Tax Rates and the Local Economy

Some of the issues I pound on when it comes to the school board have to do with fiscal responsibility. With that comes the desire to reduce or lessen the growth of the tax burden on members of our community. That is not to say that the Board has the ability to reduce property taxes, I would never make that promise- not in an environment where property assessments are frozen at 2002 levels and where the District has contracts that increase every year. When I look out 2-5 years it is pretty easy to see what is coming down the pike. When you look at the more than $100 million high school, PSERs (which I will give an update on soon), and the contracts mentioned above, it is easy to see larger than 30% increases in property taxes here in Mt Lebanon. The only reason I say it probably won't be more than that is that I expect the State legislature will come up with a solution to address much of the PSERS expenses coming due in 2012. Call it wishful thinking if you like, but elected officials are in the business of getting re-elected and if they can't come to a solution on that single issue, there won't be many people getting re-elected in 2012. On many occasions I have opined about the coming tax increases and how we will compare to other Districts across the State. I have only touched on what the implications of such high taxes will be. It is those implications that I wish to address here.

To that end, I came across a speech given by Calvin Coolidge on February 12, 1924 in front of the National Republican Club. I don't know if I have ever read a speech by a President that so clearly illustrated the effects of high taxes on economic activity. While President Coolidge's speech was addressing the national economy, the effect of high taxes is the same whether at the federal level or local level. Below are some excerpts with my comments on sections that I think need highlighting:

In time of war, finances, like all else, must yield to national defense and preservation. In time of peace finances, like all else, should minister to the general welfare. Immediately upon my taking office it was determined after conference with Secretary Mellon that the Treasury Department should study the possibility of tax reduction for the purpose of securing relief to all taxpayers of the country and emancipating business from unreasonable and hampering exactions. The result was the proposed bill, which is now pending before the Congress. It is doubtful if any measure ever received more generous testimony of approval. Opposition has appeared to some of its details, but to the policy of immediate and drastic reduction of taxes, so arranged as to benefit all classes and all kinds of business, there has been the most general approbation. These recommendations have been made by the Treasury as the expert financial adviser of the Government. They follow, in their main principle of a decrease in high surtaxes, which is only another name for war taxes, the views of the two preceding Secretaries of the Treasury, both of them Democrats of pronounced ability. They are nonpartisan, well thought out, and sound. They carry out the policy of reducing the taxes of everybody, especially people of moderate income. They give to the country almost a million dollars every working day.

During World War I, taxes were raised to help fund the war effort. The United States still ended up borrowing billions of dollars to help fight the war, and we were also a major credit provider for our allies in that war. However, after the war ended, tax rates were not reduced to pre-war levels. President Coolidge in this speech is essentially calling for a return to the normalization of pre-WWI tax rates. As he said in his opening, he had no problem with financing a war with higher taxes, but in times of peace, he felt differently.

The proposed bill maintains the fixed policy of rates graduated in proportion to ability to pay. That policy has received almost universal sanction. It is sustained by sound arguments based on economic, social, and moral grounds. But in taxation, like everything else, it is necessary to test a theory by practical results. The first object of taxation is to secure revenue. When the taxation of large incomes is approached with that in view, the problem is to find a rate which will produce the largest returns. Experience does not show that the higher rate produces the larger revenue. Experience is all in the other way. When the surtax rate on incomes of $300,000 and over was but 10 per cent, the revenue was about the same as when it was at 65 per cent. There is no escaping the fact that when the taxation of large incomes is excessive, they tend to disappear. In 1916 there were 206 incomes of $1,000,000 or more. Then the high tax rate went into effect.

The next year there were only 141, and in 1918 but 67. In 1919 the number declined to 65. In 1920 it fell to 33, and in 1921 it was further reduced to 21. I am not making any argument with the man who believes that 55 per cent ought to be taken away from the man with $1,000,000 income, or 68 per cent from a $5,000,000 income; but when it is considered that in the effort to get these amounts we are rapidly approaching the point of getting nothing at all, it is necessary to look for a more practical method. That can be done only by a reduction of the high surtaxes when viewed solely as a revenue proposition, to about 25 percent.

I agree perfectly with those who wish to relieve the small taxpayer by getting the largest possible contribution from the people with large incomes. But if the rates on large incomes are so high that they disappear, the small taxpayer will be left to bear the entire burden. If, on the other hand, the rates are placed where they will produce the most revenue from large incomes, then the small taxpayer will be relieved. The experience of the Treasury Department and the opinion of the best experts place the rate which will collect most from the people of great wealth, thus giving the largest relief to people of moderate wealth, at not over 25 per cent.

This part of his speech perfectly illustrates the soundness of the Laffer Curve which was "discovered" in the 1970's by economist Arthur Laffer. The Laffer Curve suggests that there are two tax rates that will produce the exact same revenue. Think about it this way, at 0% tax, the government realizes no revenue and at 100% tax, there is no incentive to work and therefore the government again realizes no tax revenue. At various points along the graph coming down from 100% and up from 0%, there are points at which government can realize the same revenue. This is illustrated perfectly when Coolidge points out that tax receipts at the 65% tax rate were the same as when tax rates were at 10%.

A very important social and economic question is also involved in high rates. That is the result taxation has upon national development. Our progress in that direction depends upon two factors; personal ability and surplus income. An expanding prosperity requires that the largest possible amount of surplus income should be invested in productive enterprise under the direction of the best personal ability. This will not be done if the rewards of such action are very largely taken away by taxation. If we had a tax whereby on the first working day the Government took 5 percent of your wages, on the second day 10 per cent, on the third day 20 per cent, on the fourth day 30 percent, on the fifth day 50 per cent, and on the sixth day 60 percent, how many of you would continue to work on the last two days of the week? It is the same with capital. Surplus income will go into tax-exempt securities. It will refuse to take the risk incidental to embarking in business. This will raise the rate which established business will have to pay for new capital, and result in a marked increase in the cost of living. If new capital will not flow into competing enterprise the present concerns tend toward monopoly, increasing again the prices which the people must pay.

Taken altogether, I think it is easy enough to see that I wish to include in the program a reduction in the high surtax rates, not that small incomes may be required to pay more and large incomes be required to pay less, but that more revenue may be secured from large incomes and taxes on small incomes may be reduced; not because I wish to relieve the wealthy, but because I wish to relieve the country.

President Coolidge here is suggesting that allowing people to keep their surplus capital (and not the government) will lead to better economic growth. People will employ this capital in the most efficient way possible, in a way that gets them a return on their investment. His stated goal is to secure the largest possible amount of revenue to the federal government but not at the expense of stifling production. His plan to do this, under the guidance of Treasury Secretary Mellon, is to reduce the top marginal tax rates to 25%.

This legislation was past shortly after this speech and so began the "Roaring 20's". There were tremendous increases in overall GNP from just under $70 billion to over $103 billion in just over five years. And this happened without a jump in inflation, indeed, prices actually went down while GNP increased.

The point of this is to say that for decades (perhaps more) we have seen the impact that high taxes have on consumption and production. Many of those in favor of a large high school project here in Mt Lebanon like to say that an extra $60 per month is just a cup of coffee a day, or that its just one less dinner out per month. If that is the case then let me ask the obvious question. What if this actually turned out to be true? What if the residents of Mt Lebanon decided to give up their morning cup of joe or their monthly night out at dinner? What is the impact of that decision? How many people from Mt Lebanon do you think go to Aldo's or the Uptown each morning for coffee? How many people hit one of the restaurants on Washington Road or Beverly Road once a month or even once a week? What happens if all of these people actually DO reduce how much coffee they drink or how often they eat out? An increase of $60 a month in tax has the potential to take money directly from the productive part of our local economy (the coffee shops, the florists, the restaurants) and places it directly in the non-production part of local economy (debt service for a high school construction project).

This money will not go to hire more teachers to reduce class sizes. It won't expand programs. It won't make the District magically find ways to become more efficient. There most likely will not be an increase in student achievement and/or test scores due to a newly renovated building- although with our new Superintendent I hope this will happen anyway. The fact is that research does not show that constructing a new building will add anything to our ability to ready our kids for college and life after school. Isn't that what this should be all about?

The question that needs to be addressed has to do with how best to prepare our students for a constantly changing and ever more demanding future. Spending $100 million on bricks and mortar does not seem to be the best answer.

Thanks for reading.

James

August 10 Meeting Summary

There were a few interesting topics discussed at last night's board meeting. The Board was given some high school financing options and we also discussed the possibilities of relocating the 6 tennis courts that will be displaced.

During the architects update we were given a presentation on the Mechanical, Plumbing, Fire Protection, and Electrical Systems. You can find that document here. There was some good information in this presentation regarding some of the technologies we are expecting to use. Other than that, it was a nuts and bolts type presentation.

We were also presented with four options to relocate the tennis courts that will be displaced by the current design. You can view the entire document here. There are good pros and cons presented for each option. Please look through that link yourself and think of what you would prioritize. For me, the top three priorities are to 1) keep the courts on the high school campus, 2)keep the courts together as a unit, and 3) to have parking spaces next to what should be the main building entrance on Horsman.

Option One separates the courts on either side of Horsman Drive and does not allow for much parking near the new main entrance on Horsman. Option two keeps the courts together but has them facing a non-optimal direction while eliminating all parking near the main entrance. Option 3 keeps the courts on campus by moving them behind the rockpile and also allows for maximum parking spaces near the main entrance. However, this does eliminate a number of parking spaces and potentially reduces the area in which our marching band practices. Option 4 relocates the courts to Markham Elementary school.

Given the above options I would choose option 3. If this is the option chosen then I would expect that we are early enough into the design process to figure out a way to add back as many parking spaces as possible through this project while also figuring out an alternative practice space for our marching band. The combination of having parking where we need it (near the main entrance), having the tennis courts all together, and keeping the courts on campus make me believe that this option is the best one. During the meeting last night I asked Dr. Steinhauer to take the lead in figuring out alternative practice spaces for our teams during the construction phase of this project. Hopefully we will have some options shortly.

The other topic of interest was the financing options for the high school project. You can view the presentation here. As you may know, this project is too large to fit under our current debt limit. This requires us to do two floats of bonds to fund this project. In 2006 prior to Act 1, the Board passed a resolution to allow for the floating of $69 million of pre-Act 1 Debt. This means that when that bond is floated, the millage increase required to pay for that debt will not be counted against our Act 1 maximum allowable millage increase (which has been about 4% per year). The structure and payment of those bonds has already been set. The only thing about those bonds not set is what interest rate we would get when we go to auction.

The second set of bonds is where things get a little trickier. The presentation linked to above really is a discussion of the options regarding floating these bonds at a level payment (like your mortgage) versus a wrapped issuance (like an interest only loan for the first number of years). It has been my contention from the start that we ought to have a level payment of the debt. Pushing out the principal payments simply burdens taxpayers with $10 million in additional interest payments (see page 5) and burdens future boards with lowered borrowing capacity since the debt would be repaid at a slower rate.

Having the bonds wrapped simply puts us in the same position where we are now. In 2005 we wrapped the $55 million in elementary school construction bonds. To this date we have paid down very little in principal on those bonds. If memory serves me correctly we still have almost $54 million in outstanding debt on those bond floated back in 2005. This means that our current borrowing ability has been restricted by that wrapped bond schedule. It also means that our taxpayers will be paying excessive interest on those bonds because the principal has been pushed back to the later years of the debt service. As long as we keep wrapping bonds, the district will continue to burden taxpayers with millions of dollars of unnecessary interest costs.

While I have no doubt that we will have the ability to go to the market for the first $69 million in bonds and also the second $47 million, I do have concerns about the Act 1 limitations on the second bond issuance. As I mentioned before, the first bond float is exempt from Act 1. Even if millage needs to increase above an Act 1 limit, we will not be forced to referendum. However, with the second float, that might not be the case. If we did a straight float at $47 million that resulted in over a 1 mill increase, then along with any other kind of budget changes, I would expect that our 2011-2012 budget would be over the Act 1 millage increase limit. It would be the worst of all scenarios to have to go to referendum at that point in the high school project to get the final $47 million to complete a two-thirds completed project. I did ask our financial adviser about this and he admitted that it "could" be an issue. But he also said that there are ways around this. Essentially, what he said is that there are ways to avoid the Act 1 referendum at that point which would include structuring the bonds in such a way that they have minimal up-front impact on millage- essentially recommending that if we were expected to exceed Act 1 limits then we should just wrap the bonds to avoid a referendum.

Why are we trying so hard to avoid a referendum every time we turn around? It seems to me that if we know that the taxpayers would vote down a project of this size (or $500,000 more), then we ought to be planning to do a project of significantly less size and scope.

More on that in a future post.

Thanks for reading.

James

Response to Constituent Email

First, let me take a moment to thank all my friends around the area that helped with a job search that was recently completed. Losing a job is a humbling experience, however, the compassion and willingness to help shown by my friends and neighbors was even more humbling. This experience has forever changed me for the better. On to the blog.

As has been recently blogged on BlogLebo, there is much public discussion about an analysis of the Mt Lebanon High School project that was done by structural engineer and Mt Lebanon resident Dirk Taylor. The documents have been posted by BlogLebo on the link provided above.

As one of the two members of this Board that have over the last year been consistently voicing a dissenting opinion in the pursuit of such an expensive and questionable project, I have been silent about the Taylor Report in the hopes that other Board members would take the opportunity to publicly respond to its content and questions. Perhaps other members will choose to respond at a Board meeting, perhaps they will respond later, or perhaps they will not respond at all. I will take this opportunity to give some feedback on the report. As always, the opinions are mine and may not reflect the opinions of others on the Board.

First, it is important to understand who the author of these documents is. Dirk Taylor is not just a regular structural engineer that happens to live and work in Mt Lebanon. Mr. Taylor has done extensive work for the District over the last number of years. He understands the needs of the District and more importantly understands the architecture and the guts of our buildings. I believe he fully understands the risk he has taken in putting this type of a report out into the hands of the public.

On the functionality of the School:
Mr. Taylor points out some of the biggest misconceptions that I believe the public has had regarding the need for this project. Information has been given to the public that says that our high school buildings are falling down creating a safety issue for our kids and that our current building is not able to adequately educate our students. On both counts I agree with Mr. Taylor. One cannot prove that these statements are true. The public has been shown pictures of broken pipes and has been given tours of the building that show where water has been leaking and where ceiling tiles are missing and these visual anecdotes are used to convince the public that the need for new construction and huge expense is great. However, our architects came back and said that they were perfectly willing to renovate Building B at an EXTREMELY reasonable cost of about $14 million. B Building is the second oldest building at the high school and is also the building that contained some of the oldest plant (water and electric) in the complex. With proper repair and maintenance over the years we might not have some of the issues that are presented as being dire today. Despite its age and its antiquated plant, we have been assured that this building will be renovated in a “like-new” fashion that will better prepare our students for the future at a cost that is far less than construction/renovation at any of the other buildings. Think about this renovation of B Building the same way we thought about renovating our elementary schools a few years back. As for how well our students are performing in our existing buildings, what more do we need to look at than our test scores. We have consistently been comparable to other high-performing districts in both SAT and state standardized tests. While we do have room to improve in areas, I have complete confidence in our new superintendent to take us in the right direction on this front no matter what decision is made with the high school construction project.

On Travel Distance:
I went through the most current drawings and tried to figure out exactly where this design criteria has been met. I didn’t see it and this topic makes for a great question to present to the architects.

On Classroom Size:
Pennsylvania Department of Education says that a classroom needs a minimum of 25 sq ft per student. That is their standard. Apparently the renovation of B Building will meet this standard. Mr. Taylor’s description of how the walls are reconfigurable in C Building is new to me. If I did hear it before, I didn’t put much thought into it. Mr. Taylor’s description of how things can be reconfigured in this building to meet PDE standards is very intriguing and has the potential to significantly impact this project in my opinion. Mr. Taylor does address the issue of asbestos later in his report and I think it important to get the facts on what condition ALL of C Building is in from our current architects. I think many in the public and on the Board have been convinced by the architects that C Building needed to be torn down because it has too much asbestos and because it would be more expensive to renovate than it would be to simply replace it with a new academic wing. Mr. Taylor’s report at the very least raises some good questions that ought to be asked of our current architects with regards to the possible re-use of C Building.

On Building Size:
What more can I add? The building size we are being shown today is much larger than other area projects at Bethel Park and Baldwin despite us not having many more students. It is much larger than what has been recommended for the number of students we have. I have pointed this out on my blog on more than one occasion. Mr. Taylor’s comments regarding ways to manage the construction of a renovation project using underused or unused space seems very logical to me. Since eliminating temporary classrooms has been a top priority of the design team to this point, perhaps there is a way to incorporate Mr. Taylor’s suggestion into the renovation of the building.

On the Sports Facility:
There is a pedestrian walkway connecting the new academic wing to the sports wing because the property is zoned for a single building. I know, a pedestrian walkway doesn’t seem to be part of a contiguous building but according to the law it is. It is my understanding that without the pedestrian walkway the sports facility would be in violation of current zoning laws. But, that is small potatoes. Mr. Taylor’s suggestion about re-orienting the pool and then building additional levels for wrestling and fitness on top of the extended pool complex seems very well thought out. Can it be done? It’s another great question for our current architects. If by chance this solution is selected, we cannot ignore the need to then do upgrades and/or expansions to the current field house and locker rooms. I understand the design team is working on figuring out where to put the two displaced tennis courts under the current design. I have not seen if there was a similar effort underway for the softball field. If you have followed the Board and Commission closely, you know that we already have a rather serious issue with having enough field space for our athletes. Removing another practice field from the mix will simply complicate things further.

On LEED:
Again, great points on destroying a perfectly good building to build another like-use building. I can see how that defeats the spirit of LEED/Reusable design.

On Some Omissions:
One omission was mentioned above. What the new athletic complex would have given us is some new locker rooms and space that would have taken the place of the field house. Without that complex we would then need to do something with our existing field house and locker rooms. This work could end up being significant. The second difficulty is figuring out how to improve band/music instruction in the building under Mr. Taylor’s solution. While our current staff and students seem to make the current environment work, I wonder if there is any way to improve it outside of a simple stale renovation of existing space

Conclusion:
All in all I find the report very helpful in trying to determine what direction to take the high school project. The report confirms some of the concerns I have had for some time. I trust Mr. Taylor’s experience and insight and hope the rest of the Board will not take this analysis as simply another email from a disgruntled resident.

Thanks for reading.

James

Summer Break

I am taking a little break from blogging for awhile. I am focusing on a job search at the moment. Please still feel free to email me with questions and concerns as I am continuing to check email.

Have a great summer.

James

State Revenues from Income Taxes Declining

The Nelson Rockefeller Institute of Government released a report the other day that shows states across the country are losing revenue from income taxes at an alarming rate.

Some of the conclusions in the report include:

-The sharp declines in personal income tax collections will punch still deeper holes in the budgets of many states. This increases the risk that state budget agreements for 2009-10 will not close budget gaps completely, and that states will need to make midyear budget cuts.

-These new data on income-tax revenues also make it likely that states will be forced to consider further spending and revenue actions in 2010, and will confront large budget gaps when federal stimulus assistance ends in 2011.

Pennsylvania experienced a 26% decline in Personal Income Tax between January and April of 2009. Because Personal Income Taxes make up 32% of our budget, you can see that being 26% short on 32% of your budget will have a significant impact on budget shortfalls. However, we are not as bad off as some other states. Arizona is seeing a 55% decrease in PIT. PIT makes up 25% of the Arizona budget. California was 34% lower in PIT revenues this year and PIT revenues make up almost 48% of their budget.

Something to remember about government budgets is that the revenues always lag. State and local budgets are set one year in advance and are based on the best projections available at the time. Last July, Harrisburg had no idea what the economy would be doing in April of 2009. They budgeted with their best guess. Now that best guess is going to be off by over 25%.

Each state will handle these shortfalls in their own way. Most will end up doing a combination of things including laying off workers, unallotments (as they are doing in Minnesota), tax increases, etc.

What I can say with confidence is that this recession is not over, especially when talking about the actions various states will be forced to take in June and July of this year (this is when budgets are typically passed). Pennsylvania is weathering this storm better than half of the other states but we will still be impacted. The 2009-2010 budget will be a tough one to pass, but it will be easy compared to what happens in 2010-2011.

The report concludes with this bit:

-It (the PIT situation) raises the risk that the newly adopted budget will take an optimistic view of the year ahead and may unravel as the year progresses, requiring midyear cuts. And because those solutions that are adopted may be nonrecurring in nature, it raises the risk that states will face larger gaps for 2010-11 when such non recurring resources go away

Thanks for reading.

James

Message from Senator Orie on Keystone Exams

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Edit-

I forgot to mention that our State Senator John Pippy is a co-sponsor of Senator Orie's legislation. Thanks to Senator Pippy for stepping up on this issue as well.

***

I received a message from State Senator Jane Orie yesterday regarding her attempts to curb the PDE's ability to unilaterally implement Keystone Exams. The message provides a great summary of how we got to where we are today and what is happening at the legislative level. Please see the full message below:

Dear Friend:

Thank you for your recent correspondence stating your opposition to the Rendell administration’s graduation competency assessment (“GCA”) scheme as well as conveying your support for Senate Bill 281, which would expressly prohibit any further movement on GCA’s without the express approval of the General Assembly.

In 2008, the State Board of Education included GCA’s as part of its proposed changed to their Academic Standards regulations. Under the proposal, all high school seniors would be required to pass a series of standardized exit exams in order to graduate. After receiving a tremendous flood of criticism against such a plan from citizens, school administrators, and educational experts statewide, the Pennsylvania Senate and House of Representatives passed a moratorium last July through Act 61 of 2008 that expressly forbid any further action on the GCA for one year.

Despite this clear directive to cease any and all activity related to GCA’s, the Department of Education began to solicit bid proposals for the development of these high school exits exams in the fall of 2008. Faced with the Department’s blatant disregard for the Act 61 ban, it became abundantly clear that this matter must be addressed with legislation conclusively banning any further movement on GCA’s. As such, I promptly introduced SB 281 in February.

SB 281 would bar any direct or indirect advancement of the GCA agenda by the Department. More importantly, the legislation would instruct the Pennsylvania Treasury not to expend funding related in any way to graduation standards unless specifically authorized to do so by the General Assembly. The crucial need for SB 281 was once more sharply reiterated when the Department recently executed a $202 million contract for the development of GCA’s. I would also note, that confronted with a projected deficit of over $3 billion, fiscal prudence demands that we not allow limited resources to be expended on new and unproven initiatives like the GCA’s when many other worthy current programs cannot be funded. Put simply, the Department’s actions in plain disregard to the Act 61 prohibition and our economic circumstances compel an immediate legislative response as embodied in SB 281.

Presented with this difficult situation, I am pleased to report that SB 281 overwhelmingly passed the Senate on June 10th with nearly unanimous bipartisan support (48-1). The bill now proceeds to the House and I urge my colleagues to act swiftly and curb any further action or spending towards the GCA initiative. To this end, you are encouraged to contact your own representative and convey your support for SB 281. Should you require any assistance in doing so, please do not hesitate to contact my offices at your convenience.

Once again, thank you for your contacting me and voicing your thoughts about such a significant issue. Your staunch advocacy is also most appreciated on behalf of all Pennsylvania students who could be considerably harmed by the hasty and irresponsible implementation of graduation tests. Please feel free to contact me whenever you have any other state-related concerns.

Sincerely,

JANE C. ORIE
Majority Whip
40th Senatorial District

Thanks to Senator Orie for taking a leadership role on this legislation.

Thanks for reading.

James

Senate Education Committee Votes to Stop Keystone Exam Funding

In a bi-partisan effort to stop the Governor from unilaterally implementing the Keystone Exam/GCAs, the Senate Education Committee voted unanimously to block the contract that was awarded to the company that was designing the tests.

From the Pittsburgh Trib:

Senate Education Committee votes to block contract with testing company

HARRISBURG — A high school graduation exam drew fierce opposition Tuesday from members of the Senate Education Committee, who voted unanimously to block a $201 million contract with a Minnesota testing company.

For almost two hours, senators from both parties skewered Education Secretary Gerald Zahorchak for proceeding with a seven-year contract without legislative approval at a time when Pennsylvania faces a $3.2 billion deficit.

Even members of Democratic Gov. Ed Rendell's party, especially Sen. Anthony Williams of Philadelphia, criticized the contract.

"The reason why we're having the hearing today is because every time we ask a question, the response is sort of condescending," Williams told Zahorchak. "You sort of act like, 'What right do you have to ask a question?' I'm concerned about how we arrive at moments like this, which are embarrassing to all of us."

The committee approved a bill by Senate Majority Whip Jane Orie, R-McCandless, requiring that any graduation exam be approved by the General Assembly. Orie, calling the Rendell administration's action "unconscionable," predicted the bill would move through both chambers with a veto-proof majority.

Orie said the bill would negate the contract signed last month with Data Recognition Corp. for the tests. She said the contract is flexible enough that the state would not owe the company money for canceling.

Rendell fired back hours later: "If it becomes law, I will veto it." He said states surrounding Pennsylvania have such exams.

"Do you think all the states have it wrong and we have it right?" Rendell said business leaders across the state back the exams. The opposition was driven by a "special interest," the Pennsylvania State Education Association, the state's largest teachers union, the governor said.

"The fact other states might be doing it doesn't mean Pennsylvania should do it," PSEA spokesman Wythe Keever said. He said 23 organizations across the state oppose the exams, ranging from the NAACP to the Disability Rights Network of Pennsylvania.

The opposition had less to do with the tests than a perception by senators that Rendell's office was dictating education policy without legislative input.

Deeming the situation a "corruption of the legislative process," Sen. Mary Jo White, R-Venango, said, "It is not the Department of Education's job to determine education policy for the entire state."

Zahorchak said the $8 million included in this budget and $20 million next year for the contract are a fraction of the $10 billion the state spends on education. He said it is important to measure students' competency before they go out in the work force.

Committee Chair Jeffrey Piccola, R-Dauphin, supports the idea behind graduation tests but said he is disappointed by the Education Department's "absolutely miserable job" of communicating with the Legislature.

"You're asking us to kill a mosquito with a sledgehammer," Piccola said.

"You can use the sledgehammer, but its not me who will be punished by it," Zahorchak said. "It's generations of kids."

Michael Hauser, principal at Moon Area Senior High School, supports the idea behind the so-called Keystone exams but believes Rendell rushed the issue.

"Ultimately, having some type of standardized assessment of what kids are learning across the commonwealth is not a bad thing, but we need to move forward at a reasonable pace," Hauser said.

Erin Vecchio, a Democratic committeewoman and school board member with two children at Penn Hills High School, does not support the standardized exams. She fears the tests would cause teachers to change the way they teach students.

"It doesn't mean that anyone is going to be educated unless you're going to teach them the test," Vecchio said. "You're teaching the kids how to do the test instead of teaching them how to learn. What good does that do?"

Thank you Senator Orie for stepping up and getting this done.

Thanks for reading.

James

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