Octorara School Board Prepares for 2.25% Property Tax Hike Vote

Octorara School Board Prepares for 2.25% Property Tax Hike Vote

The Octorara Board of Directors held their Facilities and Policy Committee Meetings, and the Work Session Meeting on Monday, June 12, 2017. All nine Board Members were in attendance.

With the exception of two items of note, Monday’s Committee and Board Meetings were generally unremarkable. The Facilities and Policy Committees are dealing with rather routine issues. While it is important work, most of it is also not very newsworthy.

Octorara SD’s 2.25% Property Tax Increase

During the Work Session Meeting, Board Members reviewed the changes made to the 2017-2018 Budget since the initial Draft Presentation back in December. Most can easily be described as minor and peripheral. The one major change that many people are concerned with is the lowering of the property tax increase from 3.2 percent to 2.25 percent. Next week, Board Members will vote to increase the real estate property tax millage rate in Chester County to 39.49 and in Lancaster County to 29.45.

I will be voting against both the budget and the tax increase, and here is why. First, with as high as the tax rate already is, I believe any tax increase is too much. Over the last 15 years, property taxes have grown at a much faster rate than incomes. Additionally, our retirees have it the hardest. Since 2010, their social security cost-of-living increases have been small or nonexistent. In many respects, the Board wants you to be grateful that they only punched you in the face rather than kicked you in the groin, as they originally intended. Continue reading

What Will Be This Year’s Octorara Property Tax Increase?

property-taxes

The Octorara Board of Directors and Finance Committee met on Monday, September 19, 2016. All Board members were in attendance.

Debt Refinancing

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.  Continue reading

Octorara’s $2 Million Deficit, Budget Cuts, and Tax Increases

Octorara's $2 Million Deficit, Budget Cuts, and Tax Increases

The Octorara Finance Committee and Board of Directors met on Monday, March 21, 2016. Eight members were in attendance. Linda Bicking was absent.

2015-2016 Budget Updates

There was an update regarding the 2015-2016 Budget. Local revenue is projected to come in at $186,760 above the budget. Revenue from Federal sources is expected to be short $288,748, We have no idea what is going on with the State.

We have received some funding from Pennsylvania thanks to a spending bill earlier this year, but there is still no budget. The State will hopefully, at the very least, pass another spending bill to help schools. However, it is not out of the realm of possibilities for Octorara to end the year short $3.8 Million.

I made sure to ask at the Finance Committee Meeting about the impact to Octorara. I wanted to make sure I knew, and could convey to the public, our unique situation. The Octorara Area School District is technically “safe” for now. In the off-chance we receive no more money from the State, there is enough in the Reserve to cover us until the end of the year.

This will completely erase the unassigned portion of the Reserve. Even so, property taxes will begin to come in for 2016-2017. We should be good for next year, even if the Pennsylvania budget issues continue. After that, all bets are off.

This scenario is highly unlikely. It is unimaginable the State will not pass an additional spending bill if the budget impasse continues, but we just don’t know. All that said, they could pass a budget that will actually plug this year’s deficit, and we could end the year up. It is all speculation, though.

2016-2017 Proposed Final Budget

In April, the Board will vote on the 2016-2017 Proposed Budget. It will look like this:

  • Expenditures — $52,405,602
  • Revenue — $49,484,879 (before any tax increase)
  • 3% Tax Increase — $964,727
  • Deficit — $2,005,996

On the revenue side, the State funds were calculated at a zero increase over 2014-2015 numbers. Last month there was speculation we could get an increase of $422,344. We just don’t know. Continue reading

An Interesting Outcome to Octorara Track Vote

Octorara Track and Field

The vote to approve $210,000 in spending to refurbish the Octorara Track was held at the Board of Directors’ Meeting on Sept 21st. The agenda item caused information to surface that several Board Members had been asking for almost 2 years. A last minute modification to the agenda item also added a bit of a twist, However, before all that, lets talk about current district costs, expected deficits, and the 2016-2017 Budget process. Good times, right?!

Explaining Budget vs Actual Costs

The issues of actual cost and the budget were discussed in the Finance Committee meeting. However, my first observation comes from comments made during the Track discussion. It explains a lot about our current financial situation when there are Board members who—either actually or intentionally—don’t understand the difference between budgeted costs and actual costs, or the difference between coming in under budget and coming in under revenue.

How has the District, for the last 2 years, come under budget but still ended with deficits? It is easy to come in under budget when you inflate costs on paper. As an example, if you know your actual car payment is $250 per month, but on a written budget you pencil-in a cost of $300 per month, then on paper it looks like you are doing a good job saving. This is essentially what the District has done for roughly 10 years.

What we have today is a situation where the car payment is $250, we only have $240 to pay for it, but we still are showing $300 a month on the budget. On paper, we look like we are saving. In reality, every month that goes by, we are getting farther and farther behind. Did I explain that well?

Projected Actual Costs and Deficit

The current projected actual costs for the 2015-2016 school year are expected to create a deficit of $647,472. These numbers were given to us by the Business Manager. They are also based on the current Teachers’ contract, and do not include any projected cost increases associated with any potential new contract.

Mr Curtis is also projecting 2016-2017 school year actual costs will increase by $1.5 Million, with a deficit of $1.6 Million. These projections assume only a modest increase in revenue, without a tax increase, and they again do not include assumptions about costs associated with any potential new contract.

While not specifically discussed in the meeting, we can have a reasonable expectation that taxing to the Act 1 limit will only add roughly $800,000 in revenue. If the Board decides to take that path, the actual deficit for 2016-2017 could be a around $800,000. Continue reading

Fireworks at Octorara Board Meeting

The Octorara Area School District Board of Directors held their monthly Work Session Meeting, and Facilities Committee Meeting, on August 10, 2015. Eight Board Members were in attendance at the Work Session. Shawna Johnson was absent.

During the Work Session, the Board was presented the Agenda Items to be voted on at the Regular Meeting on August 17th. Additionally, the Board received a presentation from the Field Development Task Force, and unexpectedly voted on two items other items.

Field Development Task Force

Dr Thomas Stickley, DPM, and Charlie Koennecker gave a presentation to the Board about why they believed renovation of the Track was essential, and cost scenarios with a list of several options. I can’t speak for the other Board Members, but for myself, the presentation left several questions I was looking for unanswered. Most of the very specific information revolved around cost, which ranges between $389K to $501K.

I questioned the Field Development Task Force representatives, “What percentage of the cost where they looking to split with the District?” It was a question they were unwilling to directly answer, but instead wanted to discuss the issue in terms of District obligation and responsibility.

Other Board Members also weighed in on the financial realities of the District. The District is on the path to hit a Budget wall in 3 years, and then negative Reserve in 4 years. The remaining $1.7 Million in the Capital Fund will also be depleted in 4 years, possibly sooner once the District’s Ten Year Facilities Plan is complete, and we have no realistic way to replace the money once spent.

A rephrased version of the question came for Hank Oleyniczak who wanted to know, How much money from the District means this is not worth talking about? If the District can only, at the very best, afford to put $100,000 toward the project, and the Task Force can only realistically raise $40,000 – $60,000 per year, then maybe discussion of the Track renovation needs to be placed on hold until the financial winds change.

Fireworks over Music teaching position

Some may recall last month an action to hire a new music teacher, replacing one retiring, was tabled. This week, Dr Newcome provided information requested about the impact of losing the position. That memo described a system relying on no less than five full-time Music teachers, and losing one would cause major issues.

fight

In discussion of the memo, Board President Lisa Bowman and Vice-President Brian Norris used apocalyptic terms to describe the consequences, stating that failing to hire this one teaching position would cause a systemic failure within the Music Department, and irreparable harm to students for years to come.

Sam Ganow challenged not only the idea not hiring this one teacher would have such a long-term negative impact, but directly challenged the contents of Dr Newcome’s memo, describing it as “manufactured.” He also challenged Board leadership regarding the way they have conducted themselves with the issue’s discussion, the presented information, and procedures of the vote.  Continue reading