More East Penn Facts

I previously posted about the East Penn Tax Hike and provided background about the whole atmosphere regarding this issue. I felt it was quite important to let people understand the workings of government and attitudes that tend to exist.

But now, let’s get to the facts.

The debate centered around two core principles. The first was if school district spending increases were reasonable or not. The second, was if cuts would harm education efforts. This post will deal with the first point.

The School Board (and pro-tax hikers) took great exception to literature that was disbursed with financial information. One of the statements on the postcard was:

Spending has increased an average of 7.2% per year since 1998-1999.

This is more than twice the annual inflation rate. It is time to say ENOUGH!

The school board handed out a flyer before the meeting and were making claims that our numbers were “wrong” because we did not calculate expenditure increases due to increased enrollment. However, the school district proves our case for us. Their flyer stated:

Claim: Spending has increased and average of 7.2% per year since 1998-1999.

Reality: During this period the student population has increased by 2.5% per year. On a per student basis, the total spending has increased 4.8% per year.

Exactly! Still much greater than the rate of inflation! Here are the numbers (inflationdata.com):

Year	Actual Inflation	Average Increase	Factor
6/98 – 6/99	1.96%	4.8%	2.45x
6/99 – 6/00	3.73%	4.8%	1.29x
6/00 – 6/01	3.25%	4.8%	1.48x
6/01 – 6/02	1.07%	4.8%	4.49x
6/02 – 6/03	2.11%	4.8%	2.28x
6/03 – 6/04	3.27%	4.8%	1.47x
6/04 – 6/05	2.53%	4.8%	1.90x
6/05 – 6/06	4.32%	4.8%	1.11x

AVERAGE: 2.06x the rate of inflation.

So, on a per student basis, the school board is approving expenditures that greatly exceeded the inflation rate – our challenge and concern. And the statement on the postcard, “…more than twice the annual inflation rate” is correct, as confirmed by the school board’s handout.

Furthermore, enrollment is the umbrella excuse for all this spending growth. But enrollment numbers show an interesting reality. Enrollment has dropped the last two years. And here is the enrollment snapshot according to the budget:

Grades K-5	566 (Average)
Grade 6	609
Grade 7	600
Grade 8	657
Grade 9	713
Grade 10	659
Grade 11	694
Grade 12	654

With the exception of the spike in Grade 9, enrollment will continue to decline by a significant amount for the next decade.

How much money is spent on direct education costs? Well, that depends on what you define as a direct education cost. But, let’s use the school board number. There is no sense squabbling about what should be counted or not, though this might be a useful exercise to study at the state level. The school board handout stated:

Reality: Over 67 cents of each dollar of total expenditures are instruction expenses. The rest of the budget covers debt service (mortgage payments on buildings), transportation, administrative costs, and athletics and other extracurricular activities.

Well, I think they may have skipped a few things. And if we discount the fractional penny, it can be stated that 33 cents of a dollar do not go to direct education costs. So if we don’t touch that, education will not suffer at all. So the debate is quite simple. Are there opportunities in that 33 cents on the dollar? And, what is the spending growth in these discretionary areas?

Here are some interesting expenditure categories that bear some scrutiny:

	2000 Support Services	400 Other Purchased Property Services	500 Other Purchased Services	800 Other Object	900 Other Uses of Funds
1998-1999	$15,868,690	$957,956	$4,361,759	$3,288,857	$3,288,857
2005-2006	$25,514,429	$2,147,856	$8,670,995	$5,400,788	$9,042,475
Growth	60.78%	124.21%	98.80%	64.21%	174.94%

Now, these numbers were on a Powerpoint slide and it was quite interesting that people decided not to show Powerpoint presentations at the well attended meeting. These clearly exceed the inflation rate for the period, even on a per pupil basis. The inflation rate for the period of 1998-2006 was 24.48%! These expenditure categories have grown by 2.6-7.15x the rate of inflation. There must be some opportunities for rational, fiscal restraint in these categories.

Now in a business, or at the kitchen table for a family, you have to constantly look at discretionary spending. Especially when you have to come up with more money to pay higher taxes. The School Board refused this course of action. Instead, they played the political spin game by declaring that the only options were to “eliminate advanced placement classes” or eliminating the “sports budget”, etc, etc.

The opponents of the tax hike have legitimate, valid numbers on their side. It seems reasonable to begin questioning such excessive spending growth. Reasonable fiscal policy does not require the elimination of sports, the drama club or large swaths of curriculum. In fact, there will be more detailed scrutiny to determine what has been going on.

Future posts: Where is the new tax hike money going, the simple alternative that was offered, the explosion of debt, what’s going on, and what’s next?