Public Budget Hearing #1 - April 21, 2004
Minutes
BETHLEHEM AREA SCHOOL DISTRICT
BOARD OF SCHOOL DIRECTORS
BUDGET HEARING #1
APRIL 21, 2004
BUDGET HEARING #1
The first 2004-2005 budget hearing of the Board of School Directors of the
Bethlehem Area School District was held on Wednesday, April 21, 2004, beginning
at 6:07 p.m., in the Auditorium of East Hills Middle School, 2005 Chester Road,
Bethlehem, Pennsylvania.
MEMBERS PRESENT
Members present: Directors Amato, Haytmanek, Heske, Koch, Leeson, Rowe, and
Williams - 7. Members absent: Directors Craig and Venanzi - 2.
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 chaired the meeting. She explained that the administration will
present the budget without interruption for questions. Then, board members will
ask their questions. At the end, members of the community will be given an
opportunity to ask questions.
DR. LEWIS Š INTRODUCTION OF BUDGET
Dr. Lewis called the boardÕs attention to a document listing travel, conferences,
field trips, and equipment from the 2003-04 budget at their places that was
requested by a board member today. It is provided as a reference point in
discussing the new budget.
Dr. Lewis referred to the yellow sheets in the budget packet. He highlighted the
letter of transmittal which accompanies the document. This budget, like prior
ones, has been a challenge for the administration. He complimented all those
involved in generating this proposal. He stated that recently in the paper
articles reported double-digit increases being proposed in terms of property tax
levied in some other districts. This organization has done an exemplary job in
keeping the proposed increase significantly lower than those encountered in the
press.
Dr. Lewis stated that in order to balance this budget, there are additional
revenues from real estate property taxes projected at 1.34 mills, a 3.98%
increase, for a total of 35.02 mills in real estate property taxes for the
2004-05 budget. He pointed out that, while there has been a very modest increase
in state funding, the state is still not anywhere near the levels needed on their
part. There is a greater and greater need to place the burden of funding public
education on the property owner than ever before in the history of the
commonwealth.
Dr. Lewis stated that the fund balance reached better than the projections
provided last year in terms of the accumulation of dollars. Of that, the
administration is proposing using about $2,500,000 to help fund this yearÕs
budget. He pointed out that, although this does not reflect as a return to
taxpayersÕ pockets, this results in an offset of approximately one mill that
would otherwise have to come out of local property taxes. It is significant that
this district has historically used a sizeable portion of its fund balance to
keep the tax increase down.
Dr. Lewis stated it is also noteworthy that the value of a mill has increased
approximately $50,000 from $2,363,486 to $2,414,203.
Dr. Lewis stated that current class size guidelines are being maintained, meaning
that the district is not trying to balance the budget by increasing class size
and not requiring additional staff to maintain increased enrollments or
additional programming.
Dr. Lewis stated that the district has seen an increase in health care benefit
costs. The contribution to PSERS, the state retirement system, has increased for
an overall impact of about 12.2% over last year. That is significant, but down
from earlier projections. These items are mandated costs. There are an
additional 4.2 teaching positions to address enrollment increases and program
changes.
Dr. Lewis stated intersystem payment expenditures are higher. Charter and cyber
schools are allocated $2,700,000. Dr. Lewis again pointed out to the public and
the media that those are costs the district cannot contain and are mandated.
Such costs are ever encroaching on the public school dollar.
Dr. Lewis stated that costs to replace seven school buses in a very large fleet
on a rotational basis are being charged to the 2001A bond fund.
Dr. Lewis stated that one question was received about debt service. He explained
that about 80% of the proposed budget Š $109,000,000 Š represents fixed
expenditures that are often required by contractual obligations and debt service.
As the district builds and maintains its schools, as it is required to maintain
the contracts associated with good programming and good class size ratios, those
dollars are really untouchable. The district has the latitude to work with about
20% of its budget. Speaking of debt service, he commented that an increase of
$681,000 or a .28 mill increase is included in this proposed budget. None of
that is associated with the proposed upcoming bond issues of $55,000,000 in 2005
and 2007, which was another question brought to the administrationÕs attention.
Dr. Lewis stated that textbook upgrades, maintenance, and new programs are at
about $450,000. That level is where it was several years ago. That is an area
that often is adjusted to balance a budget. Administration is glad that the
level is back up so that the students are using the most current materials
available.
Dr. Lewis stated some additional positions will be recommended: supervisors in
social studies and science to join the curriculum department.
Dr. Lewis stated there is a $1,000 flat stipend per library per building to
increase collections. There were some concerns about reduction in volumes.
While not a tremendous amount of money, it is designated dollars to expand the
library collections.
Dr. Lewis stated that the laptop initiative and replacement computer initiatives
will again be handled through the acquisition of grants and bond fund dollars, as
in the prior year.
MR. MAJEWSKI Š REVENUES
Mr. Majewski provided a Powerpoint presentation, beginning with revenues. He
stated he hoped to primarily review the revenue area, touching a little upon some
of the expenditures. One advantage or disadvantage of having some years behind
you is that you start to accumulate some information for comparative purposes.
He hoped to convey an idea of what has happened over the last 10 years.
Sometimes when the last one or two years are compared, you get stuck in trends
that may not be accurate. A 10-year period is probably a good trend for
comparison purposes.
Mr. Majewski stated that the initial draft of the proposed budget is for
$138,299,394. There are several components of local funding. The state funding
is 22.9%. What has happened over the last 10 years is that the district had
approximately 26% of the budget in 1994-95 funded by the state which has now
decreased to about 23%. What has occurred over that 10-year period has pushed
more of the additional burden onto local governments.
Mr. Majewski explained that market value aid ratio is a key ratio because it is
looking at real estate taxed property within the district. Since the primary
source of revenue for a school district is real estate taxes, it is something you
key in on. In the state of Pennsylvania, districts that have a .5 market value
aid ratio are considered to be average. Districts with a lower number are
considered to be relatively wealthy; those above relatively poor. Districts are
compared with other districts in Pennsylvania. In 1994 and 1995, our district
had a market value aid ratio of .31. That ratio is now about .42 to .43. The
district has been declining with relative wealth. As the burden of funding the
budget has pushed more onto local school districts, our ability to generate
revenue locally with the real estate taxes has diminished somewhat.
Mr. Majewski explained how the dollar amount of the real estate tax bill is
calculated. In Lehigh and Northampton Counties there is a 50% assessment ratio.
If you look at the market value of real estate property at the time of the last
assessment, take one-half of that to get the taxable assessed value. That amount
is what the mill is applied to. If a home is valued at $120,000, the taxable
assessment is $60,000. A mill is one dollar for every one thousand dollars worth
of assessment. To calculate your tax bill, you would take $60,000, divide it by
$1,000 for an answer of 60, then multiply that by the millage rate to arrive at
the amount of your tax bill.
Mr. Majewski spoke on assessment. Over the last ten years, the five
municipalities have had different increases or growth in the assessed value.
Freemansburg was flat until recently when there has been some development in
2003-04 and 2004-05, but for many years there was practically no growth.
Fountain Hill has been flat. Hanover Township has shown growth through the
entire 10-year period. Bethlehem Township has shown the majority of growth as a
percentage within the school district. The City of Bethlehem accounts to more
than half of the districtÕs total taxable assessed value. If it is increasing at
a fair percentage, the districtÕs tax base increases. If it decreases or stays
flat, then it affects the majority of our taxable assessments. As shown on the
slide, in 1994-95, the taxable assessed value of the City of Bethlehem was
$1,350,153,150. The district has yet to get back to that point. It had declined
and was trying to scratch back, but there is not much movement there now. Mr.
Majewski stated he does not expect that to come about for some time. That will
become a very important revenue source for the Bethlehem Area School District
when the commerce parks and industrial parks come on board. These projects are
desperately needed to get the cityÕs assessment to where it was years ago. There
is a total assessment, but when bills are sent out, not everybody pays in the
current year. Therefore, the full amount of that billing cannot be applied as
revenue. In 2004-05 the value of a mill is $2,527,000; however, in the budget
the mill is valued at $2,414,203. That is because only 95.5% is used to
calculate receipts. Collectibility is tracked. Over the 10-year period,
collectibility has been about 95.18%; however, the last four years have shown
some improved collection rates. A lot of time is spent on this because it is one
of the few things on the revenue side that is controlled. The state dictates
what the district will receive. The other rates are already set. Real estate
tax is all that can be controlled. Assessments in the Bethlehem Area School
District over the 10-year period have increased about 1.1%. Looking at the
growth puts into perspective the challenge the district has had over the last 10
years in trying to create a budget that is balanced and trying to keep some of
the millage increases as low as they have been. Some years were successful;
others less successful.
Mr. Majewski explained one local revenue which is interim real estate tax. That
is a factor of ongoing construction. The district has the ability to bill
certain construction prior to its completion.
Mr. Majewski commented that very little else happens in local revenue. That is
why he focused so much on real estate taxes. Some increases in earned income tax
have been seen. That rate is legislated. Real estate transfer tax is still
showing some healthy growth. Mr. Majewski credited the City of BethlehemÕs
effort for improved business related tax receipts. The city has tried to
actively research and find businesses that have not been claimed and is
collecting so that there is a fair collection among all businesses operating
within the school district. Investment returns are far below what the district
used to receive due to the factor of interest rates. There may be some increases
in the future. Mr. Majewski is taking a "wait and see" attitude. The interest
rates are still at historic low rates. That, with the 1.34 mill increase
generates a 5.9% increase in total local sources. The district does receive
regular updates on the assessments. If an update is received that shows some
additional assessments billable as of July 1, that will be reported and the
millage increase will be reduced accordingly. However, if there are some appeals
on reductions, that information would be reported as well.
Mr. Majewski explained the millage increases since 1993-94. The increase has
been more rapid during some periods of time and slower in others. A lot of the
more rapid rise is tracked when some of the debt service begins to get paid. As
mentioned by Dr. Lewis, the 2005 and 2007 issues are not part of this budget, but
will be phased in as part of the 2005-06, 2006-07, and 2007-08 budgets. The
district has increased by about 2,000 students during this time. Debt service
has increased. The number of teachers has increased due to some special needs
students. There have been additional mandated costs such as charter schools.
Mr. Majewski stated that the majority of state revenue comes in the form of the
basic instructional subsidy. The second largest component would be special
education. The attempt of the state is to provide 50% of the cost of special
education. This is one area where the state does a fair job in funding. Our
district has been in a better position than some others. The district is
receiving about 50% of its special education costs.
Mr. Majewski said that the next largest component is that the state shares in 50%
of the cost of Social Security and retirement contributions. The district is
fortunate that a way was found to reduce the originally proposed increase in the
retirement contribution rate.
Mr. Majewski stated that the basic instructional subsidy showing an increase of
8% is somewhat misleading. The state did not approve a budget last year until
many months after the board approved the districtÕs budget. Without knowing
there would be any increase, a zero increase was budgeted in the district budget
for state subsidy. Now, roughly two yearÕs worth of increase is shown,
approximately 4% per year. Of the approximate $2,700,000 budgeted for charter
school spending, the district will receive about a $300,000 offset from the
state. The debt service paid by the district is also offset by a subsidy of a
fraction of the cost by the state. You hear when talking about the PlanCon
process in making sure that it is approved through the PlanCon process because
there are funds that come into the district is it gets approvals. He is
anticipating PlanCon receipts next year of about $1,200,000 on the debt service.
Normal receipts on debt service are about 8% to 9% of total costs.
Mr. Majewski spoke about the interfund transfers. One area in which Bethlehem is
different than some others is that we have what is called entrepreneurial or
enterprise funds. These funds are day care and dining services. Because they
are considered to be self-sufficient and need to be self-sufficient, the district
will calculate a cost for their utility utilization as well as custodial care,
charge those funds, and expect that they reimburse the general fund for costs
incurred. The district does not expect the taxpayers of the Bethlehem Area
School District to subsidize either of those operations. That is the $350,000
for the interfund transfers.
Mr. Majewski stated that occasionally there is a sale. Typically, not much is
received from that.
Mr. Majewski explained that refunds from expenditures takes place if something is
charted in the prior year and the district is able to get a refund.
Mr. Majewski spoke on fund balance. Statewide, recently legislation has been
enacted that places limits on the size of a fund balance that school districts
are allowed to maintain. That was done for good reason. Some local school
districts having budgets between $50,000,000 to $60,000,000 were carrying fund
balances of $11,000,000 to $12,000,000, in excess of 20% of their budget.
Bethlehem, in 1996, before regulation of the fund balance, made a decision to
self-regulate the size of the fund balance by maintaining a fund balance in a
range approved by the board of approximately 3.8% and 6.3%. Some funds need to
be on hand in order to smooth out some of the revenue cycle. The district has
maintained a reasonable fund balance of approximately 5% as a contingency. Last
year the district had a bump in that fund balance due to the delay by the state
in passing its budget. Money is being put into the fund to return back the
excess funds to the taxpayers. That is done because the board has directed, by
policy, to always do that. The money seen in the budget is not just another
attempt to lower the millage increase. It is something the district has done
consistently for eight years of returning surplus funds to the taxpayer instead
of accumulating them.
Mr. Majewski stated that throughout the budget book reference is made to a
district budget, to federal/state/local grant budgets, and also a supplemental
section. The grants to be received next year are not known. The focus of
discussions will almost exclusively be on the district budget, the unrestricted
portion of the general fund budget that is funded by local and state tax dollars,
not the grant portion. The reason the grant portion is in the budget book is
that the district is limited when establishing a budget by law to not spend more
than that budget. That includes grants. Therefore, with final budget approval,
the grants revenue must be included. We know the district will receive a
significant amount of grants.
Mr. Majewski stated that the increase year-to-year budget for next year is 4.87%.
The average increase budget-to-budget for the 10 years has been 4.77%. For all
practical purposes, this is a very average budget. When looking at the budget
and cost increases over that 10-year period, although employee benefits has been
an item, it has been offset by some of the reduction the district has had in the
retirement costs. The two areas having the largest increases have been in debt
service for replacing and renovating buildings, a very well thought-out program
since 1992. Mr. Majewski stated he was surprised to see that the second largest
increase of over 8% a year is in the 500 category. The 500 category, among other
things, is what the district pays to other local school districts for providing
services to our students. A new and rapidly-growing component of that is charter
school costs which have grown from zero to almost $3,000,000 currently. If you
remove those two items, Bethlehem Area School DistrictÕs budget has increased
over a 10-year period at a rate of 3.88%. You might hear from some folks that
there is uncontrolled spending in school districts. Mr. Majewski stated that a
3.88% increase on average is not excessive when you consider what has happened
with No Child Left Behind, the district standards movement, increases in number
of students, and the types of services required.
Mr. Majewski stated that he hoped that while going through the budget review
process, the answers provided will help to better understand what is in the
budget.
MR. MAJEWSKI Š EXPENDITURES
Mr. Majewski stated that the majority of costs within the district is spent on
instruction. A school district is a complex organization required to do many
things: transport students, feed students, provide for buildings and cleanliness
of the buildings, and various programs. But, instruction of students is always
paramount in consideration of developing the budget. Dr. Lewis mentioned earlier
that 80% of the cost is in salaries and employee benefits. A page in the book
shows a breakout of the various objects: salaries, benefits, various professional
services, payments to other school districts as well as charter schools, other
purchased services of almost $13,000,000. Mr. Majewski stated that he was
surprised when making comparisons to learn that the district spent less on
supplies than ten years ago. One thing the district has been successful in doing
is tying to find ways to do more with less of those expendable consumables which
must be bought year after year. Mr. Majewski explained the cabinet code. In
preparing a budget, the district is not only required to break out according to
the state required accounting manual, the district tries to further break it down
by responsibility and program so that type of expending can be better monitored
both by the board and by administration. In that cabinet code area letter codes
are seen such as: AB, AA, CA, GG. If the code has an A in front of it, the
primary responsibility for monitoring those budgets is under Dr. Lewis and Mrs.
Kostem. The code provides an idea of who is in charge of that area of the budget.
Supplemental budgets do not have cabinet codes. Mrs. Cintr—n has primary
responsibility for the grant programs; Mr. Villani for athletic programs; Mrs.
Ostman for child care, himself for the food service program; Mrs. Richardson does
enrollment projections; Mrs. Kostem does staffing.
QUESTIONS FROM THE BOARD
Director Koch announced that board members may ask questions.
Director Leeson stated that some increases are being seen on the revenue side of
the budget. She asked if there was no tax increase what the revenue number would
be. Mr. Majewski replied it would be 1.34 mills, approximately $3,235,000. If
you took the total revenue of $138,299,394, subtract the $3,235,032 it would
result in $135,640,362. Director Leeson asked if she is correct that it
represents just a little under a 3% increase. Mr. Majewski stated it is an 8.24%
increase in revenue and receipts. In the number he used there is $2,500,000 in
fund balance that would not have been included. To get an idea of the actual
increase in revenue from 2002-03 because we wonÕt know the actual increase in
2003-04 until the district goes through the audit. Mr. Majewski asked Director
Leeson if she wanted her answer based on current year budget or the actual from
prior year. Director Leeson stated she was taking it from the budget of 2003-04,
taking the $131,873 and looking at 3% which she thought would bring us to
$135,830. Mr. Majewski explained that is wrong. To come up with a decrease in
the revenue you must multiply 1.34 (the millage increase) times $2,414,203 for
$3,235,000. So if you reduce the millage increase to zero, that is how you have
to reduce the revenue in the proposed budget. So the $138,000,000 comes to the
$135,000,000. Director Leeson asked if the $135,000,000 is about a 3% increase
over the $131,000,000 of the year before. Mr. Majewski replied that is correct.
The millage increase represents .98% over that 3%. The budget overall increase
was 4.87%. Director Leeson stated that when the framework for the budget was
looked at in January, one thing looked at was a 3% increase. She stated, if she
is correct, the additional revenue will cover almost a full 3% increase,
including the fund balance. Mr. Majewski said that is correct. Director Leeson
stated that was her point.
Director Amato questioned if he is correct that $2,500,000 will be taken out of
fund balance as part of the revenue, leaving $5,000,000 in fund balance. Mr.
Majewski stated he is correct. Mr. Majewski stated for 2003-04, the fund balance
started with $4,400,000. He anticipates not needing to use all of the
$4,400,000. Director Amato stated that we say we need this fund balance for a
contingency. What he is trying to establish is what amount was started with last
year and how much we used. He stated his point is whether more money can be used
out of that fund balance to reduce the millage increase. He asked if a mill is
worth $2,400,000, if we say we will use $2,500,000, what if we went to $3,700,000
and then have six-tenths of a mill increase. Mr. Majewski replied that we can do
that. The only restriction on what level it is dropped to would be the school
boardÕs own policy as to the low end of the limit. Director Amato stated all he
is asking would the money that has been put into our fund balance, in past
history, cover us for the next year, unless something catastrophic happened. Mr.
Majewski replied, "Yes." Director Amato asked why we donÕt do that. Mr.
Majewski replied that at this point in the year, without having a state budget,
he is not at a point where he can comfortably say there is not going to be any
need to have 5% of our budget on hand. Director Amato asked what past history
has been, what average year-by-year amount was needed from the fund balance to
get through the budget. Mr. Majewski stated that fund balance is a concept not
heard of other than the school district. The purpose of a fund balance is to
have some cash on hand until tax collection receipts come in because summer pays
must be done and bills are coming in. Regarding being in a position where what
we have right now would have been needed or if we can reduce it, the answer is
that in a normal year we can, without needing to go to a bank to borrow money.
Mr. Majewski stated that the problem with one-time money is that when you use
fund balance, it goes away. Therefore, in a future budget you have to tax to
make up the difference of what you canÕt put into that budget from fund balance,
causing a more accelerated increase in the future. Director Amato remarked that
we do build in some contingencies, but never to this great an extent. He asked
what amount was needed from the fund balance over the last 10 years. He stated
we must manage what we have. Just because items have been budgeted, maybe it is
not necessary to spend all that money. Director Amato thinks some things can be
done to get to zero without hurting the school district or having to borrow money
from a bank. Mr. Majewski explained that summer teacher pays are done, through
July and August. Real estate and per capita taxes are collected throughout the
summer as well. The majority of the money starts coming in in August. So, the
question is, if youÕre looking to have cash on hand, if youÕre spending roughly
$5,000,000 until tax collection receipts of perhaps $1,500,000 are received,
there is about $3,500,000 of cash needed to operate the district until tax
receipts come in. Director Amato remarked that if the district does as he said,
take the fund balance down from $2,500,000 another $1,200,000 that would leave
$3,800,000. Mr. Majewski stated that the district can do that, but the following
year that amount would need to be replaced. It is a pay now or pay later
situation.
Dr. Lewis noted to Director Amato that last year the district appropriated about
$4,500,000. It was an extraordinary fund balance year in that there was
initiative to refinance which created dollars. Dr. Lewis stated he did not want
to give a false sense that each year the fund balance wonÕt meet the levels that
it is meeting this year. Although being able to look historically over the last
10-year period and see that the district hasnÕt had to use the fund in a deep
way, we do not know what will happen over the next year. The district could see
an increase of 2.8% in subsidies this year from the state evaporate because the
political climate changes. There are many things that could happen beyond the
catastrophic event that could jeopardize that. Dr. Lewis cautioned that the fund
balance not be taken too far. He stated that Director AmatoÕs suggestion has
some merit. The administration can look at what it might feel comfortable
recommending in additional fund balance application. Director Amato stated there
are 114 or 120 pages worth of budgeted line items which, if the fund balance
needed to be reduced too low, could be prioritized and some expenditures not done
this year but delayed until next year, to get the district through such a period.
Director Koch asked Director Amato if he would be willing to have Mr. Majewski
and the administration look into what they think they would be comfortable with
removing from the fund balance in addition to what has already been proposed.
Dr. Amato replied that he would. Director Williams commented that it is usual
budget procedure for the administration to present adjusted figures during the
process.
Director Heske commented that this is the eleventh budget he has heard an
explanation of. This is the first time that he has heard the presentation
receive applause. He commended Mr. Majewski for an excellent job of explaining
some very complex items.
Director Heske, referring to the revenues, stated he noticed that in an effort to
raise money without increasing the tax burden, some districts have sold naming
rights to things such as a stadium or gym. That might be something to be
considered.
Director Heske stated that, rather than get into lengthy discussion about
numerous line items, he suggests the board ask the administration to show what it
would do if the increase had to be cut by 10% and the impact of those cuts. He
would also like to see the top three items the administration would like to
include in the budget but for which there is not enough money to do so and the
impact of those. Director Leeson stated, that along the line of Director HeskeÕs
thinking, she would also like to see how the administration would put together a
budget that would have a zero mill increase.
Director Leeson asked if she understood correctly that the federal and state
money is not included in the budget. Mr. Majewski replied that in June, upon
final budget approval, the money is included in that number. However, for
discussion purposes, it is not something that can be discussed because for every
dollar budgeted the district must spend a dollar. Therefore, it will not have an
impact on any budget discussions. Director Leeson asked if the expenses for
those budgets are included in the district budget now. Mr. Majewski replied that
they are. Those expenses are separated because those revenues are restricted
money, but they are in our budget. Mr. Majewski explained that for purposes of
reviewing the budget those state/federal/local expenditures are separated out of
the statement of expenditures of the districtÕs budget. However, for purposes
of final approval those amounts need to be considered because it is part of the
overall budget. When the district receives a grant, it is for a specific
purpose.
Director Williams stated that DecemberÕs CPI listed fuel costs and other such
items at around 6% and 8%. She asked what impact that has on the district. Mr.
Majewski replied that this year certain assumptions had to be built into the
budget. He stated that, primarily, natural gas is used to heat our buildings.
The cost of natural gas has gone up; so has the cost of heating our buildings.
In order to try to minimize that, during the period of time, usually June and
July, when the cost of units is low, the district is actually in the commodity
market buying gas. In the winter when the cost is high, the district has already
purchased the gas needed for the winter. The district attempts to do the same
thing with fuel oil, diesel fuel, and gasoline. Costs for the entire year are
locked in. The cost of gasoline is now staying fairly high. He is not
anticipating being able to take advantage to the extent the district has in the
past of such savings even with the timing of the bidding process in periods when
costs are usually lower. The district has been fortunate, but next year may have
caught up with us. The budget was prepared with the assumption that diesel fuel
will cost significantly more.
Director Amato stated that the brunt of revenue is beared by the homeowners. He
asked Mr. Majewski if the district is at the maximum amount of earned income tax.
Mr. Majewski replied that we are at the max.
Director Koch asked if the board was to decide that it wanted to bring down the
budget to at least a 3% rather than a 3.98% increase, could the administration
pick out those items having the least educational impact for the board to decide
if it is willing to make that kind of sacrifice. Dr. Lewis replied that this
information could be prepared. Director Leeson commented that she would still
like to see a budget with a zero mill increase since there is a 3% increase on
the revenue side. Director Koch stated she would like to see a list for both
suggestions in the form of side-by-side comparisons. Dr. Lewis pointed out that
when you talk about bringing the budget down to a zero mill increase you are
talking about $3,200,000 in cuts. He stated the administration will go through
this exercise, but those are pretty deep cuts. He asked if the board wishes the
cabinet to look at both revenues and expenditures. Director Leeson replied,
"Yes." Discussion ensued on the amount of reductions to be listed by the
administration. Dr. Lewis stated administration will look at prioritizing down
to a zero tax increase. Director Leeson commented that it would not be a 0%
increase, but a 0% millage increase.
Director Amato asked about a $171,000 salary increase on page 15. Dr. Lewis
replied that new positions in that office are being proposed: a supervisor of
social studies and a supervisor of science.
Director Amato stated that the yellow sheets show that the proposed budget
reflects the funding necessary to further the superintendentÕs reorganization
plan. He stated he was looking for "head counts" pertaining to the
reorganization. Dr. Lewis stated the total head count is one social studies
supervisor, one science supervisor, and two technology support personnel.
Director Amato asked the total cost for the four positions. Mrs. Kostem stated
that an assistant principal at East Hills Middle School has also been proposed.
That position is partially offset by the reduction of a teacher position at East
Hills. Director Amato stated he thought Dr. LewisÕs reorganization of staff was
not going to cost any additional dollars. Dr. Lewis stated that in the first
year he worked towards an offset. He stated that the technology support
personnel is necessary because of our increase in technology implementation. The
social studies and science supervisors were part of the long-range plan for
reorganization. Director Leeson asked how the effectiveness of adding these
positions will be measured, how the return for spending this additional money
will be assessed. Mr. Villani stated the hope is that, based on their employment
and the districtÕs articulated curriculum, test scores will go up. Director
Leeson stated to be comfortable with the budget, she needs to know we are
measuring the success of additional money being put into the district. Dr. Lewis
stated he thinks our ultimate goal is to show increase in studentsÕ performance.
Someone needs to do the work involved in increased demands of science assessment
coming up, social studies standards being put in place, and the need to map
curriculum to those standards and be in compliance. The goal in building a
curriculum division was to provide the people to do that. It is not fair to ask
principals to do what is a massive amount of realignment of curriculum standards
in two new curriculum areas. The ball is rolling in mathematics, language arts,
and reading. There is a tremendous amount of work to be done that has
historically been done by principals. Dr. Lewis stated his philosophy is that it
is more appropriately done by dedicated curriculum people. The principalsÕ first
priority is their buildings. For evaluation, performance indicators that are
being compiled will be studied and shared with the board.
Director Amato stated he has a problem with the new positions which will cost the
district dollars. He asked what will happen if test scores do not go up. He
stated he has no problem spending money for additional positions if they return
on our investment. He has a problem when someone canÕt tell Director Leeson or
himself exactly what the people will do and what the return will be. He stated
he is 100% behind technology as he is for Reading Recovery, because he knows
great returns are achieved. Dr. Lewis stated that all the elements measured that
compile a profile, whether improved attendance rates, higher graduation rates,
lowering of drop-out rates, a greater number of students enrolling in two and
four-year institutions pursuing post-secondary education, increased numbers in
advanced placement. All of these indicators need to be looked at across the
board. It is his goal.
Director Amato provided an example. He stated, as mentioned earlier, that he is
for the technology initiative. If the district says it is going to get laptops
for students because we feel test scores will go up, we now have an academy that
will take care of students that are not meeting standards. If we say we will put
the technology initiative in place for next school year and in two years the
academy will not need to be in place because we will have taken care of those
students meeting standards, then he says to follow through with the program
whole-heartedly. You invest here and your return is that something can go away
in the future. Dr. Lewis stated he cannot guarantee that. The transient nature
of the population would make that an absolutely impossible item to guarantee.
The value added is that students perform better. Students become engaged in the
classroom. Dr. Lewis stated that if he is being asked to put a quantitative
measure on that, he will do his best and will provide that profile information.
Director Williams commented that from year-to-year everything the district tries
to do is to improve on what was done previously. It is her perspective that, as
a board, they were presented with the superintendentÕs reorganization plan in a
very timely fashion. The board agreed upon it and knew there were budgetary
implications.
Director Koch stated it is her understanding that the two positions having to do
with the science and social studies are, again, examples of the unfunded state
mandates, not that those positions must be put in, but that the district must
align curriculum to meet the state standards. She asked if we would not put the
new positions in, if the standards could be met with the people we have. Dr.
Lewis stated he doesnÕt think there is any question that the increased emphasis
nationally and statewide on the importance of standards in curriculum would make
it an impossibility to do it with just simply the principals in place. Director
Koch stated that what she would expect to see, to answer Directors Amato, Leeson,
and everybody on the board, is that sometime in the future the board would hear
at a curriculum committee meeting exactly what these people are doing and how it
is improving both of those programs. Dr. Lewis stated that curriculum updates
will constantly be brought at the committee meetings. Mr. Villani has done a
very good job in keeping everyone informed on the direction his division is
taking.
Director Leeson stated that, philosophically, on the issue of two additional
supervisors, all probably agree. She stated what Director Amato and she are
looking for is the plan before putting people in place, the anticipated outcomes,
and updates on how the anticipated outcomes are being met. She would like to see
that for the laptop and the curriculum realignment.
Director Leeson asked if she was correct that last year we purchased some laptops
and leased some. Dr. Lewis stated that the majority were leased. Director
Leeson stated at that time she objected to an ongoing expense coming out of
one-time funds Š bond funds and grant funds. Dr. Lewis stated that it is
comparable to providing facilities through lease, providing equipment through
lease, and perfectly legal. The purpose of leasing was to handle the obsolescent
nature of technology. He stated to run that initiative is $2,000,000 a year at
peak, meaning that all students 6-12 would have a system.
Director Amato asked what the $307,719 on page 19 for salaries Š office and
administrative is for. Mrs. Kostem stated that is accounted for by increases in
salaries, two additional administrative positions Š the new assistant principal
at East Hills, coordinator for CA/MP program. She explained that this year a
grant is paying for the CA/MP position, but there is no assurance that a grant
will pay for that next year. Also, at Liberty High School there is an increase
of changing one current 10-month secretary to a 12-month secretary.
Mrs. Kostem summarized changes in personnel. There are four additional positions
in instructional meet and discuss: supervisor of science, supervisor of social
studies, new assistant principal at East Hills, and coordinator of the CA/MP
program (in-school suspension center). The noninstructional meet and discuss
changes are: addition of two support technologists to support the technology
initiatives, recommendation of the conversion of two present security
supplemental employees to become members of noninstructional meet and discuss,
elimination of the supervisor of buildings and grounds, resulting in a net
increase of three. Under teacher aides/teacher assistants an additional health
assistant is being recommended to assist in making sure we provide health
services on a regular basis when people are absent.
Director Koch asked Mrs. Kostem if she has provided for the possibility of
needing additional teachers, especially for schools that are increasing in
enrollment. Mrs. Kostem stated that throughout the school year, administration
will occasionally ask for an additional position from budgetary reserve because
of an increase in student enrollment. That has been included in this budget as
in prior years.
Director Leeson stated that in January when the additional $1,000 for each
library was discussed, she requested looking at how the libraries are currently
being used. The information she is receiving is that the libraries are well used
at the elementary level, but at middle and high school there is much more limited
usage. She would like to see that before concluding the budget. She does not
think there is a point to putting $1,000 into a library that might not used. Mr.
Burkhardt stated there is a change in the way high school libraries be are used.
When students had two or three study halls a day, the libraries were packed with
students sitting there and lounging, doing next to nothing. Today, with block
scheduling, high school students donÕt have study halls so most of the usage is
done by classes that come, under the direction of teachers, for research and for
use of the technology. The way high school libraries are used is different than
years ago, but he does not think the libraries are any less used. Director
Leeson stated we may want to consider changing the hours libraries are open to
accommodate the research portion of the high school curriculum as opposed to
perusing the library and selecting a book for reading. Mr. Burkhardt stated that
libraries have really taken on a different flavor in the last few years. It
would be good at some point to have some updates. LibertyÕs librarian has made a
major shift from book buying to a lot of the online services to keep research
materials up-to-date so that students have the latest information. He would bet
you would see a decrease in hard book buying, at least at the high school level,
and a lot more money being put into the resources that are available.
Director Haytmanek stated there are some major renovations and capital
improvements in the works, particularly at the two high schools, in the near
future that need to be funded. He asked if there was a sense of the percentage
of money to be spent that will be devoted to academic areas, perhaps new
classrooms, versus the athletic facilities, parking lots, and ancillary
facilities. Dr. Lewis stated that a question that came to administration was
that the projects at Liberty were basically for athletic facilities. There is
major site work reconstruction due to the fact that the remnants of the old
boiler room and cafeteria must be gutted at a cost of about $3,200,000. Masonry
and facade restoration in order to maintain Liberty is $1,500,000. Renovations
of the Commons is $19,000,000 which includes all classroom spaces, windows, all
mechanical, electrical, and plumbing systems. Renovations of the Classroom
Center is $6,000.000. Asbestos abatement is $850,000. Roof replacement is
$1,600,000. Replacement of toilet rooms and the two locker rooms below the
stadium which will be used for athletics and physical education is $2,600,000 or
one-half which is $1,300,000 each for athletics and physical education.
Replacement of the cafeteria, locker rooms, band room will cost roughly
$8,000,000. Gymnasium changes and the pool will be around $8,000,000 estimating
$5,000,000 on the pool replacement and $3,000,000 on restoration of Memorial
Gymnasium. Coupling that with $1,300,000 on the locker restoration, you are
looking at a very small portion of this project Š $8,000,000 plus $1,300,000, a
total of $9,300,000 of the $61,000,000 earmarked for the project. There are
contingency fees, furniture, equipment, architectural fees, etc. of about
$7,600,000. The public needs to know that this is a major renovation of a
building having mechanical systems that have seen the test of time. There will
be complete renovation of heating and cooling systems. Electrical systems are
outdated and insufficient to supply power to equipment and computers. Data,
phone, intercom, clock systems are going in. The educational program will be
improved to the tune of about $53,000,000 of the total of $61,000,000. Director
Haytmanek remarked that five-sixths of the cost is toward academic programs. Dr.
Lewis stated that this is a significant investment in our high school that needs
to be done to a building that was built in 1922.
Director Leeson explained that when she was reviewing the budget there were a
couple of items that seem to have a large variance between the actual expenditure
of 2002-03 and the budgeted expenditures of 2004-05. In many instances the
2004-05 figure was not radically different from the 2003-04 but actual numbers
are not yet available. She had asked Mr. Majewski to provide a year-to-date
expenditure for two areas: conferences and equipment. She stated that she
totaled $157,278 for conferences and travel in 2002-03 and currently have
budgeted $170,051 in 2004-05, an increase of $12,773. Current year-to-date is at
$128,000. Dr. Lewis stated at this time of year travel tends to slow down, but
there will be more. Mr. Villani commented that it is at this time of year, in
May, that students who have moved on to state and national competitions in DECA,
FBLA, Science Olympiad, PJES. That entire amount of money in the student
conference section, which is $70,000, is usually expended. Director Leeson asked
why the budgeted amount was increased. Dr. Lewis stated there had been a
discussion with the board regarding an adjustment on board conferences to more
accurately reflect that. He stated since individuals have been added to the
curriculum division some conference attendance must be funded on their behalf.
Conferences have been relatively curtailed in the district. Dr. Lewis thinks the
increase is a modest amount in terms of travel and conference. We have more
people now attending than ever before. Director Koch asked if it would be fair
to say that the cost for travel, for lodging, and conference attendance has also
gone up. Dr. Lewis agreed that is a very good point.
Dr. Lewis stated that someone asked him why he joined the Pennsylvania League of
Urban Schools. The president of the board accompanies him to Harrisburg for
annual meetings. This is an investment of a couple thousand dollars to join,
several hundred dollars to go out for an evening meeting that runs into the next
day in Harrisburg. He suggested rounding that figure to a cost of about $7,000
to $8,000. That investment netted immediately a $50,000 seed grant for the
Broughal project. An additional $20,000 was netted in business education
incentive tax credits. The district also received funding through the
Mid-Atlantic Deans and a continued commitment from that organization. That
$7,000 brought back $75,000. The district is trying to make prudent investments
in educating staff.
Dr. Lewis stated that Bethlehem is not anywhere near what other districts spend
in the conference and travel area. He has encouraged 35 administrators to attend
the IU summer workshop. This workshop has been attended over the last two
summers. Our district has not, typically, attended.
Director Leeson remarked that Dr. Lewis is justifying why there is an increase,
which is part of her question. She stated that when she reviewed state and
federal conference spending, she arrived at a figure of $208,517. She asked if
she is correct that the district is also getting money on the state and federal
level for conference attendance. Mrs. Kostem remarked that is how most people
are being sent to conferences. Director Leeson asked if we anticipate spending
the entire budgeted amount. Dr. Lewis stated that, as Mr. Villani said, we will
come very close. Director Leeson stated that discussion had taken place on
holding the line on conferences and trying to reduce conference spending.
Director Leeson referred to 760, the equipment code. There seemed to be a large
variance in actual expenditures for 2002-03 and the budgeted expenditures for
2004-05. That is currently budgeted for $123,638 and $63,000 has been spent,
almost half. She asked if it is anticipated that the other half will be spent
within this budget year. Mr. Majewski replied that it will not all be spent. A
directive was put out a number of weeks ago that if it is not necessary to spend
that money this year we should find every way to conserve on spending. The
district has intentionally put off some of its spending this year so that it
could try to accumulate the fund balance.
Director Leeson stated that there are some similarities between 2003-04 and
2004-05. She wondered if there was a way of sharpening our pencil in 2004-05 in
this particular area. Mr. Majewski stated that when administration is building a
budget there is a plan that may require replacement of equipment. Because the
money is budgeted, if another way is found to accomplish that without buying the
equipment, that is done. But, at this point in time, in looking at replacement,
it is part of what is expected to be done. The other issue is that equipment may
be some of the things the district will wait until the end of the year to
purchase because other costs are known. It is monitored very carefully. Mr.
Majewski stated his concern with reducing the equipment budget is that there
truly are needs there. Whether or not it is spent depends on whether or not it
is believed we are able to at that time. There is only so much replacement that
can be pushed off. Director Leeson asked if we canÕt put in the budget only what
is felt to be absolutely necessary and even go to bond funds for some of the
equipment replacement. Mr. Majewski stated that has already been done. Several
hundred thousand dollars for equipment has been able to be delayed because there
are some funds through some of the savings. That was not even brought to the
board. It was part of the process. Monies needed to be identified for equipment
that could be removed. An example is that for many years the district did not
really replace maintenance equipment. It was old and breaking down. It was a
devil of a time to remove snow because year after year it would be put in the
budget and then be removed. The district needs to replace that equipment. Bond
funds are being appropriated to replace equipment that was originally in the
budget you are reviewing today. It was felt that we did not want to burden the
general fund with that.
Mr. Majewski provided another example. The business office is in the process of
replacement of all computers purchased 8 to 10 years ago. That is being phased
in over a period of time. It was pushed off as long as possible, but in some
cases you canÕt. Similar equipment may need to be replaced or there may be
initiatives that we are looking to undertake that will bring us up to a more
current standard. An example is optical imaging. Using reels or microfiche is
not the most practical way of storing data. Some of those initiatives are built
into the budget and will show up as equipment replacement or new equipment. If
that account must be reduced, it will be done. However, there is nothing that
can be removed without having some impact.
Director Williams questioned a slight decrease in insurance and pointed out that
over the last couple of years there have been increases in insurance. Mr.
Majewski stated that 9/11 had real impact on the insurance companies as an
opportunity to be able to have the insurance companies correct a problem which
they had built into the system. Insurance companies werenÕt charging premiums
based upon their risks. They had unusually low premiums. They could get the
money, invest it in the stock market, that went crashing, so they could no longer
do that. They have now gotten to a point where they are assessing premiums based
upon risk and premiums are leveling off. It is not so much that the districtÕs
insurance has reduced. We see it at a more moderating level this year and it is
anticipated that it will continue next year.
Director Leeson stated that an increase is listed for the charter schools. She
asked how the figures for the increase were arrived at. She asked if we are
getting numbers from the Academy for Performing Arts, the Lehigh Valley Academy,
and Vitalistic indicating that there would be increases. Mr. Majewski stated
that there is not a significant increase in Vitalistic. Mr. Majewski stated that
the district has received numbers from Performing Arts. What is shown is the
number of students currently going to the Lehigh Valley Regional Academy who the
district is paying for including an anticipated increase in the tuition rate. If
they enroll more Bethlehem Area School District students, it will be
underbudgeted. The tuition rate is calculated based upon our own costs. Mr.
Majewski stated he expects a slight increase in Performing Arts. Director Leeson
questioned the $20,000 increase for Vitalistic. Mr. Majewski stated it is
because they have had a larger number of students identified as special
education. That changed the tuition rate from about $6,500 to $11,400. Director
Leeson pointed out that there is an $800,000 increase in the Lehigh Valley
Regional School. Mr. Majewski stated that is grossly underbudgeted this year
because their enrollment far surpassed what was budgeted. Director Leeson asked
what the actual budget was this year. Mr. Majewski stated the district is still
in the process of paying them. The district is paying Vitalistic approximately
$9,000 a month for 12 monthly payments, about $108,000 a year. Approximately
$155,000 a month is being paid to the Lehigh Valley Charter School, about
$1,800,000. Cyber schools vary, but have been fairly consistent. The district
pays Performing Arts about $35,000 monthly, over $400,000 a year.
Director Leeson questioned student tuition on page 46 asking if these are special
placements. Mr. Majewski stated it is primarily the charter school students as
well as the Bethlehem Area Vocational-Technical School.
COURTESY OF THE FLOOR TO VISITORS
Director Koch offered courtesy of the floor to visitors. Speakers are allowed
three minutes to address the board on budget items. The following person
addressed the Board of School Directors:
1. Robert Fields, 3117 Easthill Drive, stated he has been an educator for about
seven years, is very much into education and for the benefit of the students.
He recommended, after watching the two-and-a-half hour meeting, to open the
floor to the public beforehand as a consideration to the public that is
waiting. He stated he was impressed that a couple board members went to bat
to try to have a flat-line budget. In looking at the public audience, it is
very disgraceful. He was coming to the meeting to recommend maintaining a
flat-line budget because as a property owner, paying that extra money per
year, it is a big chunk. After seeing the poor response of the public, he
would recommend keeping the total percentage. On the same sense and a swift
hand, being elected by the public, the public may be in an outcry and come
after the board members and show it in the polls. However, he doubts it and
asked how many were unopposed at the polls. He thinks the lack of presence
gives the green light to go ahead and increase the mill.
Director Koch thanked Mr. Fields for waiting. She explained that in the past
courtesy of the floor has been allowed in the beginning of the meeting. It
was found that if a half-hour is allotted in the beginning, people express
all sorts of concerns that, if they had listened to the administrationÕs
presentation, they would not have had to make their comments.
Dr. Lewis announced that final approval of the budget will be June 28 instead of
June 21. The next budget hearing will be on May 3.
ADJOURNMENT
The meeting adjourned at 8:35 p.m.
Attest,
Stanley J. Majewski, Jr.
Board Secretary
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