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Saucon Valley residents won't go another 5 yrs w/o school tax hikes

By Randy Kraft, WFMZ.com Reporter, RKraft@wfmz.com
Published On: Apr 09 2014 06:40:04 AM CDT
Officials Tentative contract deal reached in Saucon Valley
HELLERTOWN, Pa. -

Residents of the Saucon Valley School District should not expect to enjoy another five years with no tax increases, warned a school board member Tuesday night.

Those residents have not seen any increase in school taxes for the last five years.

"I'd like it if we did not increase taxes for the next five years, but obviously the school district cannot afford to do that," said board member Edward Inghrim.

"The question is when and how much," said Inghrim. "It's not a pretty picture."

During Tuesday night's school board meeting, Inghrim made a presentation about the district's projected cash flows for the next five years, which he prepared with district business manager David Bonenberger.

Inghrim's bottom line is that property taxes will have to be increased, unless the state government fixes a massive pension liability problem, which he considers highly unlikely.

He explained if the school board does not increase taxes through 2018-19, "the increase in our costs, which is predominately salaries and pensions, is going to completely consume our reserves. They're gone. And we'll be about $2.3 million in the red."

The district's annual expenditures, which total more than $38.9 million in the current school year, are projected to rise to more than $49.6 million by the 2018-19 school year.

Revenue by 2018-19 is projected to be $43.1 million.

"By 2018, we're running around $6.5 million in the red," said Inghrim.

He said 70 percent of annual budgets are spent to pay salaries and benefits of district employees.

He said the biggest problem facing school districts everywhere are employees' pensions.

By 2017-18, according to Inghrim, those pensions will have increased 250 percent since 2011-12.

"It's huge," he said. "This is what's generating a crisis in this school district and every other school district.

"When you see Allentown, Bethlehem and Easton laying off teachers, it's a combination of salaries they can't afford and the pension increases that they also cannot afford."

Inghrim said the budget projections are one of the major "drivers" behind the district's position in still-stalled contract negotiations with its teachers union. "We don't want anybody to get fired."

After the board meeting, school officials said there has been no progress on resuming negotiations with the teachers' union for a new contract.

"We're still waiting to hear from the union on who their new team is and to provide a date on which they would like to continue negotiations," said district superintendent Sandra Fellin.

The district's 185 teachers have been working without a new contract since June 2012.

On Feb. 24, they rejected a tentative agreement that had been reached on Jan. 30 between the school district and their negotiating team.

During his presentation, Inghrim mentioned paying for teachers' continuing education is another big factor driving up costs for the district. He added the union wants to ignore that component, "but it's real in terms of the bottom line."

No tax increase for 2014-15?

Fellin, who is retiring in summer, hopes to avoid a tax increase in 2014-15. She wants Saucon Valley to be the only school district in Pennsylvania that can say it had no budget increase for six years in a row without cutting programs.

"Some of us have been looking at a sixth year of no tax increase," acknowledged Inghrim. He warned if taxes do not increase in 2014-15, they will have to increase by a total of nearly 16 percent in the following three school years.

Fellin did not comment on those projections.

Her administration plans to present the latest version of the proposed
2014-15 budget to the school board on May 13. It must adopt a budget by June 30.

Inghrim presented several scenarios for tax increases in the next five years, but did not make any recommendations to his colleagues on the school board.

He explained the district's target is to maintain cash reserves totaling 12 percent of its total budget - nearly $6 million. (He said the state recommends 8 percent.) His presentation to the board shows the district currently has about 33 percent in reserves.

He indicated if the district did nothing but draw down its reserves, by 2017-18 it would have to raise taxes by about 31 percent to rebuild those reserves.

"This school board in the past has done things like that," said Inghrim. "We've had some 17 percent increases, some 10 percent increases. It's not unusual for school boards to suddenly hit you with a major increase in your taxes."

He said the state allows the district to raise taxes by no more than 2.1 percent a year. But doing that in each of the next four fiscal years would not give the district enough money to maintain that 12 percent reserve target.

To maintain that target, he said taxes would have to increase a total of 13 percent over the next four years, "which is not unreasonable in terms of a tax increase."

He added doing that would require a voter referendum or an exception from the state, as would having no increase in 2014-15, but increases in the following years.

Taxpayer stats

Inghrim said 81 percent of the district's revenues come from local taxes.

He provided some statistics about residential taxpayers in the Saucon Valley district, including:

*Median household income is $39,700 in Hellertown, $60,000 in Lower Saucon Township.

*Average household income is $46,300 in Hellertown, $78,800 in Lower Saucon.

*Average real estate tax is $4,250 for Hellertown, $6,700 in Lower Saucon.

*Households with annual incomes of less than $30,000 a year total 34 percent in Hellertown, 19 percent in Lower Saucon.

Inghrim said in Hellertown, 84 percent of property taxes are paid by homeowners. In Lower Saucon, 90 percent of property taxes are paid by homeowners. "We have no commercial in the tax base."

He also said home ownership in Hellertown by people who are 65 and older declined by 23 percent between the 2000 and 2010 U.S. Census.

"I can't help but believe that our property taxes is one of the factors that has created that phenomena. We have a very large percentage of our community that's very vulnerable from an income perspective. And we have a responsibility to those homeowners, as well as the students and the teachers."

His statistics show homeownership increased by 33 percent in Lower Saucon during those same 10 years.

Inghrim said 362 families in Saucon Valley School District have applied for the tax rebate program.

Board president Michael Karabin announced that senior citizens must file for district tax rebates by April 30. He said information about how to do that is on the district website.

Board delays Fellin's retirement by one month

Also during the meeting, the board voted 7-2 to delay Fellin's date of retirement until Aug. 8.

The idea behind that vote is to give the new superintendent that will be hired to replace her some time for the two of them to work together, to help with the transition.

Her last day of work originally was July 4.

The district hopes to hire a new superintendent by July 1.

Fellin explained the delay also will give the district more time to hire a new superintendent and will give that person more time to give notice wherever he or she now works.

After the meeting, Karabin explained he voted no because it was premature to extend Fellin's employment. He indicated it's possible a new superintendent may be hired before July 1.

Board member Charles Bartolet also voted no.

"I think we're jumping the gun a little," he said. "Hopefully, we can hire a superintendent in time to come in with her feet running on the ground, ready to go when she's hired."

Despite his vote, Bartolet praised Fellin, saying he couldn't think of a better person to run a school district.

Bartolet said he's been involved with the district since 1960 -- Fellin later said he was a former teacher and assistant principal at Saucon Valley High - "and I've seen 13 different superintendents. She's by far one of the best.  I don't want Dr. Fellin to feel hurt or anything by my vote."

The board president announced that on Thursday a survey will be posted on the district's website that asks district residents for their opinions regarding what kind of new superintendent they think Saucon Valley needs.

After the meeting, Karabin said the district has advertised the position and is gathering applications but has not yet interviewed any candidates who want to become the next superintendent. Applications are being accepted until Friday.

Gym floors

The school board authorized the administration to seek bids to have the high school and middle school gym floors refinished. Whether both floors will be done depends on what kind of bids it receives.

It hopes to get bids soon so the work can be done when the schools are closed. It will ask for a combined bid to do both floors.

"It's getting close to summer," said Fellin. "If we're going to do both of them, we need to know now. We have to set up the work."

She said interested companies will have to submit bids for the middle school, the high school and a combination "so you have a choice to do one, the other or both."

Bob Frey, the district's athletic director, said the district already had board approval to refinish the gym floor in Saucon Valley Middle School, at a cost of $24,000.

He said three companies have inspected that gym floor, as well as the floor in the high school gym.

Frey said an original estimate to redo the floors in both gyms was $46,000 but that has come down to $34,575 --- $10,575 more than just doing the middle school floor.

Frey said the middle school gym floor has visual problems. When tape put on the floor came up, the finish came up with it. He said after 12-14 years, the surface of the floor is okay, but not visually appealing. He said it's spotty and blotchy because the original finish has peeled off the floor.

He explained the high school has a surface chipping problem, caused by bad layers of finish applied over the years. "You can peel the wax off the floor with your fingers. The only real way to correct that is to refinish the floor."

Action on Northampton Community College

The board voted 8-1 to approve its contribution to the 2014-15 budget of Northampton Community College.

Saucon Valley will contribute $268,285, a 1.17 percent increase over this year, to the college's $6.07 million budget.

Bartolet cast the only no vote. He did not immediately say why, but later commented that the school board had no say - "absolutely none" - in the college's budget.

Bartolet said the college should develop a program that provides "each school district that has to pay into it to have some active board members representing it."

The school board did just that, voting 7-2 to approve Susan Baxter as its representative on the community college's board of trustees. Baxter's six-year term will begin July 1.

School board member Sandra Miller got two votes, including her own. Bartolet also voted for Miller.