The Octorara Area Board of Directors and Finance Committee met on Monday, December 12, 2016. Eight Board members were in attendance. Hank Olejniczak was absent.
Board member absenteeism is a big pet peeve for me. It is something I mentioned privately to Board leadership about this time last year. There were several members of the previous Board that (to me) seemed over the top. In fact, one member, for two consecutive years, knowingly scheduled family vacations when the Board was voting on the budget,,, arguably the most important vote made. This year, I am taking it upon myself to make public the most egregious attendance violator… Hank Olejniczak
- RS 12/12/2016
- WS 11/12/2016
- RS 10/17/2016
- WS 09/12/2016
- WS 06/13/2016
- RS 05/16/2016
- RS 04/18/2016
- RS 02/23/2016
Mr. Olejniczak missed 8 of the 23 Board meetings (35%) and corresponding committee meetings. Within those numbers, 5 of 12 Regular Sessions (roughly 41% of voting meetings) were missed. Moreover, Olejniczak could have potentially lost his Board position under 24 P.S. 319 for missing two consecutive Regular Sessions, but the law is a bit vague in defining a “necessary absence”. However, while the law empowers the Board to remove someone like Olejniczak, who has an outrageous record for missing meetings, it does not seem to necessarily compel a vote. It all really comes down to the discretion of Board leadership to make it an issue.
Therefore, since friends don’t vote friends off the Board, it is up to voters to decide if absenteeism is a real issue. Regardless, the only way to know if your Board Members are showing up to meetings is by meticulous tracking absenteeism on your own. There is no reporting mechanism in place to inform taxpayers and the general public of a Board Member’s attendance record. You need to pick through each month’s meeting minutes and chart each them individually.
Hank Oleyniczak is up for re-election this year in Region 2.
The 2016 Audit
Once again, Herbein + Company, Inc. completed their audit of the District’s financial statements and compliance with internal controls. There is not much new information. We discussed many of the big issues regarding the 2015-2016 Budget last month. However, there are some points worth noting.
The 2015-2016 school year ended with a surplus of $648,954. This was a direct result of roughly $700,000 of debt cost savings and $500,000 of an owed but unplanned PlanCon reimbursement, This is around $1.2 million of non-reoccurring credits. This is $1.2 million that could have just as easily not been there, and caused a significant deficit, cutting deep into the District’s Reserve. This is also $1.2 million that we have not thoroughly addressed.
However, the auditors did provide high praise to Jeff Curtis and his team for creating an Internal Service Fund and the Capital Reserve Fund. Those who follow this blog know that I have given Mr. Curtis kudos for many of the changes he has made since becoming Octorara’s Business Manager. He is a forward thinker who understands the need for long-range financial planning. I don’t always agree with him, but he is reasonable and rational in his approach.
The 2016-2017 Update
In June, the Board passed a Budget with roughly $537,800 in cuts, a $1 million deficit, and a $316,883 anticipated use of Fund Balance. Projections are showing we are going to receive $585,738 in debt service saving and another $633,814 in other expenditure savings. On the revenue side, local revenue is looking up by $198,817, but State revenue is down by $168,780 and Federal revenue is down $316,319. All in all, the current forecast is an anticipated use of Fund Balance of $73,613.
The 2017-2018 Budget Process
The Board received some initial numbers for the 2017-2018 Budget. Before getting into those numbers, there are some things I should reiterate. First is while you can watch the presentation on The Cube, most of the real detail and conversation surrounding it was at the Finance Committee Meeting. This is how it is going to be from now until the Budget vote in June. If you want to know what is really being discussed, demand those meetings be recorded.
Second, you will hear some Board Members start talking about how this is a process and there is nothing anyone should worry about this early. WRONG!! This is just an attempt to keep you out of the process. Just like cutting the Librarian last year, they will tell you “no decision has been made”. Then, when you finally do speak out, it is too late. So, keep that in mind.
2017-18 Budget Highlights
- What the Board was shown was a 2017-18 Budget of $53,605,175, an increase of over $1.7 million.
- The numbers also assume a 3.132% tax increase in Chester County and a 3.411% tax increase in Lancaster County.
- This assumed property tax increase will raise $1 million in revenue.
- However, despite all sources increasing revenue by $1.4 million (this includes the above property tax increase), the budget will still have a deficit of $1.2 million.
- Because of the Budget Contingency and anticipated Debt Service Savings, there is an anticipated use of Fund Balance of $577.285.
I know, some of you are asking, “Why is the deficit still so high and higher than last year?” It all goes back to our discussion about the 2016 Audit, and an issue I have been trying to bring to the public’s attention for years. The Board has, for a very long time, relied on non-reoccurring credits to help pay for the growth in the budget. These kinds of credits have lasted way longer than most would have ever expected, but they are going away.
The District has benefited from a very slow U.S. economy and historically low interest rates. They have been able to repeatedly refinance their debt, saving hundreds of thousands of dollars within any given budget. It was a way to kick the can, and avoid making the hard choices. However, this is an issue that every Board Member knew existed when they voted on new spending programs, like the armed security guard and the iPad program. They never wanted to discuss it, but they all knew we were surviving on borrowed time.
During the meeting, Brian Norris asked what only half tax increase would look like. The answer is a $1.7 million deficit and a $1 million use of Fund Balance. However, if you watched last night’s meeting, you don’t see any questions about ways to cut the budget so that we don’t need another tax increase, or even limiting it to something less than taxing up to the Act 1 limit. At this point last year, there was already serious talk about making cuts.(Read this year’s so-called discussion about building consolidation here.) That doesn’t mean cuts won’t happen this year, but I would not hold my breath about there being any serious effort.
As I have pointed out before, the cuts in the 2016-17 budget were about doing the least amount possible, and truly did not address the long-range financial issues facing the Octorara Area School District. Before I was on the Board, I banged my fist during Visitor Comments stating that the District was on the path to reach 40 mills before the end of the decade. There were Board Members who, back then, said I did not know what I was talking about. Well, we will be just a hop, skip, and a jump away from that after this year.
Don’t expect your representatives in Harrisburg to help. Pennsylvania is suffering a revenue shortfall and not collecting the expected taxes. Moreover, the Central Pennsylvania Business Journal reports that revenue is coming in “below estimates in almost every stream, including personal income tax, the state’s largest source of income.” If the trend continues, the State will have to make cuts to their own spending. Ultimately, it is just more evidence that all taxing agencies cannot just keep reaching into people’s pockets.