Budget Hearing: April 18, 2000
BETHLEHEM AREA SCHOOL DISTRICT APRIL 18, 2000
BOARD OF SCHOOL DIRECTORS
BUDGET HEARING #1
BUDGET HEARING #1
The Bethlehem Area School District held a Budget Hearing on Tuesday, April 18,
2000, beginning at 6:00 p.m. in the Auditorium at East Hills Middle School, 2005
Chester Road, Bethlehem, Pennsylvania.
Members present: Directors Amato, Craig, Gallagher, Glancy, Heske, Leeson,
Venanzi, Williams, and Koch - 9.
Others present: Thomas J. Doluisio, Superintendent of Schools; Stanley J.
Majewski, Jr., Board Secretary; administrators; members of the press and other
interested citizens and staff members.
Director Glancy, Chairman of the Finance Committee, presided at the budget
hearing. He reviewed the budget hearing process. This first meeting will
include a budget presentation by the administration, questions and discussion by
the board, and courtesy of the floor for questions and comments from the
audience. If questions cannot be answered tonight, answers will be provided at
the next meeting. The next hearing is scheduled on May 8. A tentative adoption
meeting is scheduled on May 15. Final adoption of the budget is scheduled for
June 26. The public will have an opportunity to comment and ask questions at
each of the meetings.
MR. DOLUISIO - INTRODUCTION OF BUDGET
Mr. Doluisio provided an overview of the budget. Most of the specific highlights
are contained in the letter of transmittal. Several concerns have impacted the
flow of revenues into the school district. One is the continued downgrading of
assessment of the Bethlehem Steel properties. There is a change in the law with
respect to power plants resulting in $600,000 or so in lost revenues because of a
change in how they allocate monies generated from power plants. The governor has
again seen fit to send our district one percent increase in the basic education
subsidy, amounting to just shy of $150,000 for a $108,000,000 to $109,000,000
budget. Those three aspects of revenues and others have impacted drastically the
flow of monies into the district.
On the expenditures side, Mr. Doluisio stated that the good news is we have
state-of-the-art facilities, the best educational environments for our children
and staff around, and we are continuing the process of renewal of our physical
plants. That comes with a cost called debt service. This year our debt service
on the expenditure side has risen about $1,100,000. Additionally, the Bethlehem
Area Vocational School just acquired a bond issue for necessary improvements to
their facilities which has impacted the budget by close to $400,000. The
combination of those two equals about $1,500,000 or close to three-quarters of a
mill of additional taxes due to the increase in debt service. Mr. Doluisio stated
that one concern is that three major items have been taken off budget that ought
to be in the budget. Not included in the budget and needing to be funded next
year which we are looking at reserves to do that are:
1. Debt service - the additional $400,000. The $1,100,000 is actually an
increase of $1,500,000. We are looking to fund $400,000 out of capital reserves.
That is off budget. That means that next year at this time it is a reoccurring
expense the district must provide for. Ideally, it ought to be in this budget so
that we don't have to confront the issue a year from now. We have chosen,
because of the status and outcome of the budget, not to put that in, but fund
that in other ways. Ideally, reoccurring expenses ought to be in the budget.
2. Buses are also an item not in the budget that will be funded through
capital reserves or bond funds.
3. The third item is a line item that has been in the budget for the last two
years - about $300,000 for technology for the schools. That money is for
principals to use to buy additional hardware and software. In this case, bond
funds that allocated money for technology will be spent. The administration will
recommend to the board that the district draw upon those funds to build a bridge
into next year's budget.
MR. MAJEWSKI - REVENUES
Mr. Majewski discussed the revenues of the budget. The total amount of the
budget is $108,949,723. It is being funded by $107,949,723 worth of revenue and
$1,000,000 worth of fund balance - accumulated reserves being brought into this
budget in order to provide funding for all the proposed expenditures. The
largest revenue item is real estate tax. According to existing laws in
Pennsylvania, the district has very little flexibility with the types of taxation
available to school districts. Real estate tax is the only source of school
district revenue with the ability to adjust. Therefore, we talk about millage.
The district would love to have the flexibility of some other type of revenue in
order to not increase real estate taxes. The district is not eligible to do that
under law. The proposed millage increase is 2.23 mills, bringing the total
millage rate in the Bethlehem Area School District to 28.37 mills.
Mr. Majewski explained the concept of a mill. The county assessors determine the
market value of property. The assessed value is 50% of that determined market
value. That is what the district uses as the base in establishing taxes. For
example, a home with a market value of $100,000 should have an assessed value of
$50,000. If you divide that $50,000 by $1,000 that is one mill. Multiply that
times the tax rate: 50 times 28.37 mills to calculate the base tax bill. In
Bethlehem Area School District, the average assessed value of a residential
property is $55,100. With a 2.23 mill increase, the average increase in the base
tax bill is $122.87. Over the last five years the value of district assessments
has risen 1.48% annually, far less than inflation and other indicators. A lot of
that increase has been offset by some major reductions when plants go out of
business. If a home has a catastrophe the assessment is reduced. Some
commercial property has developed to allow an increase somewhat. Even though
there has only been 1.48% annual increase in our assessed value, the district is
looking forward in the next couple of years with optimism. A lot of those major
reductions have either occurred or are about to come to an end. Lehigh Valley
Industrial Park is underway and, hopefully, in the next three years will have
been completed, providing some additions to our assessed value. There is a
potential for Bethlehem Works and some other commercial property looking to come
into Bethlehem Area School District. All those are wonderful things in the next
two to five years, but are not the reality we are dealing with now.
Mr. Majewski explained that in Harrisburg there have been several proposals
concerning real estate taxes. One is Senate Bill 2. Another is House Bill 2263.
Those are proposals to provide real estate tax rebates to residential property
owners. Those look fairly promising. The potential rebate to an individual
property owner as it stands right now is $100. The individual still needs to pay
the money first, before it gets rebated. It would be more useful if that money
went into district subsidy instead of rebates.
Mr. Majewski stated that the basic instructional subsidy is the primary funding
mechanism the state of Pennsylvania has for school districts. In 1995-96, 16.2%
of total revenue came in the form of the state basic instructional subsidy. In
1996-97 that dropped to 13.72%. There is a significant decline in just a few
years. The real estate taxes, as its percentage of the budget, has gone from
51.2% to 58.31% of our revenue. As the superintendent mentioned, the district is
anticipating a one percent increase in that basic instructional subsidy, totaling
approximately a little less than $148,000.
Mr. Majewski explained the public utility realty tax. For a number of years
utility generation plants were considered tax exempt. However, there were monies
collected by these utilities that were paid to school districts. At one point,
Bethlehem Area School District received over $800,000 worth of revenue annually
from this tax. The properties have now become taxable by a change in the law.
If we had a utility generation plant in our district, we would probably benefit
greatly. We do not and that $800,000 which we received just two years ago has
diminished to approximately $300,000. Those are lost revenues. That is simply
because of a change in the law and the fact that we do not have a utility
generation plant within our school district.
Mr. Majewski stated that one of the areas the district has attempted to reduce
dependency on is the use of fund balance in order to balance the budget. We have
now budgeted $1,000,000. It has not been since 1989-90 that we have been able to
balance a budget with that amount of money. Previous years have budgeted
significantly more. That is by design. We have been working with multiple-year
budgets. The plan seen today is a one-year budget. But it is not part of a
one-year process. The reserves the superintendent referred to were known when
putting together a five-year plan and looking to the future. We knew we would
have some difficult years and have been planning for that, trying to minimize
that. Part of the way we anticipate is that when some difficulty is seen, we try
to put reserves aside when they are available. We reduce expenditures, eliminate
some funds, find other ways to do something, and save the money so that we can
try to reduce some of the tax burden on the people of this district. That is
where those reserves came from.
Mr. Majewski stated that the pension contribution is a reduction of $766,000.
PSERS, Pennsylvania School Employes' Retirement System, next year will reduce the
employer's contribution from 4.61% to less than 2%. That will help expenditures.
However, the state pays for 50% of those expenditures so, as those expenditures
are reduced, so will be the revenue received.
QUESTIONS AND COMMENTS FROM THE BOARD
President Koch stated she is becoming increasingly worried about the situation
with Northampton County. It is difficult at times to get information from the
county to know what is owed on a property. She stated that since she works at a
title company, she has seen this quite a bit. If a property is sold, the
searchers are stating they cannot guarantee that what they are telling is
necessarily the case. A property might be sold and it is not known if taxes are
owed. Should this happen with school district tax money, she asked if we
potentially are in a position to lose a lot of tax money. Mr. Majewski replied
that the problem she described has impacted somewhat but is not a big concern.
The lack of information has been a concern. One area that has impacted our
budget currently has been the assessment and collection of interim real estate
taxes. If that is not corrected, the district stands to potentially lose several
hundred thousand dollars because of the county's software change. It would be
very confusing for the taxpayers if they finally get their act together and get
their billings out around July when the district sends out current year billings.
The confusion it can create very likely can cause the loss of payments by
individuals who would typically want to pay their bill, through no fault of their
own. Another concern is incomplete information. We can get map, lot, and block
numbers but no address on the file for mailing. We are hoping the county very
quickly gets these problems resolved because within two months July first will be
here. We need to be able to generate these bills. We will continue to have
dialogue with the county in trying to get these problems corrected.
Director Leeson asked for the current outstanding balance in delinquent real
estate payments. Mr. Majewski replied that typically the district will turn over
4-1/2 to 5-/12 percent per year as delinquent. We have an approximate collection
rate of 95 percent. The total billings going out were approximately $60,000,000
of which $2,500,000 to $3,000,000 will not be received in the current year.
President Koch stated that this concerns her. The people that do not pay their
taxes are caught when they sell their house because those taxes must be paid.
If, through the computer system problem, we do not know that taxes are owing on
that property and it gets sold without taxes being caught up, this money is
potentially lost. She asked how such people are caught later. Mr. Majewski
stated that if the problem with the county is not fixed, he is not certain how to
answer her question. If that happens, on a limited basis, we pursue the money
that is due the district through legal means. If it occurred on a much broader
scale, he is not sure that we would catch all of them. It is a concern.
Director Glancy stated he has his yearly question about bussing - the age of our
bus fleet and if we are keeping up. The district is reimbursed from the state
for a certain amount of mileage and age of equipment. At that point, the
reimbursement stops. Mr. Majewski responded that the state calculates
reimbursement for depreciation for a period of 10 years. The school district has
over 100 buses in operation. A conscious effort has been made to replace seven
buses per year. With the exception of one year, we have been able to stay on
that cycle. We try to find the money through reserves or through the budget in
order to be able to maintain the fleet. With a fleet that size, if you miss one
year and need to double up, the cost of replacing 14 buses is between $750,000
and $850,000. We cannot afford to fall behind. In addition, even though we have
100 buses in service, we have a hard time because of the complexity and the
number of students we transport in being able to coordinate the schedules. We
need the number of buses that we have.
President Heske asked Mr. Majewski to comment on the impact to the budget of
medical insurance costs and the rate of increase. Mr. Majewski stated that for
quite a number of years the cost of medical insurance has been relatively stable.
That has changed. Over the last two years, the worse being prescription drugs,
the district has seen some very sharp increases. The increase in prescription
drugs has been from 25% to 28% annually. Increases in the costs of Blue Cross,
Shield, and Major Medical are from 8% to 12%. That has had a significant impact
on the budget. For the current year, because of retirements, the total benefit
package has had a reduction of $1,400,000. The district has been able to absorb
increases because of the reduction in our retirement payments. But those
increases are there. We make every effort to cut costs without cutting service.
It is becoming very costly.
Director Venanzi commented since the Wood Company has recently become our food
service manager, she noticed that the district is losing the one and only
supervisor in food service. She asked what the rationale for that is. Mr.
Majewski responded that when Wood was brought in, they replaced the supervisor
who retired at that time. This budget reflects that position being down. It was
eliminated in the current year and will continue to be reduced into the following
year. There is no additional reduction in supervision.
Director Leeson asked about the Monogacci Program. It was budgeted for $10,000
and actually spent $1,800 one year and $1,300 the next year, and is again
budgeted for $10,000. She asked why that budget is so far off from the actual.
Mr. Perfetti stated that the Monogacci Program is a program at East Hills Middle
School for seventh graders. It basically is a thematic program oriented around
the study of the environment. There were plans of perhaps expanding that program
to a second middle school. The $10,000 is in the budget as a possible start-up
cost if the program is expanded. It is also a program that quite frequently,
since the students in that program get directly involved in studying the
environment, needs to buy new equipment and replace equipment. They have been
very successful in getting donations from companies for the last couple of years.
We can't always count on that.
Director Leeson asked if the "Board," on page 8 of the budget, for $149,000 is
the "School Board." Mr. Majewski stated that it is the "School Board;" however,
this includes quite a few of the costs such as the auditor, solicitor. These are
costs of the board, not by the board.
Director Amato asked if the amount of additional revenue needed to balance the
budget is $6,100,000. Mr. Majewski stated that is correct. Director Amato
continued that from that we are taking $1,000,000 off the fund balance. Mr.
Majewski confirmed this. Director Amato stated that the district will be going
into the next fiscal year with a fund balance of $4,100,000. Mr. Majewski
confirmed that at the conclusion of the 2000 to 2001 fiscal year, the district
should have a fund balance of approximately $4,100,000. Director Amato asked,
going into the budget year we are in right now, what amount of fund balance was
projected. Mr. Majewski stated the amount was $3,900,000. Director Amato
recalled unease about going into this school year with a fund balance of less
than $4,000,000. He asked if we cut that fund balance in half, near $2,100,000,
planning that what we presently have in this budget without touching anything and
if we do not come upon any unusual expenses, if the district would be fine. Mr.
Majewski replied, "Yes." Director Amato asked why we don't do that. Mr.
Majewski explained that one thing preventing us from doing that is the board
policy on maintaining a certain percentage of the budget for fund balance of
about 4%. In looking at our budget of about $108,000,000, Mr. Majewski stated he
will not propose anything less than what he is allowed by board policy, which is
about $4,000,000. Director Amato pointed out that the board policy can be
changed. He asked Mr. Majewski what he would fear in changing the policy. Mr.
Majewski stated his concern is that if there are any contingencies out of the
district's control, when looking at the size of the budget of $108,000,000 and
growing, $2,000,000 is approximately one pay within the Bethlehem Area School
District. He would have the ability to be able to float one pay. If some of the
concerns about getting tax bills out in July become reality, he would not have
the cash in July to make a pay. We would need to take a loan, pay interest
expense on that money until we get the revenue. That is why we keep a certain
amount of money in fund balance. It is not that we are looking to accumulate
significant excess money or profit.
Mr. Doluisio stated that, in addition to what Mr. Majewski has stated, if we
would use another $2,000,000 as a revenue to offset expenditures, that money is
not reoccurring. Therefore, a year from now when budget development begins for
the year 2001 to 2002, we would have $3,000,000 as start-up to be made up. That
rounds off to approximately a mill-and-a-half that we are starting as a deficit
for the subsequent budget. If we go back to overreliance on fund balance, we
will give ourselves a problem in subsequent budgets.
Mr. Majewski stated that over the last several years the budget process has been
refined significantly. That means that when you take a look at the amount of
actual spending at the end of a year versus the budget, we are hitting the bull's
eye. There is not "fat" or an excess amount of contingency. When a budget is
presented to the board, it is a lean budget. According to last year's audit, we
came within $25,000. It was not a surprise because we are designing budgets as
tight as possible. If things cost much more than expected, we don't have
reserves. That is by design.
Director Amato asked, during Mr. Majewski's 5-1/2 year period as our district's
business manager, if we ever had a situation where we had a cash-flow problem.
Director Amato stated last year we projected a fund balance for the end of this
year of $3,900,000 and came out with $5,100,000. So it grew by $1,200,000 which
meant we had a pretty good cash flow to meet obligations, whether it be vendors
or to pay our professional people. If we produced a budget properly, as Mr.
Majewski stated we have because we have been bull-eyeing, then another million
off of that might not hurt us. Mr. Majewski replied negatively because in the
following year it would have to be made up somewhere. Mr. Majewski stated that
an unanticipated reconciliation of earned income tax from the city provided
additional revenue. We had a one-time influx of money which is not reoccurring.
Director Craig asked why there is such a difference this year, on page 11 -
Student Activities - Secondary, of $50,000. Mr. Perfetti stated there are two
areas in that budget resulting in that increase. One is a rotating schedule of
replacing band uniforms in secondary schools. Next year is the replacement year
for Liberty High School, the most expensive replacement. That part of the budget
is $20,000 more than in the past. Secondary, as more and more high school
students have become involved in a series of different academic competitions,
they qualify to travel to different parts of the state and country. Some
increase is related to the fact that students are being more and more successful.
Director Amato, referring to an increase of five supplemental custodial/security
personnel to address approximately 35,000 square feet of additional building
space, asked where the additional building space is. Mr. Villani stated that
with all the new construction for the past number of years, the district has
grown in space by 350,000 square feet. It has not all happened over the last
year. It has come to fruition this year that there are a number of buildings,
through the square footage formula, that need assistance. For this reason, four
custodial supplementals are being recommended. Due to the fact that we have 40
square miles of area to take care of with only one security person on a shift at
a time, with vandalism increases and school safety concerns, an additional
supplemental security person is being recommended so that the district can be
divided in half. Director Amato asked what schools the four supplemental
custodians will be assigned to. Mr. Villani pointed out that besides renovating
buildings, large additions were built. He will provide the proposed custodian
assignments at the next meeting.
Director Amato asked what the additional funds are for the athletic budget. Mr.
Villani stated the additional funds are those funds that are part of the proposed
Director Amato asked Mr. Majewski to explain page 12. Mr. Majewski stated this
is the detail. There is a summary of every program or responsibility. It is
then broken down by detail. Page 12 is the detail of the academic interventions
Mr. Doluisio stated that the top line on page 8 lists a budget of $547,560. To
see more detail of that, page 12 shows how that $547,560 breaks down.
Director Amato stated that his question is that with an amended budget for
$547,560 we are projecting a year-end projection of $215,000. Mr. Doluisio
stated that is correct. We are currently looking at that. Last summer there was
a start-up time in the proposed budget for 1999 - 2000. Until we were
administratively geared up to offer these programs, we lost a lot of opportunity
for interventions. We are ready for this summer. We anticipate spending more of
that money. This year we have been very successful in getting grants through Dr.
Garrigan and Mrs. Cintrón. Grant money is spent first, preserving district
money. That funding is not necessarily reoccurring; therefore, this is another
reason to retain this line item for academic interventions.
Director Amato questioned budgetary reserve on page 16. Mr. Majewski stated the
budgetary reserve account will never have any expenditures. These are budget
funds to be transferred out later; for example, when the district is in
negotiations. Director Amato stated we are putting $350,000 in this line item
for future use. Mrs. Kostem stated that, for example, this past year the
administration has come to the board asking for additional positions coming out
of budgetary reserve. Funds to cover those positions are coming from budgetary
reserve. Mr. Majewski stated that of the $375,000 as presented last year,
$18,037 is the portion that was not spent. Director Amato asked why the figure
started with is not shown. Mr. Majewski stated that as positions are added, the
funds are transferred to those areas. Mr. Doluisio further explained that
beginning in October, 90 days after the commencement of the year, the district
can transfer funds. The board will see, almost on a monthly basis in the agenda,
requests for the board to authorize budgetary transfers. That is when Mr.
Majewski is moving money around in the budget to satisfy certain needs. Many
times, not all, he is moving money out of budgetary reserve. Director Amato
questioned that this is not something to be taken out of fund balance. Mr.
Majewski stated it is not. If we did not budget for that and we had those
expenditures, assuming the budget is as lean as it is, we would have expenditures
in excess of the budget. By law, the district cannot expend more than the
approved budget. We need to budget for those contingencies somewhere.
Director Leeson questioned that the 1999-2000 budget for guidance was $26,000 and
we spent $11,455. Now, we are budgeting $27,000. She asked what the change is
in guidance requiring that additional funding. Mr. Perfetti stated that line
item is per diem rates for 50 summer days of counseling service per high school.
Director Leeson stated there is talk about what a lean budget this is, but it is
still a 2.3 mill increase which is significant for a community. She asked where
we can get leaner? Mr. Doluisio stated the general answer is that the real money
is in staff, in people. About 77% of our budget is in salaries. Therefore, if
we really try to save money, you must do it in the salary accounts. That means
either eliminating programs or increasing class size. With a budget this big,
Mr. Doluisio stated there are tens of thousands of dollars we can come up with,
but not the hundreds of thousands to significantly impact on the millage
Director Amato commented that we can ask Mr. Doluisio to tell the board what is
needed to get the increase down to 2 mills, 1.5 mills, 1 mill, and 0.
Director Williams commented that she has not sat through as many budget
procedures as some of the board members, but has sat through a few. In years
past, there have been times when one could look across the line items and see big
discrepancies in terms of a three-year or two-year period what the difference
might be because of an aide or something. It is difficult to find any of those
in this budget because in the last year we have been so close in a lot of the
projections. She asked if that is a correct assumption. Mr. Majewski stated
that every effort is made to come in with zero increase. That is why the
majority are coming in very close. If there are increases, it is because
programs have been added.
Director Williams asked what the approximate worth of the physical buildings and
plant of the entire district is, given that so much renovation and expansion has
been done. Mr. Villani responded that the worth is about $500,000,000. He will
supply more specific information.
President Koch commented about past budget meetings. She stated appreciation for
Director Amato's suggestion about asking Mr. Doluisio to provide a listing of
what would be necessary to achieve various reductions of the millage. In doing
so, the board can look at what the administration thinks are the things that can
be taken away with the least impact on the educational program. We don't want to
hurt our educational program at all.
Director Amato stated that we have an outstanding school district. We have gone
over and beyond what needs to be done to meet the needs of all of our students.
We did have an agreement that, as we put programs in, we would evaluate these.
If the programs were producing results we felt they would, the district would go
forward and make sure they would be funded in the future. There may be programs
at this point that are not meeting our expectations.
Mr. Doluisio stated that he appreciates the staff being asked to make reports
based on its priorities.
Director Amato stated there is an increase in next year's budget for 4.5
additional teaching positions. In looking at our staffing requirements, there is
a decrease of 2.3 teachers in elementary, a decrease of 4.6 teachers in middle
school, and an increase in the two high schools of 9 full-time teachers. He
questioned the increase of nine. Mrs. Kostem stated that is correct. It is
scattered throughout the various disciplines at the high school level. Earlier
this school year, there were some concerns that at Freedom High School the number
of students projected was under the number attending, resulting in concern about
class size at Freedom. Once the schedule is in place for the high school, it is
very difficult to change. The first thing done this year in looking at staff for
next year, was to make up that difference for Freedom High School and then to
look at the total number of students projected for next year. We are increasing
234 high school students next year. Nine regular education positions are
requested for that and 2.2 special education teachers. Director Amato requested
more particular information on the assignments of these nine teachers. Mrs.
Kostem offered to bring that information to the next meeting. There is one
increase in business education at one of the schools. There may be a four-tenths
in physical education and maybe a three-tenths in German. All the various pieces
put together add up to an increase for the two high schools of nine full-time
Director Amato stated that this leads him to another question on staffing. Since
staffing issues were brought up throughout the course of the year, one of our
board members stated he has visited schools, and that budgeted numbers building
principals have asked for are not being utilized properly. He would like a list
of what was projected for the 1999-2000 school year and what they actually did
have a need for regarding in-class teachers. Mrs. Kostem replied that she had
discussions with the six secondary schools and she can provide that information.
Director Amato asked if there was ever any thought about size of the classrooms
between the two schools that could possibly be used to combine and teach through
a distance learning lab. He asked if the high school distance learning labs are
being utilized. Mr. Burkhardt replied that there was a Latin class at Liberty
this year. If the numbers are sufficient, it will be repeated next year.
Mr. Doluisio stated there is some contractual language that defines when the
district can merge classes based on class sizes. If there is over a certain
number of students in a class, the district may not use distance learning to
reduce staffing. Director Amato stated that he is not asking to reduce staffing.
He is asking to hold staffing at its present level, not reduce present
professional staffing. Mr. Doluisio will check on the threshold number for
merging classes. Director Venanzi inquired on the need for a teacher to be in
the room for distance learning. Mr. Villani stated an adult supervisor must be
present in the classroom.
President Heske did not find anything on alternative education, for instance with
ALPHA. He asked what we are budgeting. Mr. Doluisio stated the district has not
budgeted for Second Chance. There is no longer an ALPHA program. Second Chance
is on a per pupil basis. If we send a student there, we pay. Under Intersystem
Payments there is a line item we can draw money from. We did budget money
necessarily in this budget for alternative education. The $300,000 to $400,000
we used to budget at the vo-tech is gone. We do not budget that anymore. The
district has three students at Second Chance at $12,000 or $13,000 each. There
is minimal money the district would anticipate spending on alternative education.
It was agreed that the district would use the Code of Conduct effectively and
not invest heavily in alternative education. That, in fact, has been
Director Craig stated he was not in town when one of the newspapers had a
headline that the budget proposed an eight or nine percent increase. In looking
at the budget on page 11, the increase is actually 4.86%. Mr. Doluisio responded
that newspapers go out of the way to find the glitziest number they can. The
eight point something percent headline was, in fact, accurate if you compare the
percentage increase in millage. Director Amato said that since the administration
has been asked to look at various means to hold the budget down, as you go
through the budget one sees "1998-99 Actual Expenditures," an "Amended Budget,"
in some areas a "Year-end Projection," and a "Proposed Budget." He has concern
that the "Actual Expenditures" are at one figure, the "Amended Budget" at a lower
figure, or the "Year-end Projection" at a lower figure, and then the "Proposed
Budget" at more than the actual expenditures for this particular year. He
wondered why. An example is Student Transportation, number 510, on page 83. Mr.
Majewski explained the line item. The $274,000 in that category contains a
figure for the IU transportation. In that category between the $270,000 and
$350,000 is approximately a $65,000 to $70,000 increase for IU transportation.
Those are students who are being transported who are early intervention or
special needs students. These are areas that are automatically deducted from our
subsidy. We don't know that the monies are going to be paid until June. It is a
significant increase in the 510 category. It appears that the culprit of early
intervention is the children who are prekindergarten.
Director Glancy cautioned the board about using the fund balance. He reminded
the board that five or six years ago the state of Pennsylvania decided not to pay
the district for special ed funding. The state held $1,800,000 for a year. At
that point we did have a high fund balance. We did not have a cash flow problem.
If we were to get into that situation again, he would be concerned if we went
too low on fund balance. However, he stated he understands Director Amato's
concern. He would consider using a little more fund balance, but to cut it below
$2,500,000 to $3,000,000 is asking for a new problem. He cautioned that the
state is not always predictable. Sometimes the state does things that aren't
very nice such as handing the entire retirement package costs to the district at
one time. Now the state is trying to take a little bit away because they have
more money than the district. That could change in another year or two; they
could hand it right back to us. We are talking about millions of dollars
shifting back and forth. We need to be able to have some money to cover those
changes in political climate and state law.
COURTESY OF THE FLOOR TO VISITORS
The following persons addressed the Board of School Directors:
1. Mr. Holbe, stated that 80% of senior citizens do not have enough income to
file a federal income tax. He asked how senior citizens are going to pay any
increase in taxes regardless of how well intentioned and needed the money may be.
He stated he is a past president of the local AARP and knows that many members
just cannot afford to pay these taxes. These persons got hit with an enormous
cost of heating oil. Where should they take the money from? He stated he would
appreciate if someone would tell him how to figure this math problem. Then he
will be glad to pay.
Mr. Doluisio remarked that it has been several years since he has seen Mr. Holbe
and he looks very well. Mr. Doluisio stated he agrees with the premise that the
older folks who have supported public education for all their lives need some
relief from that. The dilemma is that there is a tax better than the property
tax. The district does not have the authority to levy it; the governor does. It
is a state earned income tax which those of us that are working pay. It is based
on the amount of money you make. He stated he thinks it is a fair tax. The
property tax is a regressive tax. Nevertheless, the school districts need
additional funds to continue running needed programs for their communities. The
real answer is that our state legislators need to pass money back to the states
and, if they have to, raise the state income tax on those of us that are earning
wages, and pass the money back from the state to the local level. The governor
is sitting right now on a three-quarter billion dollar surplus. He gave us one
percent or $148,000. It seems that he has the fairer tax. The district has the
unfair, regressive tax - the property tax - and we must rely on it because the
governor is not giving us money he is deriving from the state income which would
not affect the senior citizens. The solution is not at the local level. We need
to give relief to our older folks. The solution is for the state government to
make sure state income tax is used for appropriate purposes and don't squirrel
away three-quarters of a billion dollars of our money. In terms of the immediate
concern for senior citizens, the board and administration does not have an
answer. We need to get to our legislators, have them go to Harrisburg, and do
their job. It is easier for them, as politicians, to go out there and say,
"We're holding the line on taxes." Everyone likes to hear that. The local
legislators, the local unpaid school boards, unfortunately have to do the deed
that our paid legislators don't want to do. That is the problem.
Director Leeson asked if the board has the authority or power to maintain our
senior citizens' rate and only increase other taxpayers' rates. Mr. Majewski
replied that under current law that is discriminatory; the district would not be
able to do that.
Director Glancy stated that the district would need some help from Harrisburg.
The district can only enforce the laws and does not have the opportunity to
change the law. If the state changes the law, the district could do it.
2. Joe Williams, 210 Tenth Avenue, stated this is the first budget hearing he
has ever attended. He stated he attended to learn. The newspaper stated that
Bethlehem has the second lowest tax rate in Northampton County. Mr. Majewski
stated that is correct. Mr. Williams stated that is commendable, but he would
like Bethlehem to have the lowest tax rate in Northampton County. His concern as
a citizen and taxpayer is debt service. He asked if we are paying $9,943,000
interest to somebody. Mr. Majewski stated that amount is principle and interest.
Mr. Williams stated he has no ideas on how to cut instructional expenses but he
does know there is a lot of building going on. To do that, the district borrows
money and then has to pay somebody interest. That is approximately 10% of the
budget. If taxes must be raised each year, rather than place the blame on
Harrisburg, he asked if it is possible that the district took on too much debt.
That interest is wasted money. We could build a little more slowly. Now we are
talking about two more schools.
Mr. Doluisio responded that one could say that if we would do half the building
we have done, we would have half the debt. We borrowed money and incurred debt
at times when it was favorable to do so. Money was borrowed at very favorable
rates. Even though the district has incurred debt, it is at very good rates. In
fact, one year, the district refinanced debt and saved over $2,000,000. The
district made a calculated decision that we could not let our infrastructure
deteriorate. The community, to date, has been willing to support that because
they see the new buildings. When we build those two elementary schools, every
elementary school in the district will have been brought up to the year 2000
standards. Thirteen of those are brand new, either from the ground up or from
the walls in. Liberty and Freedom have new science wings, new athletic
facilities. It is not unlike a private home. The district planned to fix our
buildings in a sequential way so that the district doesn't realize 20 or 30 years
from now that the district is crumbling. There are districts that are in that
state of affairs. Bethlehem is not because of some vision, because of a
community that is willing to pay, and because the school board has been willing
to make some tough decisions.
Mr. Williams stated he does not question fixing up schools; he questions debt and
perhaps spending a little bit too much money on building. If you want senior
citizens to not have a tax increase, that is a possible way. He stated he could
have taught another 50 years in the old Liberty building because he knows it
isn't the bricks, it is the teacher. There are schools in Japan where they teach
in plain, old buildings. They don't have 35% nonreader children. He stated
buildings are fine. He doesn't like debt because the interest on that money is
wasted. That is his point. All of us should be concerned about borrowing and
Director Leeson asked if it is correct that the current debt service cannot be
reduced at this point. Mr. Majewski stated it has already been refinanced at a
level as low as it can go. Now, interest rates are starting to rise and we are
still maintaining the lower level. It would be counterproductive to do so.
Director Glancy announced that the next budget meeting will be held on May 8.
Director Glancy announced that the meeting was adjourned at 7:40 p.m.
Stanley J. Majewski, Jr.