Noteworthy highlights:

Item D – Facilities
1. Discussion and action on proposal for custodial services for Weisenberg Elementary School for the 2010-2011 school year.

Item E – District Finances
1. Approval of final 2010-2011 General Fund budget and supporting tax levies for Northwestern Lehigh School District as follows:

a. Budget Expenditures – $36,932,065.00

b. Local Tax Levies:

• Real Estate Tax – 50.66 mills (1.25 mill increase)
• Earned Income Tax – 1% (net .5%)
• Real Estate Transfer Tax, Act 511 – 1/2% for each of 4 townships
• Local Services Tax – $10
• Amusement Tax – 10%/not to exceed 40%

NEW — Agendas now include clickable links to discussion items.

This document reflects updated information received on Tuesday, June 15, 2010

This bill parallels the anticipated “fix” [and I that word loosely] by “kicking the can further down the road”, rather than addressing the significant issues of the looming pension crisis. Gov. Rendell endorsed this “solution” [and only a politician would deem it this] in his proposed 2010-11 state budget. It’s funny how politicians appear to develop short-term memories around election time [see below].

We should reduce the benefit level. We should reduce when those benefits accrue. We can’t afford it. It’s going to break school districts and the state. It was a giveaway. Interestingly, everyone got upset at the [2005 legislative] pay raise. The pay raise cost the taxpayers about 1/500th of what this [2001] pension grab is costing. And no one got mad at Gov. Ridge. No one got mad at the Legislature back then. I guess it’s because the impact is phased in over so many years. But this is a tsunami compared to the pay raise.

Governor Ed Rendell (during an interview with the Morning Call)

An actuarial note attached to this bill by the PERC (PA’s Public Employee Retirement Commission) estimates the higher costs in later years will far outweigh the contribution reductions in the earlier years – to the tune of an astonishing $52 billion MORE to achieve this “cost smoothing” over the next 30 years. See pages 10-11 of the document below.

Again, this legislative “solution” is projected to cost $52 billion more than the total amount of the current PSERS and SERS pension crisis already!

The following graphs are from “HB 2497 and the Pension Rate Spike”, prepared by PSERS & SERS upon request from the House Democratic Caucus, detailing the impact HB 2497 would have on the employer contribution rate spike and plateau facing both state pension systems. Note: Click on the images to enlarge them.

HB 2497′s Projection of Employer Contribution Dollars

HB 2497′s Projection of Total Employer Contribution Rate

HB 2497′s Projection of Unfunded Liabilities

HB 2497′s Projection of Funded Ratio

More information on HB 2497

Regarding PSERS, the bill re-amortizes all of the unfunded actuarial accrued liabilities of PSERS over a 30-year period using level percentage of pay amortization payments and extends from five to ten years the asset smoothing period beginning July 1, 2011. The bill also proposes to fund any increases in accrued liability enacted by legislation after June 30, 2010 over a ten-year period using level percentage of pay amortization payments. For the fiscal year beginning July 1, 2010, HB 2497 establishes the total employer contribution rate as the final contribution rate of 5.0% of the total compensation for all active members, plus the premium assistance contribution rate.

The bill also imposes “collars” on the rate at which employer contributions may rise from year to year, establishing temporary collared contribution rates for fiscal years July 1, 2011, July 1, 2012 and on or after July 1, 2013, that if the contribution rate is more than 3%, 3.5% and 4.5%, respectively, of the total compensation of all active members greater than the prior year’s final contribution rate, then the collared contribution rate must be applied and equal to 3%, 3.5% and 4.5%, respectively, of total compensation for all active members. For all other fiscal years in which the actuarially required contribution rate is less than the collared rate, the bill establishes the final contribution rate as the actuarially required contribution rate, provided that the final contribution rate is not less than the employer normal contribution rate.

HB 2497 was amended by the committee to insert technical changes and also to allow any active member in the SERS, who was previously an active member of PSERS, to elect to become a multiple service member no later than 365 days after becoming an active member in SERS.

Source: PSBA’s Office of Governmental and Member Relations, Weekly Legislative Update, June 10, 2010

As it appears the Governor and Pennsylvania lawmakers are heading toward another showdown and missed deadline on the annual state budget – for a staggering 8th year in a row – maybe they could spare a few minutes of political posturing and try to learn something from “down under.”

Pennsylvania’s fiscal picture continues to grow grimmer. State Rep. Samuel Rohrer (R-Berks), minority chairman of the House Finance Committee, summed up matters thusly: “If Pennsylvania were a private company, it would be staring bankruptcy in the face.  The truth is that we now have debts that exceed our ability to pay – the definition of insolvency.”

To cover last year’s budget deficit, among other shell games, the Governor and General Assembly exhausted the MCare Fund. The Commonwealth Court, however, ruled this year that financial move was illicit, and that the state must pay back $800 million. Add this to a $1.2 budget shortfall, and PA faces a $2 billion hole. To make matters worse, if Congress does not extend the Federal Medical Assistance Percentages (FMAP), which Gov. Rendell counted in his proposed budget, Harrisburg will be short another $850 million.

Stunningly, Gov. Rendell and many legislators want to increase state spending by 4 percent.

Source: “PA’s Fiscal Picture Grows Dimmer”, The Commonwealth Foundation, June 7, 2010

The Senate Education Committee is scheduled to consider a number of bills this week, including bills that would extend the life of the mandate waiver program and that would mandate a two-third affirmative vote on the school board for property tax millage increases.

Pennsylvania – Senate Bill 250

SB 250, sponsored by Sen. Jake Corman (R-Centre) simply removes the sunset date of June 30, 2010 from the current Education Empowerment Act, Act 16 of 2000. This would have the effect of continuing the current mandate waiver program. It would also have the effect of continuing the remainder of the current statute, which includes accountability standards for school districts, many of which have been overridden by the provisions of the No Child Left Behind Act, and the takeover of the Harrisburg School District by an empowerment board named by the city’s mayor. An amendment to be offered by Sen. Mike Folmer (R-Lebanon) would allow school boards to furlough professional employees for economic reasons.

Pennsylvania – Senate Bill 553

SB 553, sponsored by Sen. John Rafferty (R-Montgomery) simply requires any property tax millage increases to be approved by two-third majority of a school board. The bill would take effect in 60 days; therefore, it would become necessary to have 6 votes to approve millage increases, effective for the 2011-2012 school year, should the bill become law.

Pennsylvania – Senate Bill 1321

SB 1321, sponsored by Sen. John Wozniak (D-Cambria) would require all school districts of the second, third or fourth class within a county to consolidate all administrative functions. Under the bill, these would include but not be limited to: payment of payroll obligations, financial accounting and reporting and purchasing and contracting with insurers, vendors and others. The governing body of the county would appoint a single county superintendent for all schools within the county and may appoint a solicitor and such other appointees and employers as it may deem proper in carrying out the provisions of the bill. Each school district within the county would pay a pro-rata share of the expenses based on the percentage of the district’s employees as compared to all the school employees in the county. This bill is scheduled only for discussion and not for vote.

Source: PSBA’s Office of Governmental and Member Relations

A dynamic discussion ensued after a consensus could not be achieved for the 1.57 mil increase option, which included reductions from its approved Preliminary Budget on February 16, 2010.

A recommendation for a 1.25 mil increase appears on the agenda for this week’s school board meeting on May 12th.

A personal comment: As illustrated by only one community member in attendance at this budget meeting, the District needs to continue to explore new ways to enhance public awareness and engagement. During public comment, this resident also suggested the use of the new marquee as an additional means to advertise Board meetings. “Kudos” for sharing that idea.

Agenda highlights:

Item D – District Finances
1. Approval of PlanCon Part J Extension for Northwestern Elementary

Explanation: When a school district undertakes a major school construction project and seeks reimbursement from the Commonwealth, a process known as PlanCon is initiated. PlanCon, an acronym for Planning and Construction Workbook, is a set of forms and procedures used to apply for Commonwealth reimbursement. The forms are designed to:

1. document a local school district’s planning process;
2. provide justification for a project to the public;
3. ascertain compliance with state laws, regulations and standards; and
4. establish the level of state participation in the cost of the project.

PlanCon Part J (Project Accounting Based on Final Costs) is the final accounting for the construction project. The permanent reimbursable percent by the Commonwealth is calculated at this stage.

Item E – District Finances
1. Approval of proposed final 2010-2011 General Fund budget and supporting tax levies for Northwestern Lehigh School District as follows:

a. Budget Expenditures – $36,964,316.00

b. Local Tax Levies:

• Real Estate Tax – 50.66 mills (1.25 mill increase)
• Earned Income Tax – 1% (net .5%)
• Real Estate Transfer Tax, Act 511 – 1/2% for each of 4 townships
• Local Services Tax – $10
• Amusement Tax – 10%/not to exceed 40%

If this protracted period of economic uncertainty continues and this problem is not fixed…the PSERS Crisis alone will bring every public school district in Pennsylvania to a screeching halt by the year 2012. That’s a pretty bold statement to make, so I wasn’t surprised this recent blog posting caught my attention as well:

Perhaps one of the most effective dramatic scenes in a movie was Tom Cruise’s JAG lawyer character interrogating Jack Nicholson’s smartaleck colonel character in A Few Good Men. At one point in his testimony, Nicholson arrogantly asks Cruise if he wants the truth. When Cruise replies, “I want the truth,” Nicholson responds with one of the most memorable lines in movie history, “You can’t handle the truth!”

This scene reminds me of where we currently are in the debate about PSERS. Certain groups can’t handle the truth that it’s disingenuous to continue to condemn school boards for not having paid their fair share into the fund over the past 10 years as the primary culprit for why the fund faces the crisis previously foretold. Actuaries, experts in this number-crunching game, have stated that while employers (school boards and the state) have not paid their fair share over the past decade, that is a tiny piece to the underfunded puzzle, and most definitely not the only root cause of the dilemma.

The time to point fingers and assign blame is over. Solutions need to be worked out now or the pension tidal wave will wash over taxpayers and school districts, leaving them angry and frustrated. We need to look forward not back.

The Governor recently included his thoughts on the pension issue in his budget address; however, that solution is short-sighted in that it only pushes the problem down the road for someone else to solve. If the Governor’s solution were combined with a new funding source and addressed the benefit levels provided by the system, then we might have something.

Source: Leading PA Schools blog

Noteworthy Highlights:

Personnel: Retirement announcements were received from Roxanne Davis (34 years), Jean Machamer (17 years), Susan Barnett (25 years), Georgine Gilligan (28 years), and Bob Mitchell (33 years) – effective the last day of the 2009-2010 school year.

Additional retirement announcements were received from Leonard Smith (35+ years) and Bob Billig (35+ years). Mr. Smith’s retirement will occur on the last day of the first semester of the 2010-11 school year and Mr. Billig’s will be effective May 1, 2011.

Leslie Frisbie was appointed Business Administrator for Northwestern Lehigh School District effective March 22, 2010. Mrs. Frisbie is currently the Assistant Business Administrator and will succeed Business Administrator Cathy Linde, who will retire on March 22, 2010.

Finance: Executive Director, Dr. Clyde Hornberger presented a summary of the 2010-11 General Fund budget resolution for Lehigh Career & Technical Institute (LCTI). Scott Shearer of Public Financial Management, Inc. (PFM) presented an option for consideration to refinance the 2005 General Obligation Bond issue for a one-time projected savings.

Curriculum/Building Issues: High School FLIC students gave a presentation of their summer trip to Greece and Turkey last year. They were also given approval to proceed with their plans for an educational trip to Poland and Hungary in the summer of 2011. The high school SAGE team will compete in the National Finals in Amherst, NY on May 27-30, 2010.

Middle school principal, Laurie Hoppes presented an overview of “Unlocking the Data” which highlighted academic achievement data at the middle school. She also illustrated the process and tools that her team has developed to enhance and support data-driven decision making.

Policies: Revisions to District Policies 210.1, 216.1, 218.1, 218.2, 219, 221 and 810 were presented and approved.

Facilities: A contract was approved to resolve the boiler exhaust issue at Weisenberg Elementary School. An update letter with additional information is posted on the District’s website.

Unfortunately this is also an election year…so that might be the real top priority for many of them. In this video, PSBA Executive Director Tom Gentzel gives a brief overview of Governor Ed Rendell’s proposed 2010-11 state budget — including its early impact on the state’s 500 public school districts.

Governor Ed Rendell’s budget brief is listed below for your review: