Volume 4, Issue 2
This
Issue
Act 1 Presentation
Post Labor Day School Starts
State Retirement System
Health Plan for Teachers
NCLB Challenge
Did You Know
Upcoming Events
Central
Columbia
School
ACT 1 PRESENTATION:
At the School Board Work Session
on
October 2, I presented a summary of some of the components of Act 1
including the accelerated budget process and the voter referendum
requirements. That PowerPoint presentation is attached. Also, in looking
at the maximum allowable property tax increase and assuming a 3% increase
in subsidy from the state (by the way, that would be the largest
percentage in the last six years), the district is estimating anticipated
revenue growth of only about 2.8-3.2%.
From the PA Legislature:
Post-Labor Day
School Starts –
A report studying the financial impact of requiring all public schools to
begin classes after Labor Day concludes that starting schools after the
holiday could result in $164 million in direct spending on travel and
tourism.
The study, authorized by the Legislative Budget and Finance Committee and
discussed in committee last week, also concludes that the late start could
generate about $500 million and 23,000 jobs directly to the state economy,
including about $30 million in state and local tax revenue. To make up
for the late start, the report recommends that, if schools add just eight
minutes to each school day and reduce the academic calendar by three days,
districts could cut three academic days from the school calendar and save
over $100 million annually in utility, transportation and food service
costs. In addition, the report states that teachers and students lose
about $45.6 million in a reduction in summer work hours and parents spend
nearly $5 million for child care expenses when schools begins before Labor
Day.
The study was conducted by Tripp Umbach, a Pittsburg-based economic
research firm.
In response to the study, Rep. Robert Godshall (R-Montgomery), sponsor of
legislation that would require all districts to start after Labor Day (HB
1968), said, “Starting school after Labor Day, instead of before
the traditional end-of-summer holiday, would help the economy and at the
same time not affect the instructional hours provided to students nor
necessarily push back dates that schools close.” Godshall also stated
that “there has been no empirical evidence…that indicates an early start
in the heat of late August provides any kind of educational benefit to
students.”
Close to 90% of
Pennsylvania school districts start before Labor Day. (from The
Associated Press, 9/27/06)
In State NewS:
State Retirement Systems –
Auditor General Jack Wagner last
week urged changes in the state employee and public school employee
retirement systems to “head off a potential funding crisis” indicated by
results of performance audits of the two pension fund systems.
The audits, conducted by the Bureau of Special Performance Audits, along
with fiduciary reviews of the funds conducted by the Independent Fiduciary
Services Inc. from Washington, D.C., indicate that “now is the time to
act” to keep both funds solvent, according to Wagner.
While stating that both SERS and the PSERS were managed “effectively and
professionally,” Wagner identified several areas of administrative
weakness that need to be tightened, including:
- improving how individual board members monitor and report conflicts of interest to improve transparency in governance
- formalizing professional investment training for board members
- improving the structure of internal audit operations to improve independence
- changing state law and fund policies to ensure that all board members are subject to a modern legal standard for judging their investment decisions
According to Wagner, neither SERS nor PSERS was fully funded at the end of 2005 due to declining assets associated with stock market losses, legislative action that increased employer retirement benefits while not addressing employer contributions, and low employer contributions. He noted that auditors found that both systems were under funded by an aggregate $11 billion, with PSERS accounting for about $9 billion of the shortfall.
State Retirement Systems-Continued
Wagner warned that, without action, the shortfalls would increase
significantly by 2012 due to rising numbers of state and school
retirees. He recommended policy and legislative changes that include:
- imposing a moratorium on adding new retirement benefits until the pension funds’ shortfalls are fixed
- returning the vesting period to 10 years, from five years, for new hires
- identifying other sources of revenue, such as gaming income and any other new funding sources that may be available in the future, to help fund pension costs
- establishing a rainy day fund that would make additional contributions to the pension funds during years of budget surpluses (General Assembly)
- passing a statute that requires the Commonwealth to make annual contributions to SERS beyond 2007 (General Assembly)
In
response to the report, PSERS chairman Roger May stated, “Since PSERS’
board members take their fiduciary duty very seriously, we are currently
in the process of reviewing the recommendations and, in fact, have already
implemented some of them.” (from the
Auditor General’s press release)
Single Health Plan for
Teachers – Last week Gov. Ed
Rendell told members of the Times-Tribune editorial board that he
will soon propose legislation to provide a single health plan for
Pennsylvania teachers. “We’ll leverage all those employees to
dramatically reduce the cost, providing health care for our school
districts,” Rendell stated.
Ongoing
interest among lawmakers in developing a statewide health insurance plan
has been sparked by numerous contract disputes throughout the Commonwealth
focused on health insurance costs and a House-commissioned study released
in February 2004 that suggested that if all school employees had
participated in a single plan in 2002-03, the savings could have been as
high as $500 million. (from The Times-Tribune, 9/29/06)
In National News:
NCLB Challenge –
A federal judge has dismissed most of a
suit brought by Connecticut concerning the No Child Left Behind law. The
state was the first to challenge NCLB, arguing that it was
unconstitutional and an unfunded mandate that cost the state more than it
received in federal funding. While the judge ruled that a challenge
concerning the federal rejection of Connecticut’s amendments to testing
rules could proceed, he ruled that Connecticut cannot challenge provisions
of the law until the state has violated it. (from The Associated
Press, 9/27/06)
DID YOU KNOW?
In preparing for the May 2007
Front-End Referendum as required by Act 1, the district’s Tax Study
Commission has found the following information:
- The minimum allowable homestead/farmstead exclusion permitted on the referendum would be $268.21. This would be funded through either an increase Earned Income tax of .4% or a replacement Personal Income Tax of 1.28%.
- The maximum allowable homestead/farmstead exclusion permitted on the referendum would be $536.42. This would be funded through either an increased Earned Income tax of .8% or a replacement Personal Income Tax of 1.64%.
- The district’s median assessed value for homestead/farmstead exclusions is $35,152 (source: Columbia County Assessor’s Office 9/25/06).
- The district’s median household income as of the 2000 Census was $41,368.
UPCOMING EVENTS:
Monday, October 16—School
Board Meeting—7:00 p.m., district office board room