A note from the SuperintendentMembers of the DASD Community,
Several months ago, we began a lengthy series of budget-related inquiries with Keith Knauss, a former Unionville-Chadds Ford school board member. Mr. Knauss’s inquiries specifically focused on our budgeted savings account. Mr. Knauss, a key witness on behalf of the gentleman who sued Lower Merion School District, questioned our elected school board’s fiscal savings strategy. We engaged Mr. Knauss in a series of back and forth emails and eventually agreed to disagree on how best to budget for both school children and residents in a rapidly growing district like Downingtown.
In July, we received a similar inquiry from Mitch Blacher, an NBC10 Investigative reporter, asking for an on air interview about our budgeting practices. I felt it was impossible to reduce a conversation about fund accounting practices, fund balances, the difference between Capital and General Funds, debt elimination, district growth needs and the legislative landscape to a brief minute or two minutes of on-air time, so the district elected not to participate in an on camera interview.
We did, however, provide the reporter with emails, attachments, and a link to the wealth of Downingtown fiscal information on our website, including multiple years of audited financial statements and budgets. We referenced the Association of School Business Officials International Meritorious Budget Award that the district has earned for the past five straight years. This award acknowledges that our budget and financial information are consistent with the strict criteria required to meet the high standards ASBO demands. We sent him the award’s criteria. We were one of only seven Pennsylvania Districts earning this prestigious award last year. We also cited the consistent approval of our budgets by independent outside auditors and conveyed the positive responses our residents had expressed to the district for NOT raising taxes since July of 2012.
On Wednesday, September 14th, the reporter and a cameraperson appeared at the School Board meeting insisting that I respond to his questions. I agreed to do an interview following the meeting. In the filmed dialog that followed, Mr. Blacher did ask about the district’s general fund savings methodology. I explained that DASD typically saves about 7% of our annual budget. In fact, since 1994 we have averaged about a 7% savings from our yearly budget calculations. This historic practice of sound and prudent management by past and present Downingtown school boards is the reason we are able keep up with the growth in the district without further burdening taxpayers. In fact, because of this savings account, our community has had no tax increase over the past 4 years while maintaining an exemplary educational program.
While we do not know for certain, we believe Mr. Blacher will be doing a follow-up story on the ruling by a Montgomery County judge that Lower Merion School District had unnecessarily raised taxes over the ACT 1 limit when it actually had money in reserve. The judge decreed that Lower Merion must lower the school board approved 4.4 percent tax increase it had imposed for the current school year to a 2.4 percent increase. Since our District has not raised taxes for residents in 4 years, you may be asking what the connection is and what’s newsworthy about Downingtown’s budget practices? We’ve been asking the same questions.
DASD cannot be compared to Lower Merion in terms of budgeting. While Lower Merion has had tax increases these past four years, Downingtown has not. In fact, one of the Downingtown School Board goals for the 2016-2017 school year is to have a fifth year of no tax increases in our district. This is all because of prudent financial planning and saving over many years.
According to the Commonwealth Foundation, Lower Merion spends approximately $28,173 per student each year while Downingtown's per pupil expenditure is approximately $16,029 per student a year. Let me be even clearer, if Downingtown spent what Lower Merion spends per student, our budget would be $411 million annually. For the record, our budget is $211 million annually.
Downingtown has much less debt service than Lower Merion, having paid down over $65 million dollars of debt these past few years.
We seem to have similar enrollment growth, yet we once again differ from Lower Merion. Lower Merion Superintendent Robert Copeland told an audience at their Monday night Board meeting that his district needed to raise taxes “because of staggering enrollment growth”, facing a 20 percent increase in the last decade. Downingtown has added 323 students just this summer alone and again, because of our financial foresight concerning growth, did not have the need this year to raise taxes.
To accommodate that enrollment growth, Lower Merion has built two new high schools. Downingtown creatively built a 6th grade center and renovated our oldest building to become the Downingtown STEM Academy; one of our nation’s highest rated high schools. By doing this, we saved taxpayers over $150 million in anticipated debt. This is a huge savings since the original plans for a new full high school campus and a new full middle school campus were replaced with more imaginative, less expensive solutions.
One area where Lower Merion and Downingtown are comparable is in the academic standing of our school systems. It’s well documented that the strength of the school system in one’s community is directly correlated to the property values of one’s home. Lower Merion and Downingtown are comparable in educational prestige. With highly acclaimed schools in both communities, property values in our two districts have been maintained and, in fact, increased in many areas. In a recent Philadelphia Inquirer article about the aftermath of the Lower Merion court decision one resident “applauded the district’s foresight” and another said, “Our property values are what they are because of the strength of our schools.” How true!
Let’s turn to the issue of a budgeted savings account that was highlighted by both Knauss and more recently by the Channel 10 reporter. As any homeowner knows, you need to look forward and plan ahead. If you spend everything you bring in, you won’t have the money to fix a roof, send a child to college, or retire securely. The district’s 20-plus year of calculated financial planning for growth tied inseparably to the Board’s saving strategy of approximately 7% each year has enabled us to pay down debt, maintain a strong credit rating, build schools to accommodate ubiquitous growth, weather the great recession, withstand the PSERS crises, endure the dysfunction in Harrisburg over state budgets, and most importantly to hold taxes to a zero increase over the past 4 years and beyond. Our savings has also enabled us to maintain a AAA bond rating from Moody’s that enables us to borrow money at a much lower interest rate than most other districts.
I explained to the reporter on Wednesday evening that it was important for a school board to have a savings strategy to meet the needs of a growing district and be able to provide our residents with 4 years straight (and hopefully more) of zero tax increases. It’s an approach supported by Dr. William Hartman, who is the preeminent Pennsylvania school budget strategist in the Commonwealth. Hartman, is the Penn State University Professor of Education Emeritus and Executive Director of the Center for Total Quality Schools. Dr. Hartman said this about our budgeting strategy over the past 20 plus years, “Because of the strength of the Downingtown Area School District’s budgeting over the past 20 years, Downingtown weathered a perfect storm of increases in PSERS expenditures, increasing health care costs, rapid and extensive increase in payments to charter schools, shrinking tax bases as the result of tax assessment appeals, historically low Act 1 indices, unstable legislative climates and non-existent investment growth better than any other Chester County school district.”
Because of these inquiries over the past few months, we asked Dr. Hartman to complete an analysis of our budget. He has done so and will be presenting his comprehensive examination of our budget practices at the Tuesday, October 11, 2016 School Board meeting. Once Dr. Hartman presents the report we will include it on the website. In the meantime, we invite you to visit our business office website (click here for that webpage) if you would like to review the extensive budget-related documents that were provided to the reporter and Mr. Knauss.