An early retirement incentive plan will enable Northern Lehigh School District to pass next year's budget with no property tax increase.
The school board unanimously agreed Monday to accept the inclusion of 11 more teachers into the district's 2010-11 retirement incentive plan, effective on Jan. 10, 2011.
They include: Erwin Prutzman, high school technology/business education; Joanne Perich, Peters Elementary, first grade; Linda Thompson, Peters Elementary, guidance counselor; Barbara Mantz, Peters Elementary, first grade; Richard Green, middle school, PSSA Prep; Lana Schmidt, high school, German; Karen Haberern, Slatington Elementary, fourth grade; Andrea Feller, Slatington Elementary, third grade; Debra Sanek, Peters Elementary, reading specialist; David Clemmer, middle school, librarian; and Patricia Bollinger, Slatington Elementary, fourth grade; were among the teachers whose requests for inclusion in the retirement incentive plan were approved by the board.
That pushes the number of teachers who have agreed to be included in the plan to 14, which will enable the district to offset a $1.5 million shortfall, said business manager Jeremy Melber.
Melber said that none of the positions will be replaced, adding that while the guidance counselor position will be filled internally by a teacher, that teacher position will not be replaced.
The $28,516,083 proposed preliminary budget represents a balanced spending plan, that, if approved, would leave the property tax rate unchanged at 64.373 mills in Lehigh and Northampton counties.
That would mean a person with a home valued at $100,000, and assessed at $50,000, would again pay $3,219 in property taxes to the district this year.
"The revenue budget reflects full cuts from state funding, including the complete loss of the Accountability Block Grant, tutoring grant, dual enrollment grant, charter school reimbursement, and a $618,637 loss in Basic Education subsidy," Melber said. "Even with dramatic cuts from the (state) governor's proposed budget, the district was still able to present a balanced budget with no tax increases, no economic furloughs, no major program cuts, no pay freezes, no large increase in class sizes, and no building allocation cuts."
Melber said the 2011-12 budget process was started by the district's administrative team last September, with numerous budgets and plans being created. After the recent gubernatorial election and proposed state budget, the district initiated plans to be able to curtail drastic cuts, he said.
One of the major components of that plan, Melber said, was to recommend that the board institute a retirement incentive for all teachers district wide. As a result, the district was able to cut $1,506,000 from its salary and benefits budget, he said.
In addition, the district's health benefits were expected to increase by 15 percent; however, early negotiations brought that increase down to 8 percent, Melber said. Further negotiations and Request for Proposals led to further health insurance negotiations, which brought the increase down to 5.88 percent.
Melber said other key factors to the budget are a new agreement with Microsoft for district licensing agreements, which will save the district over $20,000. The athletics budget was rolled back to the 2008-09 funding levels, with no major cuts occurring under that department as well, he said.
A budget freeze was initiated by the district's administration in December of last year, which limited the amount of dollars spent in the second half of the current fiscal year, Melber said. The district will enter the CSIU consortium for fuel purchases, which will be sent for bid in the near future, and is expected to result in significant savings to the district as well, he said.
Melber noted that multiple administrative team meetings were held on budgetary issues, and numerous cost-cutting plans were created that will take effect next year.
"The district's sound financial management that led the S&P 500 to increase the financial rating on the district from a B to an A+ over the last two budget cycles allowed the district to get exceptional rates on the bond issues for the Slatington Elementary project, saving the district's debt structure from larger, unsustainable increases, and will actually allow the district to see a decrease in the debt structure after the 2013-14 fiscal year," he said. "The district's long range financial plan included the use of designated fund balances to be used to offset budget deficits, such as PSERS, health insurance, and electricity rate increases. Even though the district has absorbed these increases, the use of those fund balances is not recommended under this budget."
Melber said that prior to the budget's formation, and in the aftermath of Gov. Corbett's budget proposal, the district was faced with cuts that will now be averted: 15 teacher furloughs; 15-20 building aide furloughs; full-day kindergarten reduced to half days; interventional specialist positions; elementary technology program; and significant activity and athletic cuts.
On top of those drastic cuts, Melber said a 1.22-mill tax increase would have had to be enacted, which is the Act I adjusted index for the district.
Melber said the preliminary budget is scheduled for adoption when the board meets at 7:30 p.m. May 9. Final adoption is expected to come at the June 13 board meeting.
Director Donna Kulp expressed her thanks to Melber and Superintendent Michael Michaels for their diligence.
"I really think we ought to give a hand to our business manager and superintendent for this budget," Kulp said. "I think we need to give them a round of applause for a zero-mill increase; I think they need to be applauded."
Director Gregory Williams said the district was able to produce a budget with a zero-mill increase through the relationship between the board and the district's administrative team.
"Thank you, Jeremy, for your foresight," Williams said. "It starts at the top with Mr. Melber and Mr. Michaels; a thank you goes out to everybody."
Board President Edward Hartman also heaped praise on the district's administrative staff.
"We all know we have the best darn administrative people in the area," Hartman said. "This just shows it."
Michaels said the budget process was a team effort from start to finish.
"I'd like to thank the administration for all the hard work they did," Michaels said. "With this budget came some gut-wrenching decisions."
Michaels then praised the 14 teachers who agreed to take the early retirement incentive program.
"You are truly Bulldogs, and have done a great job," he said. "I don't know that you can replace their experience, but they were team players to the very end, and I'm really proud of them."
In a related matter, the board unanimously agreed to designate fund balance ending June 30, 2010, as follows: unreserved, designated for long range maintenance ($1,800,000); replacement equipment ($1,000,747); technology ($771,789); ERIP ($350,000); health insurance premiums ($550,000); PSERS increase ($850,000); electricity rate increase ($160,000); and construction contingency ($500,000); unreserved, undesignated ($2,196,830).
In January, the board agreed to adopt the plan for all eligible professional employees, on a voluntary basis, for the 2010-11 school year. The creation of an employee retirement incentive plan figures to save the district about $800,000.
The program asks those high-end teachers who account for about $111,000 per position to retire and not be replaced, which would result in a savings of over $1 million with its fund balance and long range plan.
The offer was a one-time only program that enabled teachers in the district to submit a letter in writing between then and April 6 that said they would retire from the district.
Melber said the district came up with the retirement incentive plan in an effort to lower what was then a projected $1.2 million shortfall in the 2011-12 school year.
As per the program, Melber said the teachers would receive a $25,000 incentive paid into a tax shelter account in two equal amounts of $12,500 on Oct. 31, 2011, and Feb. 8, 2012.
Also at that time, the board unanimously agreed to adopt a resolution to not raise taxes above the Act 1 tax index, which is currently set at 1.9 percent, or, 1.22 mills.