Noteworthy Highlights:

Personnel: Approval of a new 3-year Collective Bargaining Agreement with the Northwestern Lehigh Education Association (NWLEA). The administration released the highlight sheet below to summarize the details.

Approval of the employment contract for incoming Superintendent Dr. Mary Anne Wright.

Finance: Approval of a Parameters Resolution for refinancing the 2005 GOB issue pending a minimum required savings level of $65,000 can be achieved, net of all costs.

Earned Income Tax (EIT) revenues continue to lag budget estimates. Although this month’s report shows nearly a 15% decrease for the year, our actual trend is closer to a 10% decrease due to a timing issue for the March EIT deposit.

The previously scheduled Building and Grounds meeting for May has been canceled. In its place, the Board has scheduled a Finance/Budget public meeting at 8:00 pm on May 5, 2010.

The current funding issue confronting PSERS represents the greatest challenge the Agency has faced in its history. The funding issue, commonly referred to as the “rate spike” or “rate plateau,” refers to the significant increase in the employer contribution rate in fiscal year (FY) 2012/2013 and following years that is paid by school employers and the Commonwealth to PSERS to fund pension benefits.

Jeffrey Clay, PSERS Executive Director

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)

Unquestionably many school districts will be struggling with the staggering 72% increase in this benefit cost for the 2010-11 school year.  As illustrated below, our collision course is very close on the horizon. This is truly a paramount legislative issue that originated in Harrisburg — and needs to be clearly addressed and “fixed” immediately. Although I’m just not convinced we can trust them on this one, as our elected politicians enjoy a similar “guaranteed” pension benefit system with ominous problems of its own. Contact your state representatives and make your voices heard today!

Source: PSERS

• Tax hike likely in Allentown School District
• Catasauqua Area board OKs early budget
• Salisbury may raise school tax
• Tax hike likely in Saucon Valley School District
• Bethlehem Area School District residents see 10% tax increase in preliminary budget
• Easton Area budget calls for a 12% tax hike
• Suggested Cuts
• Quakertown schools look to trim $10 million
• Souderton Area faces budget gap
• Bangor School District asks teachers to lower pay increases

In the face of continued declines in earned income tax and real estate property taxes – which account for an average of 60-70% of their total revenue sources – many schools will be facing some very tough choices in their 2010-2011 budgets – and beyond.

Significant increases in the expense areas of health care, pension contributions (PSERS), electric deregulation, special education, cyber/charter schools reimbursements and other benefits will also play an important part of those discussions.

Overview of school budget timelines

The Pennsylvania Department of Education (PDE) published a nice summary of school budget timelines and process under the mandated preliminary budget cycle requirements of Act 1.

What is the adjusted index (ECI/SAWW)?

The ECI/SAWW index is calculated by averaging the percent increases in the Pennsylvania statewide average weekly wage and the Federal employment cost index for elementary/secondary schools. Additionally, for school districts with a market value/personal income aid ratio (MV/PI AR) greater than 0.4000, the value of their index is adjusted upward by multiplying the base index by the sum of 0.75 and their MV/PI AR.

Its also important to remember the ECI/SAWW index is a “lagging” economic indicator. Act 1 directs PDE to annually calculate the Index by August 15th and to annually publish the Index in the PA Bulletin by September 1st. The SAWW for calendar year 2008 and the ECI for FY 2008-09 will be used to calculate the Index certified by the PA Department of Education in September 2009. The resulting Index will be used for property taxes for FY 2010-11.

What does this mean for our district?

The base ECI/SAWW index for 2010/2011 is 2.9% and our MV/PI AR is 0.4177. This calculation provides an adjusted index for Northwestern Lehigh School District of 3.4%.

Calculation: 2.9% x (0.75 + 0.4177) = 3.4%.

Act 1 also provides districts with ability to exceed this index by seeking and being granted “exceptions”. Additional information on these 10 exceptions is provided on PDE’s website.