Legislative Testimony

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Testimony-Task Force on School Cost Reduction, Avon Grove SD

February 2007  

Introduction
Thank you for the opportunity to testify on behalf of the Pennsylvania School Boards Association. I am Lynn Klingensmith, a school director from the Avon Grove School District where I have been serving in that capacity for five years. Avon Grove is located in the southern portion of Chester County encompassing approximately 62.9 square miles and is comprised of 7 municipalities. Our district borders the states of Maryland and Delaware . Between 1980 and 2000, the Avon Grove School District experienced a significant population gain of 78.7% (12,908 to 21, 067). In 2006, the population is estimated at 25,000. As a point of reference, Chester County 's population rose 36.9% in the same twenty year period. Avon Grove's projected student population for 2006-2007 is 6074.

Cost Concerns
The District has experienced all of the same cost concerns that will be brought before the Task Force today including but not limited to, special education, transportation (including non-public school transportation into two adjacent states), utility costs, tuition to charter schools, instructional, personnel costs related to healthcare and pension benefits, and debt service. Attached you will find charts from our Preliminary Budget for 2007-2008 which will reflect increases in all of these areas. Most notably, increases in costs for healthcare and pension benefits are substantially above any inflation index. From 2006-07 to 2007-08 Healthcare costs alone increased by 16%. (See Appendix A)

The focus of my testimony is to address the effects of the unprecedented growth in our school district. This growth has impacted and strained the operating budget as we, legally, have continued to provide all of the educational opportunities to the growing number of student. As you can see from the attached chart, enrollment over the last ten years has increased by 1932 students, from 4142 to 6074 students over this ten year period. This growth affects every area of our budget - instructional, transportation, healthcare and pension benefits, utility costs, and subsequently to debt service. (See Appendix B)

In addition to the financial demands on the operating budget, the impact of increased residential development, population and enrollment on district facilities has grown exponentially. In the last five (5) years, the District has completed a major addition to an elementary school (originally constructed in 1992) and constructed a new building in 2002 to house 1800 students in grades 3 through 6. We are currently planning to expand capacity for the secondary schools by building a new middle school to open in 2011, with a second high school likely to follow thereafter.

The following table will show that the effective rate of reimbursement for school construction (the reimbursable percentage of project costs times the district's market value aid ratio) is extremely low for recent construction projects. It is projected to be even lower for future projects. In our opinion this is presumably due to the Commonwealth's failure to properly adjust cost factors used in the calculation of the reimbursable amount. These factors include:

• Construction costs in our geographic area
• Prevailing wage rates in our geographic area
• Demands/Allocation for space per student to accommodate current programs
• Costs to purchase land

Commonwealth reimbursement is approximately 10% of the project cost, or lower, and is woefully inadequate as it fails to meet the needs of growing school districts struggling to accommodate for increased enrollments. A change in the factors used to calculate reimbursement to realistically reflect currents costs - especially those related to a particular geographic area - would have significant benefit to all school districts.

Effective rate of Facility Cost Reimbursable % Reimbursement
Penn London ES	$12 mil	26.48%	13.72%
Penn London ES addition	$3.2 mil	19.35%	10.03%
Avon Grove Intermediate School	$30.4 mil	27.40%	14.20%
New Secondary School (estimated)	$105 mil	18.00%	9.33%

In addition to those specific and many other cost concerns facing Pennsylvania school districts, a major issue for our district is the effects from this high rate of growth. The lack of assistance from the Commonwealth in the form of any increases in subsidies for school construction and lack of legislative relief through changes in the prevailing wage laws and authorization to enact impact fees on residential developers has placed an extensive burden on the district and its taxpayers. These are issues faced by many other Pennsylvania districts with similar circumstances.

Recommendations
Legislative relief in several areas would be beneficial to school districts with high rates of growth and the need to construct school buildings. There are also several other mandates which affect school construction costs which should also be reviewed and possibly modified to help contain or reduce costs.

1. Address Prevailing Wage and Separations Act
First, as we embark on a new construction project, the effect of the Prevailing Wage rates, particularly those that apply to southeastern Pennsylvania , will negatively impact our school construction costs. This is not new to us, as we have already had four construction/renovation projects in the last fifteen years. We would therefore urge our legislators to support legislation that would provide us the same options for school construction and/or renovation projects that are available in the private sector, most notably, relief from the Prevailing Wage Act and Separations Act. Additionally, we would urge legislators to consider increasing the threshold to reflect current project costs and utilizing local labor costs in order to obtain some relief from the Prevailing Wage Act.

2. Address mandate regarding financing of public road improvements
Also related to construction costs are mandates which require districts to finance the design and construction of improvements to public roads. These costs alone can have a significant impact to the cost of the overall project. We support legislative efforts to address these types of infrastructure costs.

3. Allow school districts to enact/levy Impact Fees
One way to address these costs related to school construction is to enable school districts to enact/impose impact fees on the development of residential properties. Typically, the additional tax revenues generated by new ratables are insufficient to meet the educational needs (and costs) of the students residing in these new homes and enrolling in the public schools. Impact fees would help to absorb some of these costs, but more importantly could be reserved to pay the capital needs which will ultimately be incurred to house these new students. While some municipalities have the statutory authority to levy impact fees which may help to defray projected infrastructure costs to community, currently the law prohibits school districts from imposing these fees. Legislative relief would produce immediate and tangible benefits to the Avon Grove School District .

4. Review of the PlanCon process
Given the growth that we have experienced, we would encourage a review of the PlanCon process to better address the facility needs of school districts, and specifically a reduction in the 20-year waiting period between construction and renovation projects. This restriction inhibits the strategic planning process related to the current and projected use of our facilities. The district is then forced to make piece-meal, and sometimes costly choices in order to provide educational spaces. For instance, we currently have portables at our high school and middle school campus that cost the district thousands of dollars in rental and utility costs. Reducing the twenty-year window would allow districts to respond to changes in student population in the most economical way.

Conclusion
As a School Board Director, I take my role of fiscal responsibility very seriously. I commend our Superintendent and Business Office for not only addressing "the bottom line", but for making conscientious and researched decisions about how every dollar in our district advances academic excellence and student success. While our district is not unique in the growth that we are facing, we are urging legislative action on those mandates that could bring immediate and long-term relief not only to our constituents, but to all the taxpayers in the Commonwealth. Once again, thank you for the opportunity to testify before the Task Force.

AVON GROVE SD Dual Membership 1997-2007
SCHOOL YEAR	ADM	INCREASE	%INCREASE
1997-98	4260	118	2.84%
1998-99	4461	201	4.71%
1999-00	4629	168	3.77%
2000-01	4782	153	3.31%
2001-02	4879	97	2.03%
2002-03	5087	208	4.26%
2003-04	5348	261	5.13%
2004-05	5519	171	3.20%
2005-06	5824	305	5.53%
2006-07	6074	250	4.30%