This is a video of Lower Merion School District Business Manager Scott Shafer on January 22, 2007 explaining how he backed into the latest budget “projection” in order to maximize the tax increase without triggering a public budget vote per the new Act 1. Hear him explain how he worked backwards to maximize this year’s tax increase by inflating the projected expenditures to maximize a surplus that will allow the district to beat the Act 1 limits in the future. And while this is the first year that the District has admitted to inflating its budget to create a surplus to spend on two oversized schools, here are the facts:
- The District has just announced a 6.5M surplus from the 2005-2006 budget.
- The District has just announced another $8.5M surplus in the 2006-2007 budget.
- The District intends to raise taxes for the 2007-2008 budget as high as it can without triggering an Act 1 vote, in order to collect $5.1M in excess of the funds that the district will need to cover 2007-2008 expenses.
This additional overtax will put the District’s grand total of excess revenues collected from the public at about $20.1M. Mr. Shafer tells us that his advice to this Board is “use it, or loose it,” (his words) an attitude that should scare every taxpayer in Lower Merion. Please click the play arrow to start the video. For more instructions, please click the "continue reading" link below the video screen.
This is more alarming when you put it in the context of the 2006-2007 budget debate. Recall that the district intended to increase taxes 14.3%. Thanks to a strong public outcry, the District decided to defer some of the Harriton debt over two years, lowering the increase to 10.8%. However, many residents and board members demanded a further reduction. In response to these demands, the superintendent himself is on record as saying that if we take a dollar out of the 2006-2007 budget, we will have a “mediocre district” (his words). When pressed by some board member to find a cut of at least a few hundred thousand dollars, Mr. Rosenwald, Ms. Taylor, Mr. Gelfand, Ms. Pliskin, and, at the last moment, Ms. Kugel refused to agree to even this “token” (Mr. Gelfand’s word) decrease. However, we now know that in spite of that debate, the district had a prior year surplus of $6.5M and had an extra $8.5M surplus in the very budget it refused to reduce.
To make matters worse, $4.4M of the $8.5M was for a fall debt service payment that the board knew would not be made. When asked about the at the February 12th board meeting, Mr. Shafer said that the debt was not issue because PA Dept. of Ed. PlanCon approvals came late, delaying bid opening to February 2007. However, as pointed out at that meeting, the District’s June 2006 presentation to the public, given just days after the budget was approved, showed the bid opening date scheduled for February 2007, demonstrating that the Board knew that the fall debt service payment would not be needed. See page 5 at http://www.lmsd.org/hsmodernization/documents/060628_hhs_boc.pdf . So why wasn’t the $4.4M taken out of the budget prior to approval? You be the judge.
Why has the board inflated budgeted expenditures so that it could stockpile all of this cash? The extra cash provides a sufficient downpayment to enable the district to borrow for Harriton without having a debt service increase that would require an Act 1 vote. Now, if you have been following their actions for the last several years you might question this knowing that with word of the coming Act, the district ran out in 2004 and "incurred" the Harriton debt through a Board Resolution so that the Harriton debt service would fall under the "incurred debt" exclusion of Act 1. But that's the master plan. The Board will now save that exclusion and use it for the new Lower Merion High School. In this manner, they can avoid having either an Act 34 or an Act 1 vote on either of the two oversized, overpriced high schools. THey get what they want with no controls!
So what's the the cost of preventing the public to vote. For starters, they scrapped the partial renovation, partial new construction plan for Lower Merion High School to avoid an Act 34 vote, costing the taxpayer tens of millions in additional construction costs. See the third question for which they conclude that the project "would almost certainly be not viable under Act 34 guidelines, meaning it would require an Act 34 vote!
Now, to make their plan work, they will incur the Harrtion debt over 25 years instead of 20 years, costing millions in additional interest (I should note that at the February 12th board meeting, Scott Shafer said that the interest at 25 years would be the same as at 20 years, but... You be the judge)!
In keeping with our commitment to educate citizens by providing them with free access to all relevant public information, here is your opportunity to view the full video of the Lower Merion School Board's January 22, 2007 high school financing presentation. Please double click the play arrow to start the video.
The video is 1 hour and 25 minutes. You should be able to use the slide arrow to go to any point in the hearing. If you are having trouble with the screen controls, click on the Google Video arrow and then on "Go To Google Video." From there you can view the video with more controls. Please e-mail us via the "E-mail Me" link in the left hand column if you are still having problems. You can also provide your comments by clicking on the "comments" link under the video screen in the previous view (click the back arrow of you browser to get there). Thank you for taking the time to watch this important meeting.