Octorara's Budget - Its Not Pretty

Like a broken clock, I'm right about twice a day.

And that's on a good day.

I had a bad day recently and it showed up on a post here on Parkesburg Today.  Not only was I wrong but I took a cheap shot at some good people doing their damnedest to make a silk purse out of the proverbial sow's ear.

I speak of course of the administration and school board of the Octorara Area School District.  On December 15th I wrote that unlike the Borough and County who had held taxes for 2011 at 2010 levels, the Octorara School District's board and administrators looked like they were on their way to another tax increase in 2011.

I couldn't have been more wrong.

While there may be a tax increase in June, a tax increase is NOT a foregone conclusion.  Everyone involved in the budget process at the district, including the administration and all nine members of the Board of Directors, are doing all in their power to avoid that outcome.

Here's the situation as it currently stands:

1.  Revenues in almost every form including property taxes, earned income taxes, investment revenue and states and federal funding are down and down significantly (see chart below).  The one bright spot is in a new area called 'demand response.'  Demand response (not shown on graph) is an arrangement where PECO pays the district $700 to $900 per day to shut down during peak energy demands.  Since periods of peak demand always happen during the summer, the district is able to accommodate PECO's request with zero impact on the district's education focus.  As a result demand response is expected to generate close to $50,000 in revenue for the district this year.  

2. Expenses in the form of salaries, pension expenses, healthcare, charter school fees and expenses and debt services continue to grow (see chart below).  While some of these expenses are the responsibility of the school board to manage, many are driven at the state level and out of the board's control.  Pension funding ratios are dictated by Harrisburg as is the mandate that local districts fund charter schools, a mandate that takes $2M out of the money Octorara has to fund its own classrooms.   And lets not forget about healthcare insurance expenses expected to grow at a 15-20% ($250,000) pace in 2011.

3. Student enrollment projections which spurred the recent campus building boom did not  materialized.  While enrollment projections are more science than art, the art of guessing which assumptions are valid and which are not is anything but exact.  In 2005 and 2006 the decisions to build, enhance and expand the district's infrastructure by borrowing against future revenue seemed wise given the entire world's economy was booming and Chester County's real estate wave was rolling without pause towards the district.  With the 2008 economic downturn bringing area residential development to a dead stop, the district's enrollment did not climb but remained at the decade old 2,700 student level.  Bottom line is the debt taken on to fund the expansion must now be serviced without the benefit of the anticipated tax revenue new homes would have contributed had they been built.

So what should we do?  I offer three suggestions.

1. Hold our judgment - The budget won't be finalized until the last week of June leaving the School Board and administration 6 months to work out a solution for the 2011-2012 school year.  School board members, elected by us, serve without pay.   While they need our perspective, school board members don't need, or for that matter deserve, our sharp criticism.

2. Do something, go to meetings, run for the school board, get out of your bark-o-lounger and get involved - School board meetings occur every two weeks and usually have less than 10 people in attendance.  Five school board seats are up for election in November 2011. If you're convinced you can do better, be a brave patriot and public servant and put your name on the ballot.

3.  Listen, learn, listen some more and speak, in that order.  God gave us two ear's and one mouth to encourage us to do twice as much listening then talking.  The school district's budget is complicated and complex. There are no easy solutions or short cuts around our current challenges.  Don't do what I did and take a cheap shot without first understanding the nuances and intricacies of public education funding.

Here's a recently published article written by Debbie Wygant describing Octorara's budget process.  Check back here often over the coming weeks for budget updates.