The Dirty(?) Little Secret Of Hidden QCSD Spending

November 19, 2012

Psssst .... QCSD administrators have a secret. Well, actually we are finding that they have entire closets full. Whether this particular little secret is dirty depends on how you feel about hidden school spending. This can happen anywhere...and is happening here. But you won't hear it from our admins.

The way the money is received is why it is usually overlooked.

Under PA law, real estate taxes provide the primary source of public education funding. And these taxes start the dominos in motion. Schools base their budgets on anticipated income for the next year. And those budgets are the basis for the district's planned spending. And that planned spending is what the administration presents to the community as the justification for continuing, or ending, certain classes and programs. Remember those infamous QCSD red/yellow/green lists threatening the end of sports, music, band, art, and clubs if taxes weren't increased?

Because Bucks has not had a general reassessment since 1972, your property tax bills are based on a complex formula incorporating the assessed value of your real estate - home, commercial/industrial property, or vacant land - and the yearly Common Level Ratio and County Assessment Ratio. The CLR and CAR are known in advance, and don't change much from year to year. School districts can pretty well anticipate near-future income.

But the wildcard is the number, and dollar amount, of reassessments based on individual owners' appeals to the county Board of Assessment Appeals. Some districts end up with less income than expected because a significant number of appeals are granted. That usually makes headlines, as administrators cry for district-wide tax increases to make up the difference. But the little secret is that some districts, like QCSD, actually receive additional income - perhaps significant additional income - because new construction/sales outpace reduced assessments. And that windfall income is unbudgeted, with no accountability to the community as to how it will be spent, or even disclosure that it was actually received! Take our school district....please.

For 2011 and 2012, QCSD will pocket about $244,000 over and above their budgeted income, because the total assessments in the area have increased. This is due almost entirely to growth in Richland, with 43 homes added, mostly in Regency Manor near Lowes, plus a steady dribble in the Age Qualified developments, and a few individual houses built in the rural areas. Total assessed value in RT increased by $1,761,210, from $154,681,730 to $156,442,940 since 2010 (+1.14%). Milford was up $67,640 (+.052%) in that same period, while Haycock dropped $64,610 (-.2%), and Qtown was down $30,930 (-.04%). Total increase for the four towns was $1,733,310. By comparison, Bucks County as a whole was up .83%.

Director Paul Stepanoff explained "I've been singing this song for five years (it took me a year on the board to figure it out). Remember when our taxes went up by about 50% over seven years, but Superintendent Andrejko stated that she didn't want to hear the 'myth' of the 50% tax increase? The administration was increasing it's spending by a whopping 10% a year. How could QCSD continue to increase spending 10% a year when taxes were going up 6% - 7% a year, on average?"

It turns out that of the 10% spending increases, only 60% - 70% of that was through the millage increases. The balance was through the increase in the assessment base. Home sales, and prices, in the area were booming. Even if we did not raise taxes by a single mill during those 6-7 years, QCSD could have increased it's spending by 3% - 4% a year, based only on the increase in assessment base (more homes/businesses built and paying taxes). This was the dirty little secret of most school districts. This is why they could agree to big pay increases to the unions. The money, through increases in the assessment base, was just rolling in.

It was only when the financial crisis really hit four years ago that, for the first time in 30 years, the assessment base remained flat, or even fell. Coupled with the Act 1 law that says tax increases have to be limited to, basically, the rate of inflation, the next thing you know, school districts that had locked into deals based on 10% a year spending increases were now finding they could only afford 1% - 4% spending increases.

Stepanoff continued "That is why, on the finance committee about 3 - 4 years ago, I changed the focus from 'increase taxes' to 'control spending'. Our administration had trained the community - including some board members - to think that a yearly millage increase was absolutely necessary. It wasn't, and isn't. Even if we have no millage increase, spending can still increase 3-4%."

But this hidden largesse doesn't seem to be enough for certain directors in some districts. They are looking for new ways to shove their hands into the pockets of the community.

In an action being watched by schools across the state, Central Bucks has taken a controversial approach to increasing their tax revenues. They spent $10,000 in 2010, and again in 2011, to proactively appeal the assessments of certain properties, asking that they be raised to reflect their true market value. The Board of Assessment Appeals rejected all 124 of the district's appeals in 2010, and CB missed the filing deadline in 2011.

But hoping that the third time is a charm, they are back again this year, challenging the assessments of 37 homes and eight commercial properties (one with a potential increase of only $830!). They hope to raise more than $750,000. But not all directors are on board with the plan. Vice President Geri McMullin has opposed the assessment appeals from the beginning. "I'm very, very much afraid. People are borderline financially right now. And with a majority of people in the borough being senior citizens, they're going to end up losing their homes. I don't think that a school board should have that type of thing on their shoulders. I know I don't want it on mine."

An editorial in the Bucks County Courier Times was equally critical. "If the district is successful, a few property owners stand to be penalized with higher tax bills. Like the county, the school district apparently isn't interested in fairness.... We understand why Central Bucks and other school districts are doing this. Again, the state can be implicated for reducing school subsidies. That, plus the weak economy and individual assessment appeals that lower tax liability have squeezed school district revenues. Huge, contracted labor costs leave the districts little room to reduce their expenses. That said, zeroing in on a handful of property owners can hardly be justified. The increased taxes may help the district, but who is going to help those who have to pay them? In any case, reassessment is not something a school district should be involved in."

It is shameful that directors who mismanaged budgets, and continue to spend above their means, then single out particular residents to bail them out of their mistakes. Let's hope that the Board of Assessment Appeals just says no - again.