Post by justfacts on Nov 9, 2005 11:37:53 GMT -5
frawg88 and all others on this Forum ~
As I previously said there was a lot in your last post. Covering it all in one response was too much. So here is another post to cover some more.
The addition by the State of a new service requirement will cause costs to increase. As you cited, the additional testing imposed a few years ago was expensive - to the tune of $18K to $20K per year in costs. That amounts to a percentage of the Budget - let's say $20,000/$50,000,000 or 0.04% increase in the Budget the first year it is introduced.
In subsequent years the budget for this cost only increases as the CPI changes - lets say to a 4% increase, causing the $20,000 to go to $20,800. That added $800 cost is included (and lost) in the CPI (4%) change of the overall budget to $2,000,000 more than it was! That added testing cost is no longer a separate item that causes the overall budget to go up a multiple of the CPI.
Just to be fair and not make this look insignificant, let's say there is another cost increase - that of Life Insurance contracts to induce "Black-Shirt" senior teachers to retire early and thus save on future salaries by replacing them with lower cost newer teachers. When that was done ten years ago, the cost of the all policies was about $530,000 per year (according to a report in recent minutes of a Board meeting) and the cost will continue for another 10 years from now. That was about a $530,000/$45,000,000 or 1.2% increase in the budget for this "new" obligation of ten years ago. Today, the story is different.
Both these additions caused the budget of their respective years introduction of the service to increase by an amount over the CPI increase. However, in all subsequent years that they continue on the budget - they are continuing costs that don't cause a step increase in addition to their CPI increase. They are a part of the CPI increase. Until something new comes along in the way of a cost increase element there is no longer any impact on Budgetary increase from these items over their CPI changes. In the case of the Insurance policies, there is no increase - they are fixed price costs of the first year. So, in fact, as a percentage of the Budget, their cost goes down each year that the budget increases in cost!
None of these mandated costs, or other self-assumed costs, have any basis for budget increases over the CPI level in the years subsequent to their introduction.
They can not explain, or be used to justify, property tax cost increases that are significant multiples of the CPI continuing year after year. Our record has been +10.03% per year for five years and a demand from the District for an overwhelming +13.38% increase last year. That is why the Budget was defeated - especially since the same amount was demanded (mandated?) again.
These added cost items are interesting none-the-less in that they may reveal that a cost effective analysis was (or was not) made before they were committed to. This is especially true for the Life Insurance policies. Did they actually save, over a twenty year period, more than their cost in salary differentials between new-start teachers and teachers already near retirement? I leave that to others to dig up the past numbers, compare them with present, adjust for inflation, and find out if that was a valid decision or not. As for me, I recognize that I had voted to approve that initial budget, and I live with the cost consequences of that decision. I will turn my full attention to future budget voting decisions. [/b]
The cost of the loans made against these policies is also an interesting subject, whether they were legal or illegal loans past their time of prosecution. The money must be paid back by the Plainedge residents. If it is all done in one year, that causes a large one time percentage increase in the budget and a subsequent same percentage decrease in the budget the next year since the loan has been paid off! If spread over several years - that one time increase is smaller, but the cost continues for several years before there is an offsetting decrease as the loan is paid off. Yes, as services are changed, there can be either an increase or a decrease in property tax, depending on the change!
These choices and actions have everything to do with striving for a "magic number" in controlling a Budget. If it is done in one year the property tax hike will be large, if it is done in 10 years the property tax hike is low. It is the proper choice of a "magic number" (or less) for percentage property tax increase that will produce a Budget that will pass! The effects you noted were in the costs assumed by the Board, not by the "Magic Number" they used to introduce these costs. Also, there is nothing wrong in listening to advice from a "Community Budget Advisory Team" It is how this advice is used that is determined by the Board - who is the sole responsible party for Budgets. Fame or Blame, rests directly with this, and all past and future Boards.
Because unwise decisions may have been made in the past (or not) we are not prohibited from making wise decisions in the future! And a wise decision is fully thought out by a competent Board - it does not lead to deficits - nor does it lead to excessive surpluses as we now have in the Code 9760 and Code 9950 accounts on our present "Contingency Budget"
As I previously said there was a lot in your last post. Covering it all in one response was too much. So here is another post to cover some more.
The addition by the State of a new service requirement will cause costs to increase. As you cited, the additional testing imposed a few years ago was expensive - to the tune of $18K to $20K per year in costs. That amounts to a percentage of the Budget - let's say $20,000/$50,000,000 or 0.04% increase in the Budget the first year it is introduced.
In subsequent years the budget for this cost only increases as the CPI changes - lets say to a 4% increase, causing the $20,000 to go to $20,800. That added $800 cost is included (and lost) in the CPI (4%) change of the overall budget to $2,000,000 more than it was! That added testing cost is no longer a separate item that causes the overall budget to go up a multiple of the CPI.
Just to be fair and not make this look insignificant, let's say there is another cost increase - that of Life Insurance contracts to induce "Black-Shirt" senior teachers to retire early and thus save on future salaries by replacing them with lower cost newer teachers. When that was done ten years ago, the cost of the all policies was about $530,000 per year (according to a report in recent minutes of a Board meeting) and the cost will continue for another 10 years from now. That was about a $530,000/$45,000,000 or 1.2% increase in the budget for this "new" obligation of ten years ago. Today, the story is different.
Both these additions caused the budget of their respective years introduction of the service to increase by an amount over the CPI increase. However, in all subsequent years that they continue on the budget - they are continuing costs that don't cause a step increase in addition to their CPI increase. They are a part of the CPI increase. Until something new comes along in the way of a cost increase element there is no longer any impact on Budgetary increase from these items over their CPI changes. In the case of the Insurance policies, there is no increase - they are fixed price costs of the first year. So, in fact, as a percentage of the Budget, their cost goes down each year that the budget increases in cost!
None of these mandated costs, or other self-assumed costs, have any basis for budget increases over the CPI level in the years subsequent to their introduction.
They can not explain, or be used to justify, property tax cost increases that are significant multiples of the CPI continuing year after year. Our record has been +10.03% per year for five years and a demand from the District for an overwhelming +13.38% increase last year. That is why the Budget was defeated - especially since the same amount was demanded (mandated?) again.
These added cost items are interesting none-the-less in that they may reveal that a cost effective analysis was (or was not) made before they were committed to. This is especially true for the Life Insurance policies. Did they actually save, over a twenty year period, more than their cost in salary differentials between new-start teachers and teachers already near retirement? I leave that to others to dig up the past numbers, compare them with present, adjust for inflation, and find out if that was a valid decision or not. As for me, I recognize that I had voted to approve that initial budget, and I live with the cost consequences of that decision. I will turn my full attention to future budget voting decisions. [/b]
The cost of the loans made against these policies is also an interesting subject, whether they were legal or illegal loans past their time of prosecution. The money must be paid back by the Plainedge residents. If it is all done in one year, that causes a large one time percentage increase in the budget and a subsequent same percentage decrease in the budget the next year since the loan has been paid off! If spread over several years - that one time increase is smaller, but the cost continues for several years before there is an offsetting decrease as the loan is paid off. Yes, as services are changed, there can be either an increase or a decrease in property tax, depending on the change!
These choices and actions have everything to do with striving for a "magic number" in controlling a Budget. If it is done in one year the property tax hike will be large, if it is done in 10 years the property tax hike is low. It is the proper choice of a "magic number" (or less) for percentage property tax increase that will produce a Budget that will pass! The effects you noted were in the costs assumed by the Board, not by the "Magic Number" they used to introduce these costs. Also, there is nothing wrong in listening to advice from a "Community Budget Advisory Team" It is how this advice is used that is determined by the Board - who is the sole responsible party for Budgets. Fame or Blame, rests directly with this, and all past and future Boards.
Because unwise decisions may have been made in the past (or not) we are not prohibited from making wise decisions in the future! And a wise decision is fully thought out by a competent Board - it does not lead to deficits - nor does it lead to excessive surpluses as we now have in the Code 9760 and Code 9950 accounts on our present "Contingency Budget"