Melsky: So What Does it All Mean?

Unless you’re a loyal attendee of local government meetings, the word “Melsky” probably means very little to you.

But it actually stands for a lot – specifically $8.2 million dollars.

And local officials have opposing perspectives as to just how that money should be used.

Last January, the Council Rock school district received $8.2 million from the sale of the 134-acre Melsky tract, located off Stoopville Road straddling both Newtown and Upper Makefield townships.

The district purchased the land for $3.25 million in 1988 as a site for a new high school and middle school. However, the land became subject to litigation related to approval for the VA National Cemetery. In 2007, the district agreed to sell the land to Toll Brothers, which was the final link in a long process to bring the Washington Crossing Veteran’s Cemetery to fruition.

And this year, as district officials grappled with how to trim in excess of $14 million from the 2011-2012 budget, some in the community called for the administration to use the entirety of that $8.2 million to balance Council Rock’s finances.

But district officials say it’s not that simple.

Last June, the school board voted to divide the money from the Melsky Tract sale into two funds: $4.1 million went into a capital projects fund and $4.1 million was put into the fund balance for revenue stabilization.  Of that $4.1 million set aside for revenue stabilization, $1 million was applied to the fund balance used for the 2011-2012 budget.

Superintendent Mark Klein says it wouldn’t be prudent to use much more than that.

Using the full $8.2 million to solve this year’s budget deficit will only create problems down the line, Klein said. If the district simply applied all the funds from the Melsky Tract sale to the 2011-2012 budget, it would find itself facing an $8 million revenue hole the following year, he said.

“We have applied fund balance to this budget more so than ever before,” Klein said at a public budget forum Wednesday night. In total, the district has utilized $4 million of its fund balance in the 2011-2012 budget.

“We think the application of fund balance in this financial time is important but it can be problematic in years to come if you don’t have the revenue to replace it,” Klein said.

But Newtown Township Supervisors Chairman Rob Ciervo said by using just $1 million of the Melsky Tract sale funds, the district is being inconsiderate to taxpayers while compromising the quality of education for students.  The supervisors do not vote on the school budget.

“I believe all of it should be used,” Ciervo said. “Residents in Newtown Township have seen their incomes stay flat for three straight years, while school district employees have seen raises well above inflation at the same time.  It is not right to tax residents higher when they have no more income then they did three years ago if it can be avoided.”

And even though district officials have patched this year’s budget gap with a combination of $9.1 million in spending cuts, $1.1 million in proposed employee salary concessions, and a $4 million fund balance infusion, that doesn’t mean taxes will remain flat for residents.

A 1.4 percent tax increase -- the maximum allowed by state law under Act 1 -- is factored into the revenue for next year, Klein explained.

Ciervo said he believes the Melsky money could have been used to eliminate that tax increase. Further, he said, the money could have avoided “extreme” cuts the district is proposing in order to reduce spending by more than $9 million.

Spending cuts in the proposed budget include the reduction of 42 teaching positions, four administrator positions, and 19 support positions.  Other cuts include the elimination of the 5 p.m. late bus (although the 4 p.m. will remain), doing away with freshman sports teams, and reductions to technology, supplies, and professional development funds.

Ciervo said the future difference in revenue that would result from using Melsky Tract funds could be made up for in employee contracts.  “The last two contracts signed were economically unsustainable given state constraints and should not have been agreed to by the board,” Ciervo said.