East Penn School District Superintendent Thomas Seidenberger has established a direct link between Lower Macungie Township approving a controversial TIF for the Hamilton Crossings shopping center and the size of the school tax increase district residents will face for East Penn’s 2014-15 budget.
If the township’s commissioners agree to participate in a tax increment financing plan for the shopping center early next month, East Penn taxpayers will not have to pay as much in increased taxes for the new budget, explained Seidenberger.
On Monday night, the school board voted 8-1 to give initial approval to a $136.86-million budget for the coming school year.
At the moment, that budget will require a 3.86 percent tax increase.
But school officials are optimistic the size of that tax increase will be reduced before the school board adopts the budget on June 23.
Seidenberger said one way that will happen is if Lower Macungie’s five commissioners vote to opt into the TIF when they meet on June 5. He told the board that vote will have a direct impact on the new budget.
He said if commissioners support the TIF, East Penn will get $558,000 in what he called TIF revenue, which would lower the proposed tax increase to 3.16 percent.
School board member Charles Ballard questioned how that is possible, since East Penn could not start receiving increased property taxes from the $140 million shopping center until it is completely built, which won’t happen until the spring of 2016.
Seidenberger told Ballard the school district automatically will be getting $212,000 in rollback taxes, plus real estate transfer taxes.
He said Hamilton Crossings developer Tim Harrison also has told the school board he will cut the district a check for $326,000.
“It’s not the TIF per se,” argued Ballard. “One is a side agreement and one is a result of taking a piece of property that had been granted tax exemptions for awhile, putting it back on the tax rolls and rolling back some of the taxes.”
“Because of the approval of the TIF, we’ll have that revenue coming in,” said Seidenberger.
Added board president Alan Earnshaw: “The developers have said without the TIF, the transaction will not proceed. I don’t know how you want to characterize it otherwise.”
Seidenberger said an additional revenue source will be if the district gets a Ready To Learn grant through the governor’s office for $550,168.
He’s read Gov. Tom Corbett intends to release those grants, but added:
“I’ll believe it when I see it.”
He said if the district gets both the TIF money and the Ready To Learn grant, the 2014-15 property tax increase will drop to 2.47 percent.
If the governor also reduces pension costs throughout the state via a “pension collar,” East Penn will save another $635,434.
Seidenberger the total of all three possibilities would drop the tax increase to 1.67 percent.
Beyond that, Seidenberger promised his administration will continue to exam line items and revenue to try to keep taxes as low as possible without cutting programs.
“What we adopt tonight will almost certainly not be our final budget,” said Earnshaw just before the vote.
School board member Lynn Donches cast the only no vote on the proposed final budget for 2014-15.
Her husband, John Donches, told the school board it wants to raise taxes by almost four percent. He noted the board did not raise taxes last year, adding: “That was an election year, wasn’t it?”
The largest tax increase in the last several years was 3.85 percent in the 2010-11 school year, according to figures shown by Seidenberger during his budget presentation to the board. In the current school year, there was no tax increase.
$2 million cut from budget
Seidenberger told the board that the district has made more than $2 million in cuts on the proposed budget.
He said that includes elimination of 4.5 teaching positions –two in the high school and two in elementary schools -- and two administrative positions through attrition.
He said most central office departments cut their budgets by 5 percent compared to their 2013-14 budgets.
The 2015-16 budget will be the seventh and final one done by Seidenberger since he became East Penn’s superintendent. He said it is the product of a team effort, adding “the staff has the interests of the students at heart.”
He said the goal of the budget was to maintain all existing academic programs and student activities.
Seidenberger, who is retiring at the end of June, called East Penn “the best school district I ever served in – this is a marvelous place.”
He called it a triple A district, where students excel in academics, arts and athletics.
The superintendent noted other school districts have cut teachers, programs and opportunities.
“I’m proud that we haven’t had that kind of circumstance in East Penn during the economic downturn in the last four or five years.”
He said the public is catching on to many statewide education issues.
For example, he said that education “finally” is the number one issue in this year’s campaign for Pennsylvania governor.
He also noted parents are beginning to question the value of charter schools and cyber charter schools.
Superintendent blasts charter school costs
Seidenberger indicated the new budget has to address increases in pensions, benefits, salaries, increased student enrollment in special education and charter and cyber charter schools.
“I am not necessarily anti-charter school,” said Seidenberger. “I am anti funding of charter schools the way it’s happening right now.’
Seidenberger repeatedly told the school board that working on the budget made him a cranky old man for the last six weeks.
“I am upset and angry,” declared the superintendent.
“What angers me the most is when I see advertisements that cyber charter schools and charter schools are free. They are not free. In this budget before you, there is approximately $3.9 million allocated to charter and cyber charter school tuition for next year.
“That’s an increase of over $300,000.”
He said charter schools are the single biggest expense faced by the district after pensions, salaries and benefits.
Seidenberger said he could bring every single student being educated in a cyber or brick-and-mortar charter school back into the East Penn District for about $500,000 in new staff.
He said that would leave $3.4 million. “We’d have no tax increase this year and about $330,000 left over.”
Academically, said Seidenberger, public schools are outperforming charter and cyber charter schools.
“It’s led to a parallel school system in Pennsylvania,” complained Seidenberg. “They’re treated one way with one set of rules and public schools are treated another way.”