whole project can be completed all at once. At the time, estimates of when the Task Force would have the money ranging from 1 year (from Mr. Stoltzfus) to 1.5 years (which Dr. Newcome said was more likely).
Say what you will, but tonight’s discussion and debate were a complete relitigation of everything that brought us to the September 2015 vote. Not only that, last week’s predictions of 12-18 months of fundraising was shorted to a statement that the FDTS will have all but $5,000 by June. Now think about this… During the original vote, waiting two years for the optional red protective coating was good. Today, waiting 7 months will cause indeterminate and detrimental damage to the track that we just can’t risk. Seriously!?
What changed? Shawna Johnson and Sherri Milton are no longer on the Board. They supported the track, but expressed many concerns about the ever changed cost estimates, how the Board planned to actually pay for the project, and the position the Board would be in if the Task Force fell short in fundraising. It is easy to play fast and loose with taxpayers money when there is just Tim trying to remind people why the vote went the way it did.
Playing Property Tax Roulette
Jeff Curtis informed the Finance Committee that the base Act 1 limit for 2017-18 is 2.5 percent. However, as we know, Octorara gets an adjusted rate, but that will not be announced until (maybe) later this week. Nonetheless, based on what we know, Mr. Curtis suspects the rate will be 3.2 percent (without exemptions).
If the Board chooses not to take exemptions, allowing them to tax above this limit, there will need to be a resolution by December. As of last night’s Finance meeting, there does not seem to be any move to take exemptions or tax beyond whatever that limit will be. Regardless, don’t let Board Members hide behind the process.
At the subsequent Board Meeting, I made a comment about the very likely possibility the Board will have to tax up to Act 1 limit. This was followed shortly after with Lisa Bowman (President) doing the all too typical speech about how no decision has been made. Well, let me tell you something…. no decision is ever made until a decision has been made, and by then it is too late… just ask the parents who tried to save the Librarian position before the last budget vote.
Sure, the Board can do something like they did a few years back when they didn’t raise taxes but still allowed the budget to grow. How did that work? In reality, it only accelerated our financial problems. One thing we must keep in mind, a 3.2 percent property tax increase does not cover a 3.2 percent budget increase.
A 3.2 percent budget increase adds more than $1.66 million in costs and a 3.2 percent property tax increase will likely raise only roughly $1 million of additional revenue. This is because a large portion of our revenue comes from other sources, like the State and Federal governments. Property taxes are the largest portion of our revenue, but it is significantly short the cost of the budget, So, expect to add an additional $600K deficit to the carried over deficit from last year.
Ok, sure, nothing has been decided. However, there are only so many viable paths here. So, you can choose to listen to those who hide behind the process or you can take an active role, pay attention, and make your voice heard.
Correction or Was I Right?
So, at the end of the Board Meeting, Brian Norris took issue with a comment I made on last week’s blog entry. What’s new, right? Anyway, this is the section cited:
“True to form, Brian ‘Tax-n-Spend’ Norris spoke up arguing the Board should do more than the requested loan and actually provide $30,000 towards the cost”
His offense was a claim that he did not once say $30,000 and he only mentioned $10,000 or $15,000. Is that really any better? However, I stated if I was wrong, I would print a retraction. But, if I was right, I was going to print the transcript. Well, because I think good ‘ole “Tax-n-Spend” Norris was initially gunning for spending $30,000 but he is also right that he only mentioned $10,000 or $15,000, I am posting the video starting at the beginning of that conversation.
In the video, you see Brain floating the idea of “contributing” to the band uniforms. It is only after he met some resistance that he throws out the idea of $10,000 or $15,000, which obviously (at least to me) appears to be an attempt at creating a compromise. However, is there any real difference when we are talking about spending what we don’t have?
In June, the Octorara Area School Board of Directors cut $537,800 from the budget and raised taxes to the Act 1 limit. At the August Finance Committee, members were asked what “big ticket items” we should look at to save money in the next budget. There were only 2 suggestions… mine, which was looking at building consolidation, and Mr. Ganow’s, which was to take a look at Special Education. No one else spoke up.
Ok, since there is zero support for building consolidation from other Board Members, that means most of the focus will go to Special Education and trying to squeeze dollars from the kids who need the most help. Yet, at the same time these discussions are going on, good ‘ole “Tax-n-Spend” Norris is floating the idea (In the Facilities’ Meeting) of spending $26,000 more on the track, and (depending on how you interpret the video) somewhere between $10,000 and $30,000 on the band.
In my opinion, Norris is being a bit Clintonesque with his use of language, and it doesn’t fundamentally change what he was doing. It doesn’t matter how much it is, he wanted to unnecessarily spend taxpayer dollars. Norris is like so many elected officials who have no shame throwing other people’s money around. The good news is both spending issues seem to have gone nowhere.Yay taxpayers!!
If you are so inclined, check out the last few minutes of last night’s meeting, when Norris made his complaint. (I’m currently having a hard time finding it both on the Cube and YouTube.) Does anyone really believe Norris is that upset with me for writing 30 versus 15? No! It was the uproar and backlash from taxpayers who saw him playing fast and loose with their money. It is not too dissimilar to last year when I informed the public about Brian Norris, in a Finance Meeting; wanting to take exemptions and taxing beyond the Act 1 limit. He didn’t want that out for public consumption either. Like so many of our elected officials, his go-to answer for almost everything is tax and spend.
However, here is another rub. Norris actually has the audacity to claim I misrepresented his position. OK, if you want to quibble about the very specific language he used then fine, but unnecessary spending is unnecessary spending. Nevertheless, how many of you remember when Brian Norris outright lied on me in a public meeting? In June 2015, Norris didn’t just misrepresent my position on the budget leading up to the vote, he outright lied and said I made no effort to argue for budget controls and cuts. Again, go watch that video. Sam Ganow was the only Board Member who came to my defense and even read from meeting minutes to prove Norris wrong. Mr. Pot, let me introduce you to Mr. Kettle.