NBC10 Q & A
In July, 2016, the district received questions from a non-resident and local television station concerning the district's budgetary process. The questions and answers posed and delivered to both parties are listed below.
Q. When the district anticipates a need, why are they not shared with the public and budgeted? If there is documentation the needs were shared can you please provide it?
Answer: The school board Finance Committee works closely with the Chief Financial Officer of the Downingtown Area School District and district administration and annually vets the budget. The whole board receives monthly financial reports and discusses finance concerns on a monthly basis. Throughout the budget process, the district’s needs are discussed and vented in public during committee and board meetings. The district's needs are anticipated to the extent possible in an environment that is dependent upon an unpredictable legislative, national and regional economic trends, assessment appeals, interest rates, real estate growth, pension cost fluctuations, special education needs, energy costs and health benefit cost gyrations for a self-insured school district. As part of the monthly reports made available to the Board and public is a report that reflects actual revenues and expenditures as compared to budgeted figures. Below is documentation concerning our budgetary process.
1. As a multiple year recipient of the Association of School Business Officials Meritorious Budget Award, the district has presented budget and financial information consistent with the criteria required to meet the standards of excellence in preparing and presenting budgets as set forth by the Association of School Business Officials. Click here for Information about the Meritorious Budget Award
2. The district's assumptions for budget development have been publicly shared for each budget's projected revenues and expenditures and have been incorporated in every annual budget. Click here for Annual Budget Information
3. Audited Financial statements by an independent outside auditor (Rainer and Company) going back to 2004 can be found by clicking here.
4. The Downingtown Area School District is one of only six school districts in the state of Pennsylvania and one of eighty nationally to hold a AAA bond rating. This rating is given to less than 1% of districts across the country and is a testimony to the district’s financial strength, sound budgeting practices, and fiscal prowess.
Q. An NBC10 analysis showed the district with an average $12.6 million surplus each year, overestimating expenses by an average of 7.1% during these years according to the analysis. Was the district aware it was overestimating actual expenses?
Answer: The district's projection methodology, which resulted in a series of annual surpluses over the past 20 years, has enabled the district to weather the 2008 Great Recession and kept district tax increases at bay for at least the past four years.
Planned capital spending (that is not reflected in the general fund) is approximately $10 million per year over the next 5 years. These are needs within our facilities, infrastructure, technology, and curriculum areas. These needs are real and are being addressed by planned, anticipated, and budgeted surpluses from the general fund.
Q. What do you do with these surplus funds?
Answer: Knowing the solvency of the school district over the past several years, the school board used a portion of these funds to pay down more than $65 million in outstanding debt service. By applying the funds generated from prior year surpluses directly to our outstanding debt service, we saved district taxpayers more than $4 million in annual debt service expense. That strategy coupled with resourceful educational programming over the past 7 years has enabled the District to address the educational facility needs of a growing population at the lowest impact possible on taxpayers. In 2008 the district faced in excess of $220 million in construction costs, with the specter of building a third full high school and third full middle school campus due to escalating growth and already overcrowded buildings. After careful consideration since 2009, we spent a fraction of those anticipated costs and relieved overcrowding by opening a 3rd high school program in an existing facility and building a new elementary school (6th Grade Center) rather than a middle school saving taxpayers hundreds of millions of dollars in expenditures. Because of this sort of fiscal responsibility and resourcefulness, we have created a situation where DASD taxpayers - haven’t and shouldn’t - have tax increases for some time. We are very proud of this accomplishment.
Q. Why did your budgeting exceed what was spent for the past six consecutive years?
Answer: The School Board and Administration firmly believes that the DASD has conducted its business – including financial affairs – in a prudent manner that best serves our constituents. During the six years in question, the District saved $4.3 million. $94.3 was received in general fund revenues and $90.0 million from our capital fund and debt defeasance was spent. This 20 year budgeting process has directly benefited our taxpayers and resulted in zero tax increases for the past four consecutive years.
Dr. William Hartman, Professor of Education Emeritus at Penn State University and a nationally recognized expert on school finance has observed; "School districts throughout Pennsylvania have struggled to survive the Great Recession of 2008, funding educational obligations in an economic environment of geometric increases in PSERS expenditures, increasing health care costs, rapid and extensive increases 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. Because of the strength of the Downingtown area School District's budgeting over the past 20 years, Downingtown weathered this "perfect storm" better than any other Chester County school district by essentially eliminating debt."