Budget Hearing Minutes - April 30, 2003
Minutes
BETHLEHEM AREA SCHOOL DISTRICT
BOARD OF SCHOOL DIRECTORS
BUDGET HEARING #1
APRIL 30, 2003
BUDGET HEARING #1
The first 2003-2004 budget hearing of the Board of School Directors of the
Bethlehem Area School District was held on Wednesday, April, 30, 2003, beginning
at 6:30 p.m., in the Auditorium of East Hills Middle School, 2005 Chester Road,
Bethlehem, Pennsylvania.
MEMBERS PRESENT
Members present: Directors Craig, Haytmanek, Heske, Koch, Leeson, and Williams -
6. Members absent: Directors Amato, Gallagher, and Venanzi - 3.
OTHERS PRESENT
Others present: Dr. Joseph A. Lewis, Superintendent of Schools; Stanley J.
Majewski, Jr., Board Secretary; administrators, members of the press, and other
interested citizens and staff members.
Director Koch presided. She announced that the main purpose of the meeting is to
hear a presentation from the administration. Courtesy of the floor will be
offered at the end of the meeting.
DR. LEWIS - INTRODUCTION OF BUDGET
Dr. Lewis provided an overview of the Letter of Transmittal. School districts
across the Commonwealth are experiencing much indecision as the state grapples
with the education funding issue. That uncertainty drives the district's
reluctance to make major program investments. Dr. Lewis stated he believes
firmly that it is this administration's opinion that we maintain the quality
programs we have established and not implement reductions or eliminations.
Dr. Lewis pointed out that there are two approaches in balancing any budget. One
is to deal with the revenue side. While the district is limited with certain
legal ramifications to do what can be done, the district does have opportunities
to look at revenues in terms of bond refinancing, use of fund balance, and other
creative ways to increase the revenue side. On the expenditure side, the
district can balance the budget by cutting or by finding more efficient ways of
perhaps bidding on things and acquiring necessary equipment and supplies. On
those kinds of things, the district has a very illustrious business office that
constantly looks for ways to deal with better purchasing. In addition on the
revenue side, the district constantly looks to our department dedicated to grant
writing, run by Iris Cintron, at ways to create additional funds which in many
instances are dedicated, but in most instances are offsets to general fund
expenditures. In summary, what is being proposed on the local effort is an
increase of 1.29 mills. Dr. Lewis stated it will be one of the lowest increases
in the Lehigh Valley. Total mills will be 33.95 of real estate property taxes
for next year. It is about 3.95% above the 2002-2003 budget. Dr. Lewis believes
the six percent plus range of expenditure increase is very reasonable when you
look at some of the impact items. The administration is recommending 19.4
additional teaching positions. The district has been hit with an increase of
about $400,000 in additional charter school payments, raising the district's
contributions to charter and cyber schools to $1,700,000. That is a very notable
impact. There have been some assistant coaches added to the middle school
athletic program. The district is trying to maintain and enhance programs where
it can. There is a very limited expansion of the preschool program at S.P.A.R.K.
with two classrooms to service 40 additional youngsters. The district is not
going to stagnate as a result of a lean budget proposal. The administration has
looked at the technology expenditures of approximately one million dollars to
reinvigorate what is an aging computer inventory over the next four years and to
recommend the beginning of a laptop one-to-one program starting in grade six. It
is suggested that the funding come out of our 2001 bond issue. As such, the
board would have in future years the opportunity not to expand the revitalization
project, if they so choose, or accelerate a year if things change to a more
improved status. As the governor and state legislature sorts out what the
district's funding formula will look like, what the district's subsidy will be, a
sincere effort had to be made. This budget is based on a state subsidy equal to
last year's.
MR. MAJEWSKI - REVENUES
Mr. Majewski stated this is his ninth budget presentation. For the first eight
years, the budget was basically the same format. This year, Mr. Majewski is
doing a "Powerpoint" presentation. In addition to what is shown in the book, Mr.
Majewski will supplement knowledge of the Bethlehem Area School District, its
finances, and its budget. Mr. Majewski showed the audited fund balance for the
end of those years. When the budget is presented, within a reasonable amount of
certainty, the district knows what anticipated revenues and expenditures will be.
Because there is a process in place to accurately collect that information, the
district has the ability to be able to manage that information, so that when the
board receives the document it can feel certain that the numbers are accurate.
As heard in presentations of end-of-year audit reports, even though this is a
very large and complex district, expenditures are accurate to about 99.9% of our
budget. That is not because the district is spending to the budget. It is
because the district is budgeting accurately on both the revenue side and the
expenditure side. Mr. Majewski pointed out that in Harrisburg legislation is
being discussed to limit fund balances in school districts to no more than eight
percent. Our district is nowhere near eight percent because over the years it
has taken the position that we need a sufficient amount of funding to allow for
contingencies, the cycle of the cash flow, but not accumulate excess money. When
we had it, we tried to budget it and reduce the millage increase. Bethlehem Area
School District is in a very fine position because this is where we have wanted
to be. Years ago the size of the fund balance to be maintained was discussed and
later adopted into board policy. The intent of the board was never to accumulate
more funds in fund balance than is absolutely necessary to efficiently run this
organization.
Mr. Majewski stated that school district revenues are comprised of 73.85% local
money; 80% of that is local real estate taxes. Options to be able to collect
money are limited by what is legislated in Harrisburg. The primary source is
real estate taxes. Mr. Majewski explained the concept of a mill. Homes have a
market value. At one point in time, Lehigh or Northampton County created an
assessment on each house. In both counties, that assessment was 50% of the
market value determined at that time. Residential properties, on average, have
an assessed value of about $60,000. In looking at a 1.29 mill increase, it means
for an assessed house of $60,000 an increase of $77.40. The school board can
adjust the millage, never the assessment.
State revenue is 21.37% of the budget. It has declined significantly over the
last several years. Conversely, the money has been made up through local funds.
Director Haytmanek asked, when looking at the 73.85% local revenue, if we
administer that money or if it must somehow be processed through the state. Mr.
Majewski stated those local funds are collected by the district and administered
by the district.
Mr. Majewski stated the cost of living has gone up more rapidly than the value of
our assessments. This has created additional pressures in trying to maintain the
millage level from year-to-year. Assessments have been increasing at slightly
more than one percent. Our costs are rising more rapidly than the ability of our
assessments to keep up with those costs. When you look at lowered state funding,
assessments that are not keeping up, you can see the dilemma that we have in
trying to create a budget.
Director Haytmanek asked how often, with no action on the homeowner's part,
property is reassessed. Mr. Majewski replied that it varies. Director Haytmanek
asked how the assessment increased. Mr. Majewski replied that it was the result
of developments that are new to the district. The growth we have had has not
risen as rapidly as the cost of living.
Mr. Majewski stated that 66% of every dollar the district spends is on direct
instruction. About 9% is for operation of plant, 9% for debt services, 6% for
administration. When looking at the chart, two-thirds of the money collected is
directly tied to classroom instruction, not including libraries or technical
aspects. We try to expend the majority of the funds in direct classroom
instruction.
Mr. Majewski stated that as of now, the school district has bond debt of
$156,500,000. Approximately 9% of the budget is allocated to pay for debt. He
suggested that the taxpayer think of this as a mortgage. For a person having a
$50,000 income, 9% would mean a mortgage of about $4,500 a year to be comparable.
It is a large number, but for the size of our organization, $156,500,000 is not
a load that is straining this budget. The debt load of many other school
districts is somewhere between 15% and 18%. The district tried to manage that in
a manner it could afford. That gave the district new, more efficient buildings,
appropriate for classroom instruction in the twenty-first century.
Mr. Majewski stated he is anticipating a number of figures will be questioned.
The average insurance bill on casualty and property has gone up about 18.71%. It
has been a very difficult market.
Mr. Majewski stated that another charter school is coming on, creating some
additional cost of intersystem payments.
Mr. Majewski referred to page five. Salaries and wages are $77,000,000 of this
budget, almost 71%. Another $21,500,000 is for employee benefits. More than 3/4
or 80% of the budget is salary and wages. It is very difficult to go through
this budget and find sizeable chunks of money where there is a great deal of
discretion.
Mr. Majewski stated that this morning he learned the bottom line on intersystem
payments will need to change by approximately $113,000. We have had more
students attending Vo-Tech; therefore, our cost has gone up.
QUESTIONS FROM THE BOARD
Director Heske stated it was his hope at the beginning of this cycle that we
could limit the budget increase to one mill or less. He would like
administration to come up with a budget of only about a mill increase and showing
the dollars that would need to be cut out of the budget. He believes it is
administration's job and not the board's to say yea and nay on every roll of
toilet paper.
Director Heske stated the Bethlehem Steel Company owes the district a
considerable amount of money in taxes. He asked Mr. Majewski to explain how this
unpaid tax affects our budget. Also, there is a lawsuit connected with
Freemansburg School where a contractor did not perform properly. There are
insurance and bonding monies due to the district. He would like to know how
those monies have been accounted for in the budget. Another item is $1,700,000
on charter schools and cyber schools. Director Heske asked, if those children
were in the district, how much more would it cost us? Director Heske would like
information on the unfunded mandates. One example is when the special education
population increases by eight students, the district has no choice and must hire
another special education teacher. Director Heske stated he was also interested
in what "No Child Left Behind" will really mean to the district. He would like
everyone to have an understanding of what those numbers are. Director Heske
stated that he still has some reservations about the laptop program. If we go
into this program over the next five to ten years, we need to understand the
financial implications. Mr. Majewski stated that the Bethlehem Steel has paid
their current year's taxes in full. Two years ago when they first claimed
bankruptcy they had not paid us for that year. That has been turned over for
collection. Back taxes, penalty, and interest will amount to slightly less than
$1,000,000. How much of that will be collected is uncertain. Mr. Majewski
stated it is highly likely that the process may take several years. As he
receives more information, he will pass it along.
Mr. Majewski spoke about the mold remediation at Freemansburg Elementary School
which occurred several years ago. The school district had incurred about
$1,500,000 additional cost to remediate the building and provide a temporary
site. The legal process is now to a point that attorneys are going through
discovery. He is expecting notification, hopefully over the next couple of
weeks, either about a court date or an opportunity to consider trying to
negotiate a settlement. If the district receives the $1,500,000, it will not
affect the budget because, as this money was being spent, it was established as a
receivable. If the district does not receive all funds spent on the remediation,
it will be a cost to the school district. Mr. Majewski will advise the board
when there is visibility as to what will occur. There is the possibility of
getting punitive damages, so it may end up being a revenue.
Dr. Lewis replied to Director Heske's question on charter and cyber school
expenditures. The district pays roughly $6,500 for a regular education student.
Generally, that is a deduct from our state subsidy and goes directly to the cyber
or charter school. The average on special education children in that same
situation is roughly $11,000. Dr. Lewis stated that Director Heske is right.
Because a child may go to a charter school and the money follows the child does
not mean that it costs us $6,500 to educate that child; therefore, the child is
not here and we save $6,500. The fallacy is that the actual savings is somewhere
between 15% to 20% which would equate to approximately $11,000 to $12,000. That
would be based on the fact that you might save some money on transportation of a
minimal nature. Dr. Lewis explained that of that $1,700,000 not all of those
students attended the Bethlehem Area School District prior to attending the
charter or cyber school. In many instances they attended private schools and
then made the choice to attend charter schools. As soon as these students enroll
in charter school, they become the district's expense. When a charter school
opens, there is often a hidden impact. The district pays considerable numbers of
dollars for students who did not previously attend here. There is a major
impact.
Director Koch pointed out that the most startling is the cyber schools and the
fact that many students who are enrolling in the cyber schools tend to be the
home school students. All of a sudden, the district becomes responsible to pay
$6,500 for these students who have never been an expense to us. The cyber school
is charging that without having that actual overhead cost for that child. Mr.
Majewski stated every student enrolled in cyber school was home schooled. Not
one of those attended public or nonpublic schools in the district.
Mrs. Kostem stated that in the recently opened charter school it was tracked that
104 of those students were in our classrooms last year and enrolled in that
charter school this year. This school has an enrollment of 147. Two-thirds are
from 18 of our public schools.
President Williams stated that in the summary some approximate usages are listed.
One is the additional $2,400,000 from the anticipated bond refinancing. She
asked if we can nail that number down. Mr. Majewski stated he is very pleased to
inform the board that the bond refinancing is completed. The amount the district
has been able to save on approximately $74,000,000 of refinancing was $3,465,000.
President Williams spoke on another concern that is somewhat related. In the
fund balance projections, while there wasn't a lot of change over several years,
this year would represent a severe change in terms of reducing the fund balance
so substantially that it would fall well below the levels Mr. Majewski
recommended in past years of around four percent. She is concerned because we
obviously are trying to reduce the millage rate and amount the taxpayer must
provide. However, it reduces the district's ability, should the circumstance
arise, to meet bills when money from state or other sources is not forthcoming.
Last year, for example, when the district passed its budget, the state budget was
not yet passed. The district had to reopen the budget to make some changes after
the state budget came through. If that were to occur in a year when our fund
balance is extremely low, the district could be in a position of not being able
to meet some of the bills on a monthly basis. Dr. Lewis replied that it is being
recommended that a majority of the refinancing savings money remain in the fund
balance. He stated that if it is the board's recommendation to pursue Director
Heske's recommendation of considering a .29 mill reduction, he would like to
accomplish that without using but perhaps a small piece of that money. He, also,
would like to see that fund balance replenished as a result of the successful
refinancing.
President Williams asked if there are restrictions as to how the district can use
the money from the refinancing. Mr. Majewski replied that there are no
restrictions.
Director Leeson asked if the entire refinancing amount is put into the fund
balance, bringing it back up to 4.2% to 4.3% of the budget. If we continue to
keep our fund balance at or near its current level we would be able to get better
rates, but that it must be maintained at approximately 5%. Mr. Majewski
explained that what the credit rating institutions are looking for is a
well-managed organization that has sufficient fund balance of at least five
percent. Director Leeson stated that taking money from the fund balance could
possibly hurt the district's rating if it goes under 5% in seeking future
borrowings. Mr. Majewski stated she would be correct if that was the only factor
being looked at. It is one of the issues a bond rating company will consider
because they know that unanticipated events occur. Other factors considered are
the potential or future growth or erosion of the tax base. The budget was put
together will all of those factors put in place. He believes that we can use
these funds successfully. That is what the funds are there for - to help smooth
through some of those difficult times. There is some growth coming to the
Bethlehem Area School District. He stated that even though the budgets go from
year-to-year, he looks at no less than five years in projecting when making
recommendations. We can use these funds. He would not see further erosion. We
need to replenish some of the fund balance over a period of time in the very near
future.
Director Leeson stated that she and Director Amato both asked administration to
keep the budget increase from zero to cost of living. This was a very difficult
year. She knows the administration worked very hard at getting a budget that is
under four percent. She offered congratulations for presenting a budget as
reasonable as this.
Director Leeson asked if the $1,000,000 technology expenditure shown in the
summary to be charged to the bond fund is a lease. Dr. Lewis replied yes. He
stated that if the district were not to expend any grant money, that would be the
bond depletion. However, it is anticipated that the lap top initiative will be
funded almost exclusively through grant and other offsets. Dr. Garrigan stated
he thinks immediate funding has been identified for about half of the laptops and
it is anticipated that additional money will become available from grants. Dr.
Lewis stated that of the first $400,000 to $500,000 the district will be
purchasing some of the laptops because the grants specify in some areas that we
cannot lease. However, the intention is to lease anywhere possible. It is more
fructuosus over the long haul. It now is costing $59 to $100 to get rid of old
computers. Landfills don't take them. There are 5,000 units in the district
that are obsolete. Director Leeson asked, because bond funds will be used, if we
are going to use a one-time source for an ongoing expense and if bond funds can
be used for leasing of equipment. Dr. Lewis stated the answer is yes. In year
one the estimate is $500,000 for replacement and $500,000 for purchase. In year
two that would be maintained at $500,000 and $500,000. The recommendation in all
likelihood will be to go for the second block of replacement units at an
additional $500,000 and another block of laptops at an additional $500,000. In
year three, you would expand into the third 25% of obsolete inventory at
$1,500,000 and $1,500,000. In year four, the final 25% of obsolete inventory
will be replaced pushing the annual lease payments to $2,000,000. Director
Leeson said we go $1,000,000 to $2,000,000 to $3,000,000 to $4,000,000 and then
stay at $4,000,000. Dr. Lewis stated it would stay at $4,000,000 unless it would
be decided to extend the laptop beyond four grades. Dr. Lewis stated that the
choice can be made not to increase in those $500,000 increments in any year for
either program. Director Leeson stated her point is that the district will be
getting into an agreement of $500,000 a year that will be coming out of bond
funds every year. Currently, looking at $1,000,000 coming out of a one-time
source, although at least half of that will be a lease agreement, so that we are
looking at this as an ongoing expense, either we must find another source or
continue draining the bond fund.
Director Leeson, referring to 12 assistant coaches added to the middle school
athletic plan listed on the summary page, asked if it is part of the athletic
proposal of about two years ago. Dr. Lewis stated that it is. Mrs. Kostem
stated that the assistant coaches have been added. The cross county coach should
have read "four head coaches" at the middle school level. The statement is
correct that 12 assistant coaches have been added for the first three sports plus
the head coaches for the cross country. We do not have a head coach now for
cross country which is a new sport being added to the program. Director Leeson
asked if the 12 assistant coaches are necessary. Anthony Villani responded that
he believes it is a Title IX issue in that the sports that are remaining are
girls sports. Based on Title IX we must have commensurate coaching staffs for
the various sports. The plan was developed to make sure that by the end of the
plan we would have equitable coaching staffs for both boys sports and girls
sports at middle school level. Director Leeson asked if we have that many
participating in volleyball, field hockey, and cheerleading to justify the amount
of staffing. Mr. Villani stated that we have more than ever. The girls are
there to support the additional coaches.
Director Leeson stated that information was received on a group that was
recovering funds on unpaid taxes. She wondered if the district is considering
pursuing this. Her understanding is that it would be at no cost to the district
and that there is a possibility of recovering money due. Mr. Majewski stated he
met with Mr. Portnoff and talked with other municipalities that have hired them.
They have done a valuable service for some of those municipalities. Mr. Majewski
stated that we recoup our delinquent taxes through the counties. There are some
issues about how the Portnoff organization has approached the taxpayers and how
much the delinquent taxpayers have been assessed for collection fees that need to
be worked out. It is not out of the question that some day he may review that
collection option, but not that at this time.
Director Leeson asked Mr. Majewski what the outstanding taxes are. Mr. Majewski
stated we have an average collection rate of about 95%. Approximately 5% are
turned over for delinquent tax collection In looking at current plus delinquent
collections, the district is getting approximately 100% of the annual real estate
tax revenue billed July 1.
Director Craig stated he liked Director Heske's suggestion provided early in the
meeting. Director Craig wished to clarify his understanding of the fund balance.
Dr. Lewis stated it will increase from $2,800,000 to $3,000,000.
Director Koch congratulated Mr. Majewski. For years she has been asking for some
sort of visual presentation. Mr. Majewski thanked Mrs. McCann who is very
efficient at creating Powerpoint presentations. Director Koch asked if a pie
graph could show what is being paid out that is mandated by state and federal
government as opposed to what they are actually paying. Mr. Majewski replied
that some of that can be separately identified, such as charter schools. Other
information would require educated calculations and guesses. It is difficult to
come up with an exact number.
Director Koch stated she realizes it is impossible at this point to predict the
total impact "No Child Left Behind" will have. However, she thinks Dr. Lewis
mentioned that there are some areas we know will change. Dr. Lewis stated this
was discussed briefly with groups including the cabinet and the PAC. The impact
is going to be very hard to pinpoint, but he offered some examples. Factors to
consider include training, professional development, tutoring, testing and
assessment features not yet clarified by the state. There will be one test for
grades three to eight, not a list of approved tests. To be established is
whether the district is no longer responsible to buy an approved test or is there
a dollar surcharge because now we will be testing almost two-and-a-half times as
many children. Hidden costs make it premature to assess. The cabinet will
examine individual areas, study the law, and give an estimated guess.
Director Koch asked Mr. Majewski for the current millage rate. The current
millage rate is 32.66 mills.
Director Koch stated under expenditures funds totaling $400,000 represent
"restoration" of current textbooks. Dr. Lewis stated it is for replacement and
new textbook adoptions. Mr. Perfetti stated that last year some textbook
priorities were put on hold. Some of the adoptions anticipated for last year and
the year before are being restored.
Director Haytmanek questioned that, even with the $2,400,000 to be saved by
refinancing debt and the potential $1,000,000 to be saved with the knockout
option as passed on April 28, that a 1.29 mill increase must still be
recommended. Mr. Majewski replied that this is correct. Dr. Lewis stated that
$2,400,000 was considered when calculating the 1.29 mill increase. The other
$1,000,000 was not considered and that is why administration is recommending
restoring that amount to the fund balance.
Director Leeson stated she thought we were reducing the fund balance to
$2,000,000 and we were going to restore another $2,400,000 to bring it to
$4,400,000. Dr. Lewis interjected, "No." Director Leeson questioned if fund
balance has been drained down to $2,000,000 including the $2,400,000. Dr. Lewis
stated we have used $2,000,000 from the fund balance to work on the revenue side.
Administration is suggesting that the refinance which now has created a
$3,400,000 amount of which originally the district projected $2,400,000 on the
revenue side and the additional $1,000,000, at this time, is being recommended to
be restored to the fund balance. That fund balance could increase over time for
a variety of reasons. Dr. Lewis commented that Mr. Majewski's $2,000,000
estimate as seen on the screen is a minimum.
Dr. Lewis commented that Mr. Majewski does not let the budget rest. He continues
to find ways to cut the expenditures. As the expenditure side is cut, the fund
balance increases.
Director Haytmanek asked if fund balance is mandated. Mr. Majewski stated it is
good business practice. Mr. Majewski stated that in the near future there may be
a legislative maximum. It serves as a savings account for emergencies such as
the Freemansburg School problem.
Director Leeson questioned page 12, the Academic Academy. She asked why we do
not show academic academy salaries. Dr. Lewis stated salaries are not shown on
any program. Salaries are listed in teacher staffing.
Director Leeson on page 12, asked what equipment would be replaced at the
Academic Academy. Dr. Lewis stated this was a new venture that required
everything from overhead projectors to technology, office equipment, etc. The
$20,000 is a proposed amount to cover not just replacement but any additional
equipment needed. Director Leeson stated she wondered, since the equipment there
is new, if there had been any problems or damaged equipment. Dr. Lewis stated a
lot of used desks and equipment were placed at the academy which they are hoping
to upgrade somewhat. This is a proposed budget amount anticipating wear and tear
and new purchases.
Director Leeson asked if page 13, Academic Interventions, reflects the after
school and Saturday programs. Dr. Lewis explained that this reflects dollar
amounts in the elementary and secondary programs. Mr. Perfetti explained that it
could involve after school, before school, Saturdays, summer school. Dr. Lewis
said he believes it is about two-thirds secondary and one-third elementary. It
does not reflect the ASPIRE program, a separate grant-funded program. Mr.
Majewski explained that this is just the general fund component of all of those
programs. A number of other grant funds might end up supporting those academic
programs.
Director Leeson asked if salaries on page 16, Assistant Superintendent of
Curriculum and Instruction, are for two people. Dr. Lewis stated the salaries
shown are for the entire office: curriculum supervisors, administrative
assistant, and clerk/secretary, a total of five staff members. Mrs. Kostem
stated this is for the five persons as originally proposed, six when we add the
assistant superintendent. She stated the first line item represents the two
supervisors and the assistant superintendent's salary. The next two lines are
one person each. The next line represents the two high school resource officers
plus our support for channel 39.
Director Craig asked if the salary amounts on page 16 include benefits. Mrs.
Kostem replied that it does not.
Director Leeson asked why a 22% increase in board expenses, most listed as "other
professional services," is shown on page 17. Mr. Majewski stated a lot of the
increase involves legal services the district was required to provide for the
Freemansburg litigation and increased costs of special education attorney fees.
Freemansburg litigation is a cost you would not see recurring but which needs to
be budgeted for.
Director Leeson referred to 540, Advertising, asking about district uses for
advertising. Mr. Majewski stated that the advertising fees in this account are
advertisements required for board meetings and legal requirements on behalf of
the board. Advertising for bids is included in another business office category.
Director Koch asked if the costs when the PSBA was called in for assistance
during the superintendent search are included in this category. Mr. Majewski
replied that these costs are included.
Director Leeson stated that on page 20, Building Staff, although only a 2.54%
increase is shown in this year's budget from last year's budget, when looking at
2000-2001, there is an $880,000 increase from actual expenditures to this
proposed budget. She wondered where that increase occurred.
Director Craig, referring to Director Leeson's question, stated he thought he
recalled some discussion a couple of years ago where some staff was moved from
one part of the budget to a different part of the budget. Mr. Majewski stated an
example of what Director Craig is referring to is that, if you look at the
proposed budget, Data Materials Resource Center shows zero. Those staff are now
moved into other areas making those budgets appear larger.
Director Leeson stated there are a couple budgets showing significant increases
going back from the 2000-2001 year.
Director Koch suggested that board members having questions pertaining to several
years ago could provide such questions to the administration prior to the meeting
in order to obtain an answer at the meeting. Director Leeson stated the
questions could be answered at the next budget hearing.
Dr. Lewis stated that the group Director Leeson questioned is the administrative
group. Director Craig is correct that some positions were moved into this group.
If you look at what would be typically over four years, the salary increases,
and do a progression on that, while they are in the 3-1/2 to 4% range, that would
make up for a very large portion of a four-year growth. Dr. Lewis provided a
calculation done by Mr. Majewski which showed that just on the increases of
existing people, if no one was moved into the category, the figure under column F
would be $5,264,363, just based on increases without adding a person. Some
assistant principals have been added over four years. Mrs. Kostem stated that
the academic interventions administrator between the two high schools was added
during that four years. This year Miss Moran was added as principal of the
Academic Academy.
President Williams pointed out that the district has had a long history of great
audits. All these items brought up by Director Leeson are auditable events in
our expenditures. There is a system of checks and balances that requires the
business office and administration to have these appropriately accounted for.
Director Leeson stated that auditing checks that we are spending where we say we
are going to spend; it doesn't necessarily check what we are adding to the
budget.
Director Leeson was curious if the new financing is reflected on page 33, Debt
Service. Mr. Majewski stated the way the new financing was structured would be
at the same levels. That is why the district took the upfront savings instead of
spreading it out, so we have maintained the annual debt service level. The
answer is "yes."
Director Leeson inquired as to the status of the driver's education program
listed page 36. She asked if the district is using the IU and, if so, if this
reflects the payments we are making, and why it is increasing almost 35%. Dr.
Lewis stated this is an offset of the "on the road" portion. The district is
using the IU and does not own its own cars. The area is being studied. Mr.
Majewski stated that the utilization at the nonpublic level was substantially
higher. The budget had to be increased to provide payment for that. The
Bethlehem Catholic component was significantly higher.
Director Leeson asked where the revenues pertaining to page 37, Employee
Benefits, are shown. Mr. Majewski replied that the other two revenue sources
would be for the 50% offset for the FICA and retirement, on pages 6 and 7:
Social Security $2,842,500 and Retirement $1,351,750.
Director Leeson asked what Medical Health Services is as shown on page 42. Mrs.
Kostem stated the district has requirements to provide certain examinations to
children at certain grade levels. This amount covers payments for such items as
mandated screenings that physicians provide when a child is not taken to its own
physician and dry cleaning of some materials used in the health rooms. It also
pays for equipment replacement such as audiometers, epipens, and stethoscopes.
Basically, it supports equipment and supplies to our nurses in the health rooms.
The largest single expenditure is the part that is paid to physicians who are
paid $10 per physical provided. It is a community service in some ways.
Mrs. Kostem spoke about the decrease shown. The district has received and paid
for the automatic emergency defibrillators. Donations have been received to
cover the cost of these AEDs. This is where the donations are accounted for.
Mr. Majewski stated that the money was received at the end of last year but the
supplies were going to arrive this year. The money was put into a reserve
account. When the AEDs were received he transferred the donated money into the
account in order to pay for it. It is not really a decrease, but looks like a
decrease because of this AED adjustment.
Director Leeson asked for an explanation of the Homebound Instruction, page 43.
Dr. Lewis stated homebound is generally instruction given for a variety of
circumstances when the child cannot come to school. Some reasons could be
medical or an interim period between adjudication and expulsion. Anytime a
homebound instructor is sent into the home to provide up to five hours per week
it is included under this category. Director Leeson stated she thought we had
tried to reduce the amount of homebound instruction partially by using CA/MP and
L/AMP. Dr. Lewis stated the district is obligated in medical instances. Mr.
Majewski stated that if you look back several years it shows that we were
spending more money on homebound instruction prior to CA/MP.
Director Leeson stated textbooks on page 49, Instructional Materials Reserve -
Secondary, shows a 75% increase to $350,000. On page 48, the elementary books
and periodicals do not show that type of increase. She asked why it is so much
higher this year in secondary than elementary. Dr. Lewis stated that typically
secondary books are individually more costly. Mr. Perfetti responded that
textbooks are adopted at the secondary level district-wide. If a new social
studies textbook is adopted because the current book is now in excess of five
years old, it is adopted for all eighth graders. To adopt a textbook for a grade
level costs between $60,000 and $80,000. In looking at $350,000 that is perhaps
four or five system-wide adoptions. On the priority list would be eighth grade
science, eighth grade social studies, high school and middle school Spanish,
middle school seventh grade science, seventh grade social studies, middle school
reading, high school English. There is not enough money to do all of those. New
textbook adoption is behind because some of those were cut out of the budget for
the last two years. Dr. Nelson stated that on the elementary level spelling is a
priority and would be paid for out of this year's budget. The $100,000 shown is
to replace social studies books in fourth grade.
Director Leeson, referring to page 52, Intersystem Payments, stated the increase
to Vo-Tech was explained. She asked if the ninth grade program is going to be
continued at Vo-Tech. Dr. Lewis responded, "Yes, it is." Director Leeson
inquired about the math component, "Will it be taught at the Vo-Tech or the high
school?" Dr. Lewis said math will stay at the Vo-Tech.
Director Leeson stated she went back to 2000-2001 and knows some of this increase
is the charter schools, but found a $2,800,000 increase and asked how the total
intersystem payments went from $10,207,805 to a proposed $13,000,000. Dr. Lewis
stated there are several issues. In 2000-01 $1,700,000 is not there of the
$2,800,000. There is also increased special education. Mr. Majewski stated
there are two issues with the IU payments which are the majority of the increase.
The partial hospitalization program had some changes with group insurance and
federal funding requiring more local funds. In addition, special education
programs have been expanding. Mr. Majewski commented that shortly after he
started in the district, those costs were approximately $800,000 a year. This
year, he expects the costs to be $1,800,000 just for those special education
programs, not including the partial program. Mr. Agretto stated that the degree
of need of these students has increased dramatically in that they are staff
intensive to work with a minimal number of students because of the needs they
display. The program costs $22,000 to $23,000 per student, sometimes higher.
Director Leeson asked if this also accounts for any special education students
who might be outside of our district. Mr. Majewski and Mr. Agretto stated that
it does. Mr. Majewski stated it includes the approved private schools and
payments to other LEAs for students placed outside of the district. Agency
placements are also included.
Director Leeson asked about interest listed on line 830, page 55, Maintenance
Department Contracted Services. Mr. Majewski stated this interest is the 10-year
payment on the Johnson Control performance contracting. The district had
principle and interest payments.
Director Leeson stated she has seen a line item, 620 Energy. She asked if this
is natural gas. Mr. Majewski stated that it is.
Director Leeson asked about the Monagacci Program on page 60. She verified that
the $100 is a negative. Mr. Majewski stated the Monagacci Program cabinet code
is still used. The district had a $10,000 grant several years ago. The district
finished expending those funds in 2001-02. That was just shown to track the
grant funding.
Director Leeson asked if the district can put some limits on conferences, for
example, perhaps two conferences per year, in order to decrease conference cost.
Director Heske stated he thinks it is for the administration to deal with the
conference question in reducing the budget. If administration should decide to
cut $100,000 out of conference funds, that would be one way to save some money.
Mr. Majewski stated it would be hard to find $100,000 worth of conferences. Many
have been eliminated. Director Craig stated he thinks Director Leeson's point is
well taken. We should look at the possibility of keeping a minimum. Dr. Lewis
stated that we have become a lot leaner in conference authorization. Director
Haytmanek stated he would not vote to cut educational conferences for teachers,
but questioned field trips. Dr. Lewis stated field trips are blended in. There
will be distinct approvals listed on the agenda. Mr. Majewski explained that 580
is a very broad category including conferences, travel of individuals as required
between buildings in the district, and field trips. Dr. Lewis pointed out that
there are some modest amounts for people involved in entitlement programs who are
required to attend such as Reading Recovery and Minority Affairs. Director Craig
asked if the government or conferences pay for substitutes when teachers are sent
to a conference for those purposes. Dr. Lewis replied that it is our cost.
Director Leeson asked if at times it might be more advantageous to bring someone
here as opposed to sending a number of people out. Dr. Lewis stated where you
see more than a couple people attend is when a national conference is taking
place close by. Director Craig mentioned the possibility of technology
presentations.
President Williams referred to a breakdown of projected tax revenues on page 6.
She asked if real estate transfer tax activity has leveled off to some extent.
Mr. Majewski stated quite a few phone calls are still being received for tax
certifications. It is still rather active. It appeared to be adequately funded.
Director Leeson inquired about earned income tax. Mr. Majewski replied that he
might be a little conservative on the earned income tax. It recently came to his
attention that there is a substantial amount of money the City of Bethlehem is
trying to collect from other municipalities, half of which comes to the school
district. He is strongly considering increasing that budget as high as $300,000
more.
Director Koch asked, when someone else issues the tax certification such as the
City of Bethlehem which includes Bethlehem Area School District tax, if the
district receives any of the money they charge on that tax cert. Mr. Majewski
stated we only get payment of certifications provided by us.
COURTESY OF THE FLOOR TO VISITORS
Director Koch offered courtesy of the floor to visitors. Speakers are asked to
come to the podium, stating their name and address. Personal attacks are not
permitted. It is not the custom for the board to enter into a dialogue about
concerns. However, the board does listen with care to issues raised. Speakers
will be responded to, in some form, by the administration. No one wished to
address the Board of School Directors.
REVIEW BY DR. LEWIS
Dr. Lewis reviewed the board's directions. The board has asked administration to
reduce the local impact to one mill which would be a decrease of approximately
.29, approximately $700,000. We have realized a preliminary Vo-Tech impact of an
additional $113,000. A reduction in the vicinity of $813,000 must be sought or
increases in revenue.
Dr. Lewis confirmed that the board would like information on unfunded mandates as
they impact the areas of special education, "No Child Left Behind," and perhaps a
graph showing the impact of unfunded mandates on the budget.
Dr. Lewis stated that the board would like information on the technology bids.
He directed Dr. Garrigan that if there are competitive bids on laptops or
replacements these should be presented to the board.
ADJOURNMENT
Director Koch announced adjournment of the meeting at 8:40 p.m.
Attest,
Stanley J. Majewski, Jr.
Board Secretary
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