High School Project Update and Thoughts

On Monday, June 1, the Board held a special meeting regarding the high school project. We went over the revised design and had the opportunity to ask questions of the architect. Please refer to the documents from the presentation here.

As I mentioned in my last post on this topic, I do like how much better the outside look of the building has improved from the original curved design presented months ago. However, over the past two weeks there have been a number of questions from the public and the Board that needed to be answered on Monday.

Let me list them in no particular order of importance:

1) Question: Did the architects plan for the moving of large musical instruments from the current pool area all the way over to the Auditorium/Little Theater Area? Did they allow for the fact that when there are performances in these areas that the students involved in these activities will need places to change and places to store equipment/clothes/personal item?

Answer: On the first question the architects responded that they will be building a large ("as large as we need it") freight elevator to move the instruments. On the second question...I don't remember hearing an answer. If someone else did, please let me know. The current spaces used as storage/changing spaces for performances are scheduled to be used as Applied Arts classroom space (see page 16 on the presentation). Is this an irreconcilable difference? Tough to tell. I have received numerous emails from parents stating that this is unacceptable and one email from a parent saying this is no big deal- that instruments are moved all the time. We do have a convoluted way of moving our instruments from one place to another now. Is it just that there was an expectation that this would be improved in this design or is this a matter that is a showstopper? I'd like some more feedback on this.

2) Question: What's up with the tennis courts?

Answer: The architects have vowed to find space for a total of 6 tennis courts. As pointed out by an experienced coach, we need to ensure that the 6 courts are located together and not across the street from one another. Having four on one side of Horsman Drive and two courts on the other would not be conducive to coaching a varsity tennis team.

3) Has there been a traffic study done on Horsman Drive to ensure that it can be a 2-way road?

Answer: No, but we expect to have one soon. For me, there is no doubt that Horsman can be made into a two way street. There is certainly space for it. But my concern is not so much for Horsman as it is for Lebanon Ave and Hollycrest Drive. Lebanon is pretty narrow at the top of the hill and I suspect that making Horsman a two way street would require the widening of Lebanon Ave from the top of the hill down to the stoplight. Hollycrest is also a very narrow residential street and one where the residents probably do not expect to have a serious increase in traffic by people/students going up their street to take a right on Horsman to drop off/pick up/park, etc. Maybe this is a municpal issue but it is a pretty serious one given the debate about traffic calming measures that have been taken by the sitting commissioners. Is this a dealbreaker? I'm not sure I can vote for this plan without a traffic study/commission meeting that says they will allow the extra traffic on those streets. Additionally, if we do need to widen the road at the top of the hill, who pays for that? If it is the District, then that cost is not included in our most recent documents.

4) What is the deal with the pool?

Answer: It appears that the Board is willing to increase the size of the pool from 6 to 8 lanes. The pool is a different animal than most of the other aspects of the school in that it is perhaps the most widely used community asset the high school has. Setting this pool up for more community use makes sense. Simply repeating the issues we have with the current pool would be a mistake. I am hopeful that the architects will take up a resident's recommendation to contact USA Swimming and talk about a design that works not only for our swim team, but for the community as well. There are plenty of examples out there of good combination community/school use pools. I believe there will be ways to reduce the cost of the pool while also building one that is a better fit for the community. Please see this link for a possible alternative. This link has also been given to our architects and design team. Here is a picture of what a possible "stretch" pool might look like. This design would not be exceptionally larger than what is currently planned.

5) Will the athletic spaces meet Title IX requirements for our student athletes?

Answer: The architects said that they would. There is a concern that, given how many student athletes we have, we would be cramming them all into small locker rooms. This is borne out by the evidence gathered by two different studies, one by Dejong and the other by RSH Architects (who were hired on behalf of the Blue Devil Club). If we are to remove the field house, we would eliminate over 20,000 square feet of field sports facility space. The new design does not make up any lack of existing space, it simply builds a newer space.

6) How much is it costing us to have a design criteria that says we are not to use temporary classrooms?

Answer: Noone knows. Director Hart first asked this question. Due to a lack of any clarity on the answer, I asked it again. I received the same answer. The architects cannot quantify how much this is costing. What is clear is that the design of this building (the "Z" shape) is predicated on not demolishing building C until the new academic wing is built. We need that classroom space if we are not to use temporary classrooms. This is the reason why the length of the building is barely shortened (another design criteria that apparently is only being mildly met by about 45 feet from one end of B Building to the far end of G Building). What would happen if we took out this single criteria? I get that there are a lot of people against temporary classrooms. Apparently people here have had negative experiences with them. As someone who grew up in temporary classrooms from 3rd grade through high school due to increasing student population and therefore demand for inexpensive additional classroom space, I can say that I really didn't care much if my class was in a well ventilated air-conditioned temporary classroom or in the main building. On hot days, it was always much better to be in the temporary room. I get that there is serious sentiment against using these classrooms here, but at what cost? The architect said that he was told to avoid temporary classrooms "at all costs". Surely, that is not a good way to think about this. At a $1 million cost? What about $5 million? What about $10 million?

To me, not knowing what "at all costs" is actually costing us is one of the reasons I am leaning towards voting against this footprint design.

As a final note, some will remember way back in January that I proposed we invest some money in the school now, pay down some debt, and plan for a major renovation/construction project for 2016-2017. I was told, as was the public, that the costs of renovating B Building alone would make this plan cost-prohibitive. In the latest architect costs, please note that B Building in now the LEAST expensive building to renovate at $127 sq/ft. Total cost of renovation of B Building is sitting at $14 million. This is much less than the $20-30 million number that was given as a deterrent to such a plan back in January.

That $14 million number is very well within the range of what I thought we could afford to do. I suggested in January that we use the Guaranteed Energy Savings Plan to invest in the existing school building which would cut the costs of this plan possibly in half and leave us with a viable option for a future new building in a few years.

Thanks for reading and please give the Board any feedback before Monday's meeting.

James

Budget Passes on 7-1 Vote

I've posted a number of times about the budget, about voting "no", about the high school, and many other topics under sun. There are people out there that get what I am saying. I am not on this Board for my own glorification. If I was, boy did I ever pick the wrong venue for that. I don't vote no just because I like to go against the grain. Honestly, it's not easy to vote against something. It is much easier to be FOR something. I don't taking these votes lightly, however, I think many people do.

Take the budget for one example. Are you prepared to have your taxes raised 30-50% over the next five years? Think about that for a second. Our budget puts us on a path to increase taxes from 23.81 (last year) to 34.98 in 2014-2015. That increase depends on what rate we get on our high school bonds, the cost of the high school project (this number is based on $100 million) and what return the PSERS investments get. The increase may get bigger or it may come down if the stars align. As an example, if you own a $200,000 house in Mt Lebanon, your taxes are projected to go from $4,762 all the way to $6,996. A $400,000 home will go from $9,524 to $13,992.

Ask yourself if you really think those tax increases are going to attract young families to Mt Lebanon. When I moved here in 2004 and looked at competing school districts, communities, and places to raise my kids, Mt Lebanon was one of three places I thought would work. And I was right about that. My family loves it here. We are proud when we escort our out-of-town relatives to the different places in Mt Lebanon that make it unique. We go to the parks, Beverly, Washington Rd, our beautifully restored elementary schools, and the list goes on and on. People moving to Pittsburgh all do what I did. They look at the overall quality of life in any prospective community.

When I vote on that budget, I don't just look at what is happening this year (a .30 mill increase) because honestly, what happens on a year to year basis fluctuates so much. But when you see the impact that your decision is going to have on future families that are evaluating Mt Lebanon much the way my family and I did in 2004, you have to have a bit of perspective. The impact the Board will have TODAY on the decisions made by unknown families five years from now is staggering. After talking with a few Board member off-the-record, I know that there are more people on the Board that get the fact that putting us on the course to a possible 50% tax increase makes this budget unsustainable. But there is a bit of a fear of inevitability. That we can't actually avoid those increase. I completely disagree with that assessment. As a Board we hardly looked deep into the budget to find cost savings. We never did sit down and prioritize our budget objectives. We never did implement a process to start a zer0-based budget and we never did get the programmatic budget that was asked for after last years budget passed.

Until we can sit down and look at our expenses based on programs and until we can sit down and start every budget year over at a zero number, then I fear this Board will not have the ability to avoid the large tax increases coming.

We hear every day in the news today about school districts cutting staff (see Sto-Rox), cutting classes, closing schools (see City of Pittsburgh), asking teachers to forgo raises, etc. Mt Lebanon has largely been able to avoid most of that economic fallout. It is for this reason that I believe the community thinks things are fine- that the District has sounded an "all-clear" signal that those types of things simply won't fall on us. People by their very nature are optimistic for the most part- this is very much the same as what I said earlier, that people want to be FOR something and not against something. I don't know at what point residents in Mt Lebanon will start to figure out that 50% in property tax increases will start to erode their everyday lives, but it will happen. I might not be on the school board at that point but I will proudly say that I voted against these budgets and that I was unwilling to sit idly by and say nothing while it all happened.

A couple of problems I have with the budget this year:

1) Last year you may remember that I said we should try to maintain current teacher/student ratios. For the 2008-2009 budget we projected a drop in student population of 63. Well, it turns out that we were wildly inaccurate. We actually dropped 122 students or almost 100% more than projected. Last year we attritioned four teaching positions partly due to this enrollment issue. This next year we are again looking at a student population decline of about 35, however, we are not projected to lose any staffing positions. This is 157 students lost in 2 years and we are only losing 4 positions- all last year. There is something very wrong with this. Granted there are some issues with where the retirements are coming from this year and with only a handful of retirements throughout the District, it is hard to find efficiencies. But we MUST find them. That is our job and the job of the administration.

2) Funding of a PSERs Rate Spike Stabilization Fund- We are taking $500,000 of taxpayer money and putting it aside so that taxpayers will not get hit with the full one-year impact of the PSERS increase in 2012 (see story here). To me, this is the height of wasteful use of money. Setting this money aside does nothing to reduce future millage increases, it simply defers when you will see it. If we were to take this money, have it sit in a money market fund at .5% interest, it would be more beneficial over the long-term to our taxpayers than to use it to manufacture a level increases in taxes for PSERS. With the high school project staring us straight in the face, it makes all the sense in the world to use this money to INVEST in the high school project to reduce how much we will pay in debt service for the next 3o years. You take this money, you take the $175,000 we have saved in our latest capital projects (from bids coming in under estimate) and you start to invest all that money into a project that is going to be around a while- just like the high school. Heck, aren't we having issues with just a six-lane pool being installed at the new athletic wing? I wonder if half a million dollars would get us an extra couple lanes? I wonder if half a million dollars would allow us to expand that building a bit to build a stretch pool? I wonder what half a million dollars would do for our science wing? For our language arts classrooms? For turfing a field? For putting lights at Mellon? Any and all of these ideas are a better use of $500,000 than to level out a millage increase in my opinion.

3) Zero-based/Program Based Budget- We are still not looking at a budget that starts from scratch every year. Any time you get a base budget and increase items by a percentage every year (yes this is a simplistic way to explain it but is largely true) then you run the risk of a budget that gets out of control much like the Federal Government. We need to find a way to priortize every expense and we can only do this if we know the cost of everything in our budget.

Those are the reasons I voted against this budget. I don't feel comfortable approving a budget that sets us on a path to tax people out of Mt Lebanon or to tax so much that young families refuse to relocate here. We can do better than this and I think we owe it to our taxpayers to do better than this.

Finally, on another note, I voted to approve the use of the IPCC Textbook in our science classroom. There were some questions out there by people who didn't bother to ask me about why I would want to ban a book from use in the class. If you go back to the meeting, please note that I asked if there was "balance" to the topic being discussed. Global warming is a hotly debated topic right now. The fact of the matter is, this IPCC book is largely responsible for putting GW on the radar. For that fact alone, this book is a historically significant piece of work and is reason enough to have our kids read it. But, I would be uncomfortable sending our kids out to the world if their only two sources of information on the GW debate were the IPCC book and Al Gore's "An Inconvenient Truth" (which we approved last year). After talking with Mr. Allison and having him gather some more information, I felt comfortable that all sides of the warming debate are being presented to our students.

Thanks for reading.
James

High School Update

I have been keeping quiet on the latest high school update that took place on Monday. I still have a lot of questions myself and I wanted to get feedback from people prior to me posting my thoughts here. You can see the full architect presentation on the District website here. There is also a recent Almanac article on the project here.

First, if you hadn't heard, there is a new design for the structure itself. Rather than describe it in detail, I'll link to a Post-Gazette article here that has a picture of the proposed design. This design reuses the space in Building B, the Little Theater, and the Auditorium. Building B would house multiple floors of classroom space. This change was perhaps the biggest one of all as we had been told time and again that Building B was NOT reusable for classroom space. I am sure there is a simple explanation on how this was figured out, but it would still be good to know.

This new plan gives us a brand new athletics wing that would house a new practice and competition gym along with a pool, locker rooms, and athletic support staff offices. In addition to the Athletic wing, we would build a brand new academic wing as well. This academic wing would provide for the latest classroom learning technologies and spaces.

What I found good about this presentation was that the design is maybe 100 times better than what we were originally shown. Something like this is far better at keeping with the traditions of Mt Lebanon. From that perspective alone it was a relief to see so much progress being made.

The costs for this solution right now stand at about $120 million with the architect and construction manager looking for an additional 10% reduction in the coming weeks. To be sure, bids for construction work nowadays are coming in under budget and that 10% reduction may very well be attainable.

Besides the question about B Building being used as classroom space, I came across some cost information that I found interesting. Last August I had posted some cost information from the PDE, RSMeans, and the Bethel Park high school project. I also linked to the actual PDE cost documentation here.

The new design calls for 440,000 sq ft building at $120,000,000. 33% renovation construction and 67% new construction. According to PDE statistics and various architectural sites, renovation costs should come in around $110-120/sq ft and new construction at $212/sq ft. This is before the recent economic downturn.

If we are renovating about 145,000 sq feet, then that cost should be around $16 million. If you take the remaining square feet (about 295,000) then that would mean we are spending $104,000,000 on the new areas of the school. $104 million divided by 295,000 square feet equals more than $350/sq ft. PDE says (remember, pre economic downturn) that we ought to be paying in the neighborhood of $212/sq ft. Bethel Park had their costs pegged at about $204/sq ft last time I looked (linked above). Even understanding that we have asbestos and demolition and phasing to do, such a premium seems unreasonable.

So what's this mean? Either we are paying a HUGE price tag to renovate Building B or we are paying far too much per sq ft for new construction.

Here's what I am thinking. For $212/sq foot of NEW construction, (PDE pre-economic downturn numbers), we could build a 400,000 square foot high school for $84,800,000. This is very much in line with what is happening at Bethel Park.

I asked at the meeting on Monday for the architect to provide a breakdown of cost by building.

Add to the information above the uncertainly that comes along with floating bonds year after year after year (literally) to avoid a referendum to pay for a project of this magnitude, the huge pension liabilities coming due, our unfunded health care (OPEB) liabilities, state budget shortfalls that impact our basic education subsidy, and an inability (note, I am not saying "unwillingness") of this board to delve into the base budget to evaluate the possibility of further cost savings in our budget, and I still am of the mind that we cannot afford a project like this until we pay down our outstanding debt. I also get that I am most likely in the minority on this issue. There is a mindset out there that says "we have to do SOMETHING". While I am on this Board and in the minority on this I will work to ensure that that "something" does not include paying too far over market value for what we are getting.

The next step in the process is a special meeting on June 1st. The architect has asked us to vote on this option at that time so that he can move the PlanCon process forward. So, if you want your voice heard, you need it have it heard in the next two weeks.

Thanks for reading.

James

GCA, Keystone Exam Update

***UPDATE***
Senator Orie's office contacted me yesterday (5/7) and said that there are certainly financial concerns related to the GCA/KE proposal but they want to make it clear that they are not ONLY going after the cost of the exams to stop them. They are also looking at local rights issues and what is best for our students. They said that there was definitely something lost in the translation in the message that was released which I posted below. Thank you to Senator Orie for clearing that up.
***

After my initial blog post this morning regarding the new Keystone Exams, I found out that I am not the only Director in PA that is questioning the wisdom of these exams and also the apparent re-direction on the part of the PSBA.

I also was made aware of a statement by State Senator Jane Orie. You can view her statement on her website here or read the statement below:

Joint Statement from Senator Orie and Rep. Saylor On Alternative Graduation Tests - aka Keystone Exams 2.0

HARRISBURG – State Senator Jane C. Orie (R-40) and Representative Stan Saylor (R-94) today issued the following joint statement regarding the Coalition for Effective & Responsible Testing’s alternative to the Department of Education’s high school graduation tests now dubbed the “Keystone Exams.” The Coalition, led by Pennsylvania State Education Association (PSEA), school administrators and local PTAs, called for a new dialogue with the Rendell Administration.

“We appreciate that the coalition has kept the dialogue open concerning the need for these high-stakes exams. However, at a time when our state is facing a $2.6 billion and growing deficit, we believe there is no need for these additional, costly tests. The last thing that we need in this budget is new spending.

“Why are any additional tests necessary? Our goal should be to teach, not test. First, students do not need another test. The Commonwealth needs to strengthen its classroom teaching first – in a coordinated way. We should start with the early grades and then build on that knowledge and experience.

“Secondly, schools already are using Algebra I and II end of course exams as part of the multi-state coalition begun several years ago through Achieve. Before spending anymore, why not see how these exams work?

“Any assessment systems we consider should be used to measure performance of students as they move through the education system and identify solutions for improving student, teacher and school performance prior to graduation. In order to do that, we need to step back and take a look at what is happening and what we need to happen for our children.

“We look forward to working with all interested parties to improve the quality of our student’s education. It is important to note that that this Governor will soon be leaving office and the next administration should not have their hands tied should with new mandates and new costs.”

Contact:

Nate Silcox (Sen. Orie)
(717) 787-6538

Sean L. Yeakle ( Rep. Saylor)
(717) 787-3406

I like that Senator Orie is taking a stand, however, taking a stand because of the financial impact of this decision takes away from the the other reasons why it is wrong to have exit exams. If the economy starts humming along again, this argument is completely taken away.

In my mind, the entire principle of statewide mandated graduation tests infringes on the rights given to local school districts in the Pennsylvania Constitution. Any reining in of these rights ought to be seriously and deliberately debated in the legislature with deference given to those districts that have continuously performed well and graduated students exceptionally prepared for the future.

Thanks for reading.

James

Keystone Exams 2.0

We've moved from GCA's over to Keystone Exams and now onto Keystone Exams 2.0. It looks like the Keystone Exams 2.0 is gathering the momentum it needs from various groups to possibly be the solution that is adopted by the state.

Below is an article from the Post-Gazette that outlines some of the changes from the GCA and the Keystone Exam 1.0 proposals:

Graduation tests gaining momentum

Monday, April 27, 2009

By Eleanor Chute, Pittsburgh Post-Gazette

In less than three months, the moratorium on changing state graduation requirements will be over, leaving the state board of education open to take the next step toward state-required exams for graduation.

The idea of graduation competency exams once was so controversial that more than 20 statewide organizations opposed it, about 200 school boards passed resolutions against it and state legislators blocked the state Board of Education from acting on changing graduation requirements.

Now even groups that opposed a graduation competency exam are lining up in favor of variations on the theme of state-created, end-of-course tests for high school students.

A key difference is how much the exams -- expected to cost millions of dollars to develop -- will count.

The latest proposal -- called Keystone Exams 2.0 -- was announced last week by the Coalition of Effective and Responsible Testing, a group of statewide organizations including the Pennsylvania State Education Association, the American Federation of Teachers in Pennsylvania and the Pennsylvania PTA.

In this proposal, school districts voluntarily would have their students take end-of-course tests, but the tests could count for no more than 20 percent of the grade.

If the federal government were to permit the state to use the tests for meeting the standards of No Child Left Behind, then current 11th-grade state tests would be discontinued and the end-of-course tests would become mandatory.

Joseph Torsella, chairman of the state board of education, expects the board to take up the issue as soon as the moratorium is lifted at the end of June. Its next meeting will be July 15 and 16 at the University of Pittsburgh.

Mr. Torsella called the latest proposal "a good contribution to the conversation" and said he will be meeting with its proponents this week to get more details.

It's too early to tell what the board will do, but Mr. Torsella said, "In the end, the board will be guided by what we think is going to be best for Pennsylvania graduates."

In a push for stronger graduation requirements, the state board of education nearly a year ago made an initial publication of regulations calling for students to pass six of 10 "graduation competency assessments" in math, language arts, social studies and science; the Pennsylvania System of School Assessment tests; Advanced Placement or International Baccalaureate exams; or a local assessment that independent evaluators certify is equivalent to the graduation competency assessments. It would start in the 2013-14 school year.

Last month, the state Department of Education and the Pennsylvania School Boards Association reached a compromise called Keystone Exams.

This plan would start a year later, aim to preserve local control and emphasize the exams would be voluntary. It also would split the cost of validating local assessments between the state and local districts, instead of putting the cost solely on the local districts.

With the addition of the Keystone Exams 2.0 proposal, Mr. Torsella said, "What's clear to me is that the conversation has really advanced and there's sort of a universal recognition that we are not doing right by our high school graduates, that there's a place for the new Keystones and that we ought to have meaningful accountability behind what we should be doing and what we should be expecting."

Last week, state Education Secretary Gerald Zahorchak said he appreciated the participation of the coalition but said he was worried that counting the tests for only 20 percent of the grade would remove the assurance that students have appropriate skills.

While he was "gratified" the latest plan includes Keystone Exams, Tim Allwein, PSBA assistant director of governmental and member relations, also questioned whether counting the exams for just 20 percent would offer the necessary assurance.

Sen. Jeffrey Piccola, R-Dauphin, chair of the Senate Education Committee, issued a statement calling the proposal "a step in the right direction" although he didn't "find the substance necessarily rigorous enough within this alternative proposal."

One of the early supporters of graduation competency exams, Joan Benso, president and CEO of Pennsylvania Partnerships for Children, said she, too, found it encouraging more groups are proposing final exams, but she worries their weight in the latest proposal "may not be high enough to have young people take them seriously."

PSEA treasurer Jerry Oleksiak said the latest proposal "provides for high-quality, end-of-course exams that will help children and will also help school districts that need to improve their local assessment systems. That's the best way to ensure a meaningful high school diploma."

Some local school board members wonder whether the Keystone Exams are necessary at all.

West Jefferson Hills school board member Shauna D'Alessandro views the latest proposal as a "step in the right direction" because it would replace tests, not add them.

However, she doesn't think the new tests are needed.

"We already know which students need help. We know that from the PSSA," she said, referring to the Pennsylvania System of School Assessment tests given in math, reading, writing and science in selected grades.

Nor does she think the state can afford the millions of dollars to pay for them. "The money could be used for initiatives to improve student achievement," she said.

Pine-Richland school board member Therese Dawson said the results of the current state tests could be used better.

"That's the launch point," she said. "We already have achievement benchmarks in place. We just need to use them."

Alan Lesgold, dean of the University of Pittsburgh School of Education, said the 20 percent figure might work as an "incremental approach" to measuring how well students do.

"The problem you've got is districts aren't doing as well as they might in getting kids educated well. If you suddenly implement high-stakes exams and kids can't graduate, you're penalizing the kids for the failures of the school system," Dr. Lesgold said.

Education writer Eleanor Chute can be reached at echute@post-gazette.com or 412-263-1955.

First published on April 27, 2009 at 12:00 am

I believe the 2.0 exams are a huge improvement from the original GCAs and the original Keystone Exams. These tests are voluntary and, if you do choose to employ them, would replace the 11th grade PSSA test. This means it would not be an additional achievement test, it would replace an existing one. Additionally, while counting for 20% of a final grade, it is not used as the only criteria to see if a student is ready to graduate.

I am not sure if the Pennsylvania Department of Education is going to let go of the idea of having a required high school exit exam. It is a way for them to better control the curriculum they think should be taught to our students. It will be up to our State legislature to determine what direction to take. I look forward to seeing what proposals are put up for our representatives.

Thanks for reading.

James

PSERS Story from Tribune-Review

The Tribune-Review had a nice article on the PSERS issues that will be hitting school districts and residents across the state.

The article is below and can be found here.

Teacher pension 'tsunami' expected across Pennsylvania

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By Rick Wills
TRIBUNE-REVIEW
Sunday, May 3, 2009

Buzz up!

This year, the Pine-Richland School district is contributing $900,000 to state's teacher pension fund.

Three years from now -- and for many years thereafter -- the district expects to pay roughly $7 million annually into the Pennsylvania Public School Employees' Retirement System, known as PSERS.

The dilemma facing Pine-Richland faces each of the state's 501 school districts. A bubble in the number of teachers expected to retire in the next decade and a 30 percent drop in the total value of the fund's assets last year in the souring economy means districts contribute more to the teachers' retirement fund.

School officials in turn are predicting almost certain property tax hikes at a time when many Pennsylvanians have watched the recession slash their 401(k) accounts in half or force their companies to end pension plans entirely.

"This is a financial tsunami, and doing something now does not mean significant relief for years or decades. It's one ugly scenario," said Jay Himes, executive director of the Pennsylvania Association of School Business Officials.

Teacher retirement benefits are mandated by law. Courts have ruled they cannot be reduced for current teachers or state employees covered under similar retirement plans.

"I'm worried about this, even now," said Stephen Hawbaker, president of the Pine-Richland school board.

Starting in the 2012-13 school year, when retirements are expected to accelerate, school districts and the state will have to pay an additional $2.5 billion annually into the fund, according to the Association of School Business Officials.

The fund collects from 273,000 active members and pays pensions to 174,000 retirees. It was valued at $67.2 billion in 2007. That dropped to $45.4 billion at the end of December.

Jude Abraham, business manager at the Hempfield Area School District, Westmoreland County's largest, anticipates that by 2012, the district will be paying $5 million more than the $2.5 million it pays now. The district's budget is about $80 million.

"Many districts are using reserve funds to try to plan for this. But taxes will have to go up to compensate for this," he said.

The state Legislature sets the contribution rates from teachers and school districts. School employees, including teachers, pay between 6 percent and 7.5 percent of their salaries into the pension fund. The state and school districts pay a combined 4.76 percent of a teacher's salary into the fund.

In the Hampton School District, payments this year are $510,000 -- an expense business manager Jeff Kline estimates will be $2 million by 2012.

"It's hard enough to balance a budget, and we have no control over this spending. The contributions are set by the state," Kline said.

While poor financial market conditions are the immediate cause of the problem, Timothy Potts of Democracy Rising, a nonpartisan citizens group, lays blame with lawmakers.

"The Legislature always prefers to have someone else raise taxes, which school boards will now be forced to do," said Potts, who is a member of the Carlisle Area school board in Cumberland County.

Pittsburgh Public Schools, the largest district in the county, has 2,700 teachers and full-time professionals. Chris Berdnik, chief financial officer and chief operations officer, estimates that contributions to the pension fund will rise from $10.08 million this year to $33.18 million in the 2012 school year.

"The PSERS funding crisis as one of the most significant challenges we face in the next decade," he said.

"The PSERS funding crisis as one of the most significant challenges we face in the next decade," he said.

In 2001, lawmakers increased their pension benefits by 50 percent and, at the same time, boosted teachers' and state workers pensions by 25 percent.

But the Legislature didn't require a corresponding increase in contributions from school districts, says Wythe Keever, a spokesman for the Pennsylvania State Education Association, the state's largest teachers' union.

"The districts, in the latter part of '90s and in the early part of this decade basically took a pension holiday. They did not pay enough to sustain the system during the down years," Keever said.

In 2002, for instance, contributions from school districts in the state were $539,000, Keever said. The same year, the state contributed $662 million.

Contributions generally have been based on the assumption that the stock market will go up 8 percent on average each year. During much of the 1990s and the early part of this decade, the fund generated double-digit returns.

"Earnings were very high until about a year ago," said Rep. David Levdansky, an Elizabeth Democrat who chairs the House Finance Committee.

Levdansky favors setting minimum contributions from teachers, districts and the state that would be required even if the stock market does well.

"I wish we had done that. We would not be in this kind of trouble if we had," he said.

Rep. Paul Clymer, a Bucks County Republican and ranking member of the House Education Committee, said legislators are looking at whether federal stimulus money can be contributed to the pension plan. Clymer has introduced a bill that would push state and school contributions to 7 percent immediately.

"That at least would be somewhat of a cushion for the future," he said.

But school districts remain in a tight spot.

"The market has changed and has caught up with the rest of the world, but raising taxes is really the last thing we want to do," said Jon Rupert, business manger of the Highlands School District In Natrona Heights.

Rick Wills can be reached at rwills@tribweb.com or 412-320-7944.
Back to headlines

With the recent uptick in the markets, the situation has improved somewhat. It is just hard to say by how much.

Thanks for reading.

James

Allegheny County Must Reassess

The State Supreme Court handed down its decision on the Onorato base year plan. The "base year" is simply a way to say that all property values will be frozen at a value of a specific year. In the case of Allegheny County, we have been frozen with a 2002 Base Year.

What the Supreme Court essentially said is that it is fine to use a base year, but because property values change over time, it is unfair to never reassess. If a county does not reassess then property taxes are not equal even perhaps among neighbors.

You can see the Post-Gazette article here.

Without saying what I think of the Onorato plan, I do believe him when he says that he does not want to raise the property taxes in Allegheny County. He has higher ambitions than to be a County Executive. He will do what he has to do to make sure he keeps that promise. As Onorato says in his article, he does have options. The Court did not order an immediate reassessment and even if it did, that doesn't mean that Onorato would be forced to have taxes paid on 100% of assessed value.

My expectation is that Onorato will either delay the reassessment until he is out of office or that, if he is forced to reassess, he will implement a base year with a percentage of assessed value to be taxed. This might mean higher assessed values overall, we simply would not be taxed at the county level at 100% of assesed value. I just think this issue is one that he will refuse to lose.

I came across an interesting article from 2002 that points out some differences in the way Allegheny County and Butler County do property taxes. You can view it here.

What does any of this mean for your local real estate tax? Nothing yet. Remember in 2000 that when the taxation rate changed (from 25% of assessed value to 100%), the District was forced to reduce the associated millage rate so that they would not receive a revenue windfall. I suspect something like that will take place again.

Thanks for reading.

James

Pension Liabilities in the News Again

You may have heard the story about a year ago regarding the City of Vallejo, California filing for bankruptcy protection due to ever increasing contractual obligations including employee contracts and pension costs. A judge recently held that this bankruptcy allowed the City to void its existing union contracts. Today, I woke up to find a story about Pacific Grove, California and its long walk down the same plank. As the article starts out, "Bankruptcy, its not just for banks and auto manufacturers anymore".

Local Government Agencies across California are going to be coming to the same realization that Pacific Grove and Vallejo did. The article goes on to say the following:

The city has been struggling with how to bring its pension costs to CalPERS under control in light of the economic recession. The state pension program relies on investment income to fund benefits and, when these funds fall short, cities and other public agencies enrolled in CalPERS must take up the slack.

That excerpt is why I bring this topic up here. School Districts across this state are looking out to 2012 when PSERS has its contribution rate spike. PSERS is very much the same as CalPERS (and most other pension plans for that matter). It relies heavily on investment earnings and income for payouts to retirees. I have heard directors across the state say that this increase will cripple their budget for years to come. A school district cannot have a 250% increase in an already large expense and not expect it to have serious consequences on the way it either a) educate the children or b) tax the community.

It is important for people all across Pennsylvania to contact their state representatives (Senator John Pippy and Representive Matt Smith) to tell them that they need to do everything they can to help school districts avoid the same fate as Vallejo and Pacific Grove.

Our District is poised to start planning for this pension spike this year. There are some options on the table. We are looking at a possible $1 million surplus from the 2008-2009 school year. We have the opportunity to set that money aside to even out the rise in taxes to pay for the 2012 pension increase. Instead of there being a 3 mill increase in 2012, there might be a 1.5 mill increase instead. Then the following year you would see the other 1.5 mill increase (or some other "stepped" schedule depending on what this Board does). Setting aside $1 million for this will not reduce the ultimate expense, it simply delays when it fully hits the taxpayers. The math is pretty simple. $1 million equals .5 mills. So setting aside this money will save the taxpayers in one year $100 on a $200,000 house.

I recommended to the Board that we use that money to fund projects that we know are going to happen in order to reduce millage for the next 25 years instead of manufacturing a stepped increase in taxes. We know we will be spending millions of dollars on a high school project on which we will be paying maybe 5% interest. Taking $1 million today and investing the money in the down payment on that project would reduce the eventual loan amount by $1 million and therefore reduce the millage rate in this district for the next 25 years. Over the life of a 25 year loan, this investment would save taxpayers over $1.86 million. After a 15% state reimbursement, that investment would save the district approximately $75,000/yr. While this is not a whole lot of money, its important to note that if the District keeps making fiscally responsible decisions like this then over the years the numbers start to add up.

I have made my point to the Board but will most likely be outvoted. I just wish we could stop looking at the near term results as opposed to the long-term effects of our decisions. The millage will be higher in 2014 under scenario 1 than it would be under the second scenario. That is a fact and is undisputed. The issue is whether or not the Board wants to implement a stepped increase for the pension liability rather than have a huge increase in taxes to pay for the rate spike. Nothing we do can reduce our eventual expense to PSERS. Without a change from our state government, we can only delay the inevitable expense.

Thanks for reading.

James

Recent Almanac Textbook Article

The Almanac has the following story:

Science textbook questioned

By Bob Williams
Staff Writer
bwilliams@thealmanac.net

At the recent Mt. Lebanon school board meeting, at least two directors were also curious about an item near the bottom of the agenda--a student textbook on the 2009-2010 recommended book list.

"Dire predictions: Understanding Global Warming--The Illustrated Guide to the Findings of the IPCC" by Michael E. Mann and Lee R. Kump was recommended for a high school environmental geoscience class. The IPCC is the Intergovernmental Panel on Climate Change.

By law, the school board is required to approve all student texts. There are seven books on the list. Board members Mark Hart and James Fraasch, however, questioned this book selection.

"Why is this on the list?" Hart asked. "And is there another book used in the class which shows the other side-that science is not in complete agreement about global warming?"

"I'd like to see what other materials are used in this class," Fraasch said. "If you research Michael Mann, you will find there is not complete agreement about his theories."

Superintendent John Allison said this text is one of three used as supplemental material in the class. The others are "Keeping Things Whole" by Chrispin Tickell, and "Environmental Science" by Kaufmann & Cleveland, Allison said.

"The students source different points of view, including some from the Internet, with a goal of formulating their own concepts," Allison said. "These books are not the entire curriculum.

The district utilizes a book selection process, Allison said. Books are requested by teachers. The submissions are evaluated by a review committee made up of teachers. The recommendations are then submitted to the administration, which reviews them and passes the list on to the school board for approval. Once the list is presented to the board, it is open to public inspection for 30 days before final approval by the board.

In1999, Mann, a University of Virginia Climatology Professor wrote a paper which featured a 1,000-year study of temperature change. The scientific community dubbed it a "hockey stick graph," because Mann's diagram showed a sharp increase in temperatures from 1900 to 2000. Vice-President Al Gore referenced Mann's work in his movie "An Inconvenient Truth."

Since that time, however, other scientists have disputed Mann's initial findings on global warming.

Hart said that science is not in agreement about global warming, and he supports balance texts from authors who challenge global warming theories.

I was quoted correctly here. I simply want to ensure that we are doing our best to turn our quality critical thinkers. I would not be doing my job as a school board member if I did not question whether both sides to this argument are being presented to our students.

I would never ask that we NOT allow our students to read the IPCC report, quite the contrary. Its simply that if they read this report it ought to be balanced with research that would show that man-made global warming theories are the topic of intense scientific debate at the moment. If we only present one side of this argument then it becomes a politically charged issue.

I am not going to debate the topic of global warming with anyone. Someone who is a believer can send me a thousand links to articles that proves the existence of man-made global warming. Others who do not believe can link up to a thousand articles that show that global warming is a natural occurrence. Nobody wins those arguments. The fact is, there is debate about the causes and effects of climate change and our students ought to be learning about this topic from more than one angle. That is all I am trying to do.

Thanks for reading.

James

Board Meeting on Monday April 6th

I want to give a heads on on the meeting date for April. Because of the way Pennsylvania law deals with timelines and passing of school budgets, the Board needs to have its discussion and voting meetings on the 1st and 2nd Monday of April.

On Monday's agenda you can see that we again will be talking about the budget. See my initial impressions in my last post here. I am sure we will talk more about any staff changes that can contribute to lessening the millage impact of this budget.

There was an interesting article in The Almanac about the Board addressing a five year budget plan. The last two years I had requested this long term planning as a tool for the Board to use to see the impact that decisions made today have on the future millage in our budget. Here is an excerpt:

Klein gave board members a five-year forecast which projects trends in expenses though the 2014-2015 school year. Given a 3-4 percent increase in salaries each year, an 8% increase in medical, no changes in county assessments, $117 million debt on the new high school and changes in PSERS, the district's millage rate would go from 23.81 in 2008-2009 to 37.13 in 2014-2015

Ms. Klein does make the point that this is a just a forecast and the numbers will no doubt change. The "worst case scenario" budget would result in a 55% increase in real estate taxes in Mt Lebanon. However, that worst case scenario budget is only referred to as a worst case for PSERS, not high school construction costs, salary increases, health care increases, etc. And to be perfectly honest, PSERS banking on an 8% rate of return on their investments going forward makes it so this actually isn't a worst case scenario at all. On the brighter side, given the rise in the stock markets the last month, the PSERS contribution rate may be all the way back down to where it was in December. This would still be a 250% increase the contribution rate.

The Board will also be discussing what to do with a projected surplus from the 2008-2009 budget. Once we get more accurate and final numbers from the Earned Income Tax part of our budget for this year we should have a better idea about what this number might be. Today it stands at around $1 million. Last year we had a surplus that was due largely to liened taxes being collected and a reassessment of the Galleria. This year our surplus is due more to the efforts of the Superintendent restraining spending during the school year. The question of what to do with our surplus will undoubtedly come up. I think everyone on the Board wants to put this money towards some future expense. The discussion will most likely revolve around what expense it should be. I am hopeful that we will put it towards something that will reduce future millage.

Of additional note, there is a discussion item on the agenda dealing with expanding the District's lunch program to all the elementary school's. While this item clearly does not get the attention of passing budgets or Graduation Competency Exams, it is still an important change in the way we do business.

We are chock full of meetings the next two months. Below is the schedule:

April 13, 2009 – 7:00 p.m. Focus on Instruction - Math
Mt. Lebanon High School Library

April 13, 2009 – 7:30 p.m. Regular Meeting
Mt. Lebanon High School Library

April 14, 2009 – 7:30 p.m. Policy Committee Meeting
Conference Room B, Mt. Lebanon High School

April 16, 2009 – 7:00 p.m. Audit & Finance Committee Meeting
Conference Room B, Mt. Lebanon High School

May 5, 2009 – 7:30 p.m. Policy Committee Meeting
Conference Room B, Mt. Lebanon High School

May 11, 2009 – 7:30 p.m. Discussion Meeting
Mt. Lebanon High School Library

May 14, 2009 – 7:00 p.m. Audit & Finance Committee Meeting
Mt. Lebanon High School Library

May 18, 2009 – 7:00 p.m. Focus on Instruction – Distance Learning
Mt. Lebanon High School Library

May 18, 2009 – 7:30 p.m. Regular Meeting
Mt. Lebanon High School Library