Friends, Neighbors and Fellow Upper Merion Area Residents:
At the Monument in Valley Forge
Over the last few years many of our residents have wondered why the school district is having greater financial problems than the township. One answer I’ve heard others give is that the township made some very good decisions to meet the financial challenges that we’re facing. This answer makes the Supervisors look good – something which I obviously don’t mind. But this answer doesn’t paint the full picture.
A more complete answer is that while Upper Merion Township has made some very good and tough decisions, the Upper Merion Area School District faces a different and more challenging financial atmosphere than the township. This stems from the dramatic differences in the township’s and the school district’s revenue sources, as shown by the following chart:
| Upper Merion Township | Upper Merion Area School District | |
| Primary Revenue Source | Act 511 taxes Approx. 45% | Real Estate Taxes Approx. 84.3% |
| Secondary Revenue Source | Real Estate Taxes Approx. 17.9% | State Funding Approx. 10.1% |
| Tertiary Revenue Source | Permits, fees, misc. Approx. 16.8% | Every other source.Approx. 5.6% |
As you can see, Upper Merion Area School District receives approximately 84% of their revenue from real estate taxes as compared to 17.9% for the township. Another way to think about this is to analyze where your real estate tax dollars go. For every dollar the township gets from your real estate taxes, the district now gets about 8 dollars. Even the county receives a greater percentage of your real estate taxes than the township.
As you know, the Great Recession has hammered real estate values and as such, many property holders have filed for and received reassessments, thereby lowering the amount they pay in real estate taxes as well as receiving a refund for already paid taxes all the way back to the filing date. The end result of the 1:8 ratio is that for every dollar the township loses in funding or must refund, the district loses about eight dollars. Furthermore, since the overwhelming bulk of the school district’s revenue comes from real estate taxes, it has no way to recoup this revenue drain. In fact, the problem is exacerbated as state educational expenditures – the district’s secondary funding source – was slashed by Governor Corbett.
Contrast our township’s revenue stream from that of our school district. It is much more diverse. The township does not rely nearly as heavily on real estate taxes so despite the township also losing revenue from real estate reassessments, funds from this sector makes up a much smaller percentage of our overall budget. Upper Merion’s largest revenue source comes from Act 511 taxes which are taxes paid by our businesses. Contrary to rumors, on the whole our retail sector is doing rather well at the moment and revenue from this sector has actually increased. The school district receives very little money from Act 511 taxes. But what exemplifies the difference in diversity between the township’s and the school district’s revenue streams is that our third largest revenue source makes up a greater percentage of our revenue than the district’s secondary source does theirs.
Moreover, Upper Merion Township will have our coffers bolstered by the casino as state law mandates that the township receives 2% of the income from slots and 1% from table games. This has been projected to provide well in excess of $1,000,000 per year. We’re also going to receive about another $140,000 a year as a result of an agreement between the casino and the township. The school district will not receive a penny from the casino.
None of this should be taken to mean that the township is swimming in loot. We’re not. We’ve made some tough choices and we may need to make more in the future. But the school district has made even tougher ones, particularly the teachers who agreed to break their own contract, thereby giving up negotiated raises and and accepting to be furloughed one day a year. The district continues to debate outsourcing bus drivers. I’ve learned to hate the phrase, “concentric circles.”
Criticism by the public of tax increases or decreases and spending increases or decreases by a school district, a township or any other government body is always fair game. However a truly fair comparison between any two entities should always take into account the differences in revenue streams.
Additional Business: On Monday, February 13th at 12 p.m. in Freedom Hall at the Township Building and again at 7 p.m., the Upper Merion’s Environmental Advisory Council and Economic and Community Development Committee will host EnergyWorks. Admission is free so come hear how an energy audit for your home or business could save you money while preserving the environment.
Additional Business, Part 2: At the February 16th Board of Supervisors meeting, we will be voting on whether we want to expand the Zoning Hearing Board (“ZHB”) from 3 members to 5 members. This is a key vote in support of better government as an expanded ZHB will allow for a greater diversity of voices while simultaneously reducing the influence of any one member.
Next article: The Skate Park
If you’d like to receive this article directly by email or would like to address a township issue, feel free to contact me at greg@gregwaks.com.
Sincerely,
Greg
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