The School District of Cheltenham Township has nearly finished its budget for 2008 - 2009, with the final budget being scheduled to be voted for on 6/10/08. The budget totals $90,229,774, which represents a 5.16% increase in real estate taxes and a 5.71% increase in expenses over the 2007 - 2008 budget. However, when the first year of casino gaming funds is released in 2008 - 2009 to the School District, homeowners who have filed an approved Homestead exclusion, will see a decrease in their School District real estate taxes for 2008 - 2009.

The budget process this year showed a number of significant income and expense reclassifications due to apparent flawed accounting practices in past years. For example, though it defied a logical explanation, a line item showed more expenses for health care for a class of employees than it did in salary for the same class of employees for several years. This discrepancy and others were corrected during this year's budget process. Overall, the budget process showed significant improvements over recent years. Based on PA Act 1 limitations, the real estate tax increase for 2008 - 2009 was limited by PA law to a 5.16% increase.

As recently as 4/1/2008, $1,521,592 needed to be cut from the preliminary 2008 - 2009 budget to arrive at the 5.16 percent School District real estate tax increase limit allowed for 2008 - 2009. The latest publicly available budget shows a balanced budget with the key changes being:

• A $635,502 refund from health insurance expenses from 2005 - 2006. Approximately $500,000 of this was used to offset part of the 2008 - 2009 budget increase.
• A reduction in the increased transportation expenses by $648,000, which reflects increased transportation efficiencies by changing the start times at the Elkins Park School and the elementary schools so they can share buses. This change came after several years of citizens advocating for a review of high School District transportation costs and transportation policies.
• $500,000 was used from the fund balance to help offset part of the 2008 - 2009 budget increase.
• A reduction in three teaching positions was also used to reduce the amount of the budget increases.
• Several items increased in their budgeted costs since the preliminary budget including the purchase of new high school math books, more funding for school libraries, and more funding for special education.

The School District also discussed number of fiscal policy changes they were making including:

• A recommendation to use bond funds for capital expenses only, and a realization that the School District cannot go out and borrow at will. The School District recognized that bonds need to be paid back from operating budget, and that there is a problem with buying non capital items (less than 20 year life) with bond money.
• Staff is developing line items for 2009 – 2010 for each school for equipment.
• A move towards site based budgeting; to the building level.
• A 5 to 8 percent fund balance goal.
• Using budgeting as a management tool.
• The need for a long-term capital improvement (facility plan) to be developed.

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A few weeks ago, someone asked me to compare financial aspects of the Cheltenham School District to the Upper Dublin School District, which has about the same number of students as the Cheltenham School District. Both the Cheltenham and Upper Dublin School Districts are located in Montgomery County, Pennsylvania.

After looking at 2005 - 2006 data from the Pennsylvania Department of Education for Montgomery County, and 2005 U.S. Census Data for Montgomery County, I decided to compare the Cheltenham Township School District, the Colonial School District, the Upper Dublin School District and the Wissahickon School District, all of which are school districts of similar size (in terms of students) and are located in Montgomery County. There are various and complex differences among the school districts that serve as the cause for the differences in the revenue and expenditures in the post.

The number of students is defined by the Pennsylvania Department of Education in terms of ADM or average daily membership. As shown in the table below, all school districts in this comparison are about the same size in terms of number of students.



The revenue source breakdown were relatively similar for the school districts, though the Cheltenham School District received the highest percentage shares from the federal and state revenue among the four school districts. The vast majority of funding for the four school districts was local revenue.















The reasons for differences in financial expenditures are varied, ranging from different financial resources, different needs, different programs, and different accounting systems. Also, the Cheltenham School District has recently been taking steps to change a number of their accounting, budget and fiscal management practices, which are not reflected in the 2005 - 2006 data presented below. That being said, the comparison of financial expenditure data can still be useful. As shown below, the Upper Dublin had the lowest 2005 - 2006 Total Expenditures by a significant amount, with the other three school districts being fairly close together. The expenditure data here represents part of the available data, and seeks to point out some areas of note.



The Cheltenham School District spent significantly more than the other school districts on administration in 2005 - 2006. In addition to the numbers below, the Cheltenham School District spent an additional $437,377.39 on Other Administration Services in 2005 - 2006 and the other school districts in this comparison spent $0.



2005 - 2006 Student Transportation was also an area, where the Cheltenham School District spent significantly more than the other school districts.



2005 - 2006 Community Services was also an area, where the Cheltenham School District spent significantly more than the other school districts.



2005 - 2006 Building Improvements was an area, where the Cheltenham School District spent significantly less (corrected on 05.06.08) than the other school districts.



Other Expenditures and Financing Uses and Debt Service, Other Expenditures, and Financing Uses were negligible or non existent for for the Cheltenham School District.





I would like to end by acknowledging the new Google Charts, and the new EditGrid googlechart mashup, which were used to produce the charts in this post.

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The School District of Cheltenham Township held a Budget Hearing on 4/15/08. A revised draft budget dated 4/1/2008 was discussed, as were other changes made after the revised draft budget. Before the other changes were discussed $1,521,592 needed to be cut from the budget to arrive at the approximately 5.16 percent School District real estate tax increase limit allowed for 2008 - 2009. These changes included:

• CLASP (federal) additional $81,000 in revenue.
• Transportation (state) subsidy additional $62,000 in revenue.
• Medical Insurance additional $500,000 in revenue from a reconciliation of 2005 - 2006 medical insurance expenses as part of a $635,502 refund for 2005 - 2006 medical insurance expenses.
• End of renting a sound system for High School at $10,000 per production and buying a sound system using part of the remaining 2005 - 2006 medical insurance refund.

The end result last night was a draft 2008 - 2009 School District budget that had $90,208,955 in revenue and $91,151,587 in expenses. In other words, over $900,000 must be cut in expenses and/or found in new non real estate tax revenue for the 2008 - 2009 budget before it is finished and approved by 6/10/08.

At the budget hearing there was also discussion about the goal of increasing the budget reserve, ideally to an amount of 8 percent of the budget and having an additional capital reserve line in the budget. The fact that bonds should only be used for capital items with a life span of 20 or more years was discussed. The need for an associated capital reserve budget was discussed, as was the goal for a long-term capital improvement (facility plan) to be developed, with a prioritized list of projects.

Significant changes in budgeting of certain large expense amounts from one line item for past year expenses to new line items for the 2008 - 2009 budget was discussed. This was attributed to different accounting practices by previous staff in past years.

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Some brief background: The School District of Cheltenham Township has an aging building plant. Glenside Elementary (1956), Wyncote Elementary (1948), Cheltenham Elementary (1953) and the Elkins Park School (1954) were all built over 50 years ago. The older schools have all faced a lack of maintenance and renovations over the years, and are now in need of major improvements or renovations. There is no building building improvement plan in the School District, though doing one has been talked about by the School Board for years and is apparently being worked on. There is also no capital budget, which would address the long-term costs and funding needs of implementing a building improvement plan.



At a School Board of Cheltenham Township Facilities Committee meeting on March 25, 2008, the new Director of Support Services gave a presentation with pictures and led a discussion of major heating system problems facing Glenside Elementary, Cheltenham Elementary, Wyncote Elementary and the Elkins Park School, with a focus on Glenside Elementary; and gave a presentation with pictures and led a discussion on roofing issues facing Cedarbrook Middle School and Cheltenham High School.



Problems in the heating system were mentioned by the School Board at an earlier meeting as being a key reason as to why the Myers Elementary school could not be used for another year before it was closed for renovations. The decision to close Myers in large part due to the heating system issue at the end of the school year in June 2006, before plans were sufficiently developed and approved for the renovation work, played a key role in Myers being closed for one year before renovation work started on the Myers' buildings during September 2007.

 Earlier this year, the heating system failed in Glenside Elementary forcing the closure of the the school one day, and a need for constant maintenance and watching of the heating system there. The heating systems at Glenside Elementary, Wyncote Elementary, Cheltenham Elementary and the Elkins Park School are all original and are obsolete, inefficient, and in an extreme state of disrepair. Parts are not available to replace failed components. The heating in the building and from classroom to classroom and from day to day reportedly fluctuates widely, often resulting in rooms that are much too cold or too hot and which are not conducive to a good teaching or a good learning environment. A final heating system plan and schedule is being prepared, but it appears that the heating systems in the four schools will likely face the need for an emergency major repair job this summer just to get through the 2008 - 2009 school year, and will need a full replacement before the 2009 - 2010 school year. The cost of the repairs if done in house by the School District will total over $100,000 combined for the four schools not counting for the cost of labor. The cost of the replacement of the heating systems including new boilers, pipes and other components will likely cost well over $2 million per school.



In terms of roofing, Glenside Elementary, Wyncote Elementary, Cheltenham Elementary all apparently have failing original roofs. Comments were made at the meeting that parts of the roof at Glenside Elementary have been leaking for nine years. The School District recently though they had nearly completed a roofing project for large parts of the roof at Cedarbrook Middle School at a cost of over $680,000, and a roofing project for the High School. The School District never got a building permit from the Township for the roofing work at the High School (thus the Township never inspected the work). Prior to about one or two weeks ago, the roofing work was also never inspected by the School District and it appears may not have been inspected by the firm overseeing the roofing design and planning for the project. When the new Director of Support Services inspected the roofs recently, he found the work to be not up to specifications or standards, to be incomplete, and that parts of the new roof used duct tape as a building material. The Director of Support Services' inspection followed significant leaks in one of the building during a storm. The firm that was in charge of designing the new roof and with overseeing the company doing the roof repair, was approved by the School Board during June 2007 to prepare roof replacement recommendations and specifications for Cheltenham High, Glenside Elementary, Wyncote Elementary and the Elkins Park School, at an estimated cost of $125,000.



A key issue facing the School District is what to do in terms of planning, logistics and cost for the likely need to either do major systems replacements in up to five schools over the next several years or the need to do major renovations and rebuilding for some or most of these schools. This information is still new, and needs assessments and plans are being developed further by School District staff. I would hope that the Board looks to comprehensive planning; inclusion of teachers, parents and residents in the discussion of the projects; with a goal of changing a number of planning, communication and policy practices that were used for the work leading up to the Myers renovation work.

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The School District of Cheltenham Township School Board approved the 2206 - 2007 audit at their meeting on March 11, 2008. As noted in an article in the 3/19/08 issue of The Times Chronicle, the audit by It is important to note that the audit reflects a period where business affairs were overseen by a previous Director of Business Affairs for the School District. The audit is available in a viewer friendly format and in a printer friendly format.
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The road to the final 2008 - 2009 School District of Cheltenham Township budget has taken a few interesting turns recently, though a final budget is still in the relatively early development stage. In an interesting move, the School District decided to only seek one exception from the PA Department of Education for the 2008 - 2009 budget, for $508,654 for grandfathered (building) debt. Last year it sought and received a total of $3,629,340 in exceptions for school construction grandfathered debt, special education, health care benefits, and pension obligations. The exceptions are amounts of expenses that are above the index rate (4.4 percent for 2008 - 2009) of increases in real estate taxes.

Assuming the $508,654 exception request is approved, this means that the School District of Cheltenham Township will be able to raise real estate taxes by a total of 5.18 percent for 2008 - 2009, rather than the 8.76 percent increase in the approved preliminary budget. In addition to seeking to lessen the burden on taxpayers, another potential reason for not seeking exceptions for special education, health care benefits, and pension obligations may be related to the pending negotiations for a new teachers' contract, as the areas of special education, health care benefits, and pension obligations all have a connection with teacher salaries and benefits. Also, by seeking fewer exceptions the budget will need to be cut by $2,345,252 from the approved preliminary budget. It is unclear as to where these cuts will be made. However, PA law does not allow for cuts in teacher levels as a result of budgetary issues. Also the School District staff indicated that 85 - 90 percent of the budget is for mandated programs and contractual obligations, and that it would not look for cuts in these areas. A concern that I have is that I believe that there can be significant budget reductions made in some of the contractual obligation areas, without an impact to service, with a key area being transportation. As I have noted before, the School District of Cheltenham Township pays twice the per student cost of the Abington School District on transportation expenses, with the School District of Cheltenham Township currently paying the fourth highest per student transportation cost of the 501 Pennsylvania school districts. While there may be many reasons for the high cost, there is a strong potential that there are inefficiencies in scheduling, routing and number of buses, which if addressed could significantly reduce the cost of transportation.

The School District does have the option to have a voter referendum to ask for additional exceptions. The use of this tool is unlikely due to scheduling and political reasons. The voter referendum would need to occur during the April 2008 primary election and would need to be approved by the Board well before the election to allow for placement on the ballot (and the Board has shown no inclination to use the public referendum route. Also, as the budget is still being developed and the negotiations with the teachers' union will not be resolved before the election, the voter referendum is not a viable option.

In three different but related issues ( at least in my mind), the School District of Cheltenham Township has recently faced and discussed the following expense issues:

1. A real estate tax refund due to the owners of three properties for a total of $276,621, based upon lower reassessments.
2. The potential need for replacement of boilers at Cheltenham, Glenside and Wyncote Elementary Schools at a cost of around $125,000 per boiler. (More than one new boiler may be needed at each of the listed schools.)
3. Lighting the Cheltenham High School Football stadium at an estimated capital cost of $250,000 - $285,000.

The real estate tax refund for the three properties is happening, though it is unclear where the money is coming from to pay the refund. The boiler cost is unknown as the new Director of Support Services just started work last week and the issue needs to be reviewed. The football stadium lighting issue was discussed in detail at the 2/19/08 Facilities Committee meeting, and had been discussed at length at previous Facility Committee meetings. At the 2/19/08 Facilities Committee meeting, the Board approved putting together and releasing a request for proposals for bids to provide lights for the football stadium. There is a hope and goal of the District to raise all or much of the estimated $250,000 - $285,000 needed to pay for the project from donations. However, the District administration stated that there is approximately $250,000 in the budget in the supply and benefits account that could be transferred to the building and facilities capital fund to pay for the lights if the fundraising does not raise any or all of the funds needed to pay for the project. (The $250,000 in the budget in the supply and benefits account is a surplus due to the high number of vacancies in the administration staff during 2007 - 2008, as a number of positions were waiting to be filled.) The issue of lighting the football stadium has been discussed for years, and the High School is apparently the only local high school in the conference to not have lights. Many people believe strongly in the need for lights for reasons including student motivation and equity with other school districts. The key questions in this matter are why is the School District agreeing to pay up to $250,000 of their funding for the lights when there are other significant pre-existing and non-budgeted financial obligations, and there is a $2,345,252 cut needed in the 2008 - 2009 budget that the unspent $250,000 in the budget in the supply and benefits account could be used towards.

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