Sunday, May 19, 2013

Potsdam Central: Blowing Up The Budget

Since I am one of four candidates for the Potsdam Central Board of Education, I have been contemplating some important questions about the district's fiscal and educational situation.

Will the PCSD really have to solve its problems locally?
By nearly all accounts, the problems facing Potsdam Central (and most North Country schools) will have to be handled locally. Albany has already done what it will do. The state budget is set. Now it is up to us. Lobbying did little to convince legislators to deal with soaring health insurance costs and pension costs. Albany refused any serious mandate relief. They wouldn't look at amending the Triborough Amendment. Many believe the Governor is trying to force North Country schools to merge. The bottom line is - we're on our own to deal with some serious problems facing our schools .

Why is the PCSD on the verge of educational and fiscal insolvency? 

STATE AID CUTS: The budget crisis in NYS resulted in state aid cuts to schools so the state could deal with its deficits.

PENSIONS: The pension bills to the school have drastically increased. Why? The Great Recession of 2008 hit the Teachers' Pension Fund (TRS) and the Employee Pension Fund (ERS) hard. The ERS (overseen by Comptroller DiNapoli as the sole trustee) lost $40 billion or 1/4th of its value in 2008-09. The way the comptroller gets the fund back up is to simply send out larger bills to schools. The TRS (run by a group of trustees) did likewise to get the teachers' pension fund up to what they deem an acceptable level. School districts cannot control this cost. It is determined in Albany (and is based on the total teacher payroll).

HEALTH INSURANCE: This is a local issue. Health insurance benefits are negotiated between superintendents and unions (and BOE's vote on ratification). Health insurance premiums at PCS were increasing by 20%/year in much of the 1990's. The increases over the last ten years have been soaring. Family coverage is now about $21,000/year. The district has reported that benefits will soon cost more than salaries.  

The CPH president recently characterized Potsdam Central's fiscal problems in a speech at SLU. He said, "The heart of the problem is the uncontrolled health care spending that is blowing up Pat Brady's budget..."

The major cost drivers at PCS are listed in documents available on the district's website. They are:

1. Salaries: $7.1 million
2. Health Insurance Benefit: $5.4 million
3. Special Education: $3.8 million
4. Debt Service: $3.1 million
5. Miscellaneous Benefits: $2.8 million (retirement, social security, unemployment, workers' comp.)

However, the total numbers can be confusing to much of the public. Items #3 and #4 above (Special Ed. and Debt Service) are aidable from NYS (which means that NYS pays a percentage). The Special Ed. local cost is likely to be around $1.3 million and the Debt Service is likely to be about $300,000 after aid from NYS. Therefore, it is much more informative to tell the public the following as a list of cost drivers:

1. Salaries: $7.1 million
2. Health Insurance Benefit: $5.4 million
3. Miscellaneous Benefits: $2.8 million
4. Special Education: $1.3 million (after aid)
5. Debt Service: $300,000 (After aid, this doesn't actually look like a cost driver.)

If health insurance costs are "blowing up" Potsdam Central's Budget, then I believe this is the central topic for discussion. Health insurance premiums are 20% of the $27M budget and growing. By comparison, athletics is about .01% of the budget.

 I do not want to see the school have to merge due to HI costs. A merger will cost even more people their jobs! Teachers, CSEA employees, and student programs are being cut while health insurance costs are burying the district. Let's deal with the real cost driver. If this is not addressed soon and in a substantive way, the district will continue to have its extremely expensive health insurance premiums, will continue laying off employees, and will continue losing educational programs.

Wednesday, May 15, 2013

The Hollisters, The Daycare, The PCSD, & The Public

Last night the PCS Board of Education voted unanimously to serve Building Blocks Day Care Center with eviction unfortunate end to a twenty year relationship. A few observations:

  • Richard and Jane Hollisters are the only people who deserve credit for protecting the interests of the taxpayers of the PCSD in the BBDC debacle. They uncovered and cast public light on the original relationship (1993) among the PCSD, the BBDC, and the Village -which was illegal because it made the PCSD liable for the day care's unpaid mortgage obligations (as of 2013). I sat on the Board of Education for over 12 years and watched as superintendents, some members of the BOE, certain Village officials among others, insulted, denigrated, and attacked the Hollisters in public. Their offense? Telling the truth. These two people have studied the law and local documents and have attended innumerable meetings over twenty years to ensure that there was transparency in a legal deal that was unwise, secretive, and in violation of State Education Law. The Hollisters, alone, consistently served the public interest...and did it at the expense of their reputations. No bows need be taken by anyone else...especially those dragged into doing the right thing because they had no other choice.
  • The day care center provides a needed service. Twenty years ago, when they were struggling in a run-down house in Potsdam, interested citizens should have helped them fund raise to buy a house and renovate it so they could provide day care services for the public. If this had been done, BBDC might have avoided additional bankruptcies, an eviction, and leaving the Village with a huge unpaid mortgage. Very bad advice was given to some very well-meaning people. A financially struggling organization was lured into the fantasy that it could live way beyond its means. Interesting how the relationship among BBDC, the PCSD, and the Village began with getting the PCS BOE to agree to something illegal (making the PCSD a co-signer to the day care's mortgage) and now ends with an eviction notice.  It's hard to build something substantial on a corrupt foundation. 
  • The Hollisters sacrificed their time and their reputations in the interest of truth, transparency, and adherence to the law. There are many who should hang their heads in shame or be held accountable for their actions in the day care deal - but that won't happen. The end of this saga is upon us and I, for one, thank the Hollisters - who saved our school district hundreds of thousands of dollars. Potsdam Central's new building (formerly the BBDC building) should be named THE  HOLLISTER BUILDING. That would remind those tempted to deceive the public that sometimes the public and the truth win out. 

Monday, May 6, 2013

Building Blocks Day Care Eviction?

According to the 4/23/13 minutes of the BGT Committee of the PCS Board of Education, "a request was made to bring the eviction discussion before the full board at the 5/14 meeting." The Building Blocks Day Care (BBDC) lease expires on May 12, 2013. Apparently some problem must have arisen for the issue of eviction to be discussed in committee.  The committee minutes note, somewhat ambiguously, that "A visitor to the site indicates that they may not be ready based on little reconstruction." Presumably, a reference to the preparedness of the new BBDC site.

The end of this ten-year lease (the second of two ten-year leases), brings to a close (for Potsdam Central anyway) a legal agreement made twenty years ago among three parties: Potsdam Central, the Village of Potsdam, and BBDC.

Even twenty years ago, the serious fiscal problems facing the day care made one wonder how day care officials hoped to repay hundreds of thousands of dollars to the Village. Well, predictably, they didn't. The Village Board took action to forgive all the mortgage interest and put past interest payments toward the principal. However, money (BBDC's remaining mortgage obligation) is still owed to the Village.

Potsdam Central taxpayers came close to being liable for any remaining BBDC mortgage obligation (that PCS attorneys predicted would still exist at the end of the second ten-year lease) but, fortunately, eleven years ago Richard and Jane Hollister notified the district of its exposure and pressed the district to take action to protect PCS taxpayers. School officials, under pressure from the Hollisters who were prepared to appeal to the NYS Commissioner of Education, then drew up legal documents to ensure that the taxpayers of the PCSD did not have to assume any unpaid BBDC mortgage liabilities once the building became the property of the school district.

Potsdam Central is now days away from owning the BBDC building but talks of eviction by BOE members seem to signal further problems in a twenty-year relationship that was laden with bankruptcies, misuse of school district funds, and other legal problems. Hundreds of thousands of dollars are likely to go unpaid to the Village.

Additionally, according to the BGT Minutes, "Estimated $350,000 debt schedule for anticipated improvements was discussed along with potential payment schedule." So, the PCSD appears poised to spend $350K on improvements to the building but, one wonders, why was the building allowed to fall into such disrepair? Was BBDC obligated to keep the building in good repair? In 2009 the BBDC spent $50,000 on 29 acres of land (ostensibly to build another center - something that did not occur). Should that money have been better used to keep the existing building in proper repair or to help pay off mortgage obligations to the Village?

The BOE will be discussing eviction at its upcoming meeting and there are many questions that should be asked and answered but getting full and complete answers about the BBDC, as it impacts the PCSD, has never been easy for the public.

For more detailed information, see:

Friday, May 3, 2013

Some Facts About Education in the US

A recent NPR "On Point" episode  about education in the US included some interesting points. See:

According to the experts:
  • Student loan debt has topped one trillion dollars... $1,000,000,000
  • Is there too much focus on ivory tower research and too little on teaching and keeping costs down?
  • The biggest challenges facing colleges are: 1. decreasing student learning 2. unaffordability
  • By 2025 most adults will need a college education
  • The new majority attending colleges are the non-traditional students (over 25 yrs. old, working full-time, with families to support).
  • 36% of college students, after 4 years of study, show no statistical improvement in critical thinking or writing skills. (Univ. Chicago)
  • Grade inflation is a national scandal. The most commonly given grade is an "A" and 43% of grades are A's. 
  • Are colleges focused enough on employability? 37% of college grads are underemployed.