MY SIDE OF SOPO – City taxpayers need a lemon law

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In a recent Gallup poll, members of Congress and car salespeople were ranked at the bottom of 22 professions, when it came to perceived honesty and ethical standards. Americans gave these two professions relatively equivalent grades – abysmal ones.

In August of 2010, in response to my email about the school superintendent making misleading and false statements, City Councilor Blake responded in part: “SB (school board) and administration use facts and figures to their advantage, something we see in all walks of life, every day. I believe most salesmen do that, be it a car salesman or a realtor.”

Unlike Councilor Blake, I don’t believe it is in the best interest of South Portland taxpayers that the school superintendent acts like a car salesperson, who unethically leaves out many facts that don’t support her weak positions and often makes false and misleading statements. Of course, what makes it even worse is that the financially challenged city councilors don’t do the proper due diligence and challenge the “car salesperson” superintendent.

Last week in the joint City Council and school board workshop on the 2013-2014 budget, once again the “car salesperson” superintendent made several misleading statements about the school “surplus” (the accumulated taxes collected in excess of all of the expenses as of a given date) and the projected budget shortfalls in the coming year. Of course her position was that there would be a need for a significant increase in property taxes in 2013-14.

Some of the facts (from the School Audited Financial Statements) that the superintendent does not want the taxpayers to understand include:

1.) During the five years ending June 30, 2012, the school budgeted expenses were $6.9 million more than the actual expenses.

2.) Over the same five years, the school budget assumed that the school surplus would be reduced by $5.25 million, but actually the surplus increased by $2.74 million, accordingly the budgets were overstated by $8.0 million in total.

3.) Over the five years ending June 30, 2012, the school transferred $3.8 million of the excess property taxes generated from the budgeting errors out of the “undesignated surplus” to other surplus accounts called “reserves.”

4.) As of June 30, 2012, the school had $6.1 million in “surplus” when you combine the $1.1 million “undesignated surplus” and the $5 million in various other “reserve” surplus accounts.

The “car salesperson” superintendent last week talked about the $1.1 million undesignated surplus, as if it was the only surplus that could be used to cover any potential 2013-14 budget problems. In addition to ignoring the other $5 million in reserve surplus, she overstated the projected 2012-13 and the 2013-14 expenses, just as she has done for the past five years. Based on the last five years of budgeting errors, why would any city councilor or taxpayer not question any projected school budgets for the years ended June 30, 2013, and June 30, 2014? As usual, not one city councilor questioned the “car salesperson” superintendent’s budget projections.

In the past, the “car salesperson” superintendent has tried to incorrectly imply that the $5 million in reserve surplus was different than the undesignated surplus and that the total surplus was not excessive. The fact is only $1 million of the $6.1 million surplus is restricted in any way. The fact is that as of June 30, 2012, South Portland’s $6.1 million in total surplus was greater than $5 million more than the Scarborough, Portland and Cape Elizabeth school surpluses, which all were less than $1 million each.

The superintendent was correct in that there could be major cuts in school funding from the state in the 2013-14 year and that the school must establish a contingency plan to deal with those cuts. The exact amount of the cuts may not be known until June, when the state legislature finalizes its budget. However, the proper reaction should not be to raise taxes, rather it should be to reduce the school’s excessive non-teaching administration expenses by at least $1 million and use a portion of the $5 million in excessive taxes (surplus) that it has collected over the past several years due to budgeting errors.

Rather than dealing with the already excessive non-teaching administration costs last year, the superintendent refused to accept the original 2012-13 budget and pushed through the “rubber stamp” City Council a $753,000 budget increase that included $391,000 in additional non-teacher administration costs. The superintendent admitted that South Portland spends millions more on education than the state standard. But the “car salesperson” superintendent claimed that the number of school buildings was a major factor in why the costs are so high, like having two middle schools instead of one. She has made that claim several times over the past four years and I have illustrated several times that the claim is false, but she continues to make it.

For example, the 2012-13 South Portland middle schools budget had five staff positions and $331,276 in total costs, or $456 per student (based on 725 students), for their guidance departments. The budget had 2.5 positions at each school (one staff position would split their time between the two schools). The total guidance costs are in excess of the state standards and other schools in the area, not because there are two schools, but because they have decided that they want to spend more than the state has determined is needed. At Scarborough’s middle school, the total guidance costs budgeted for 2012-13 were only $150,279, or $187 per student (based on 800 students). South Portland’s costs are 2.44 times that of Scarborough’s. Similar excessive non-teaching costs in other administration areas exist and have nothing to do with the number of school buildings.

It’s time for the superintendent to provide the taxpayers with all the facts about the real budget numbers and real surplus and allow taxpayers to decide whether to raise taxes or use the excessive taxes already collected and or to cut excessive administrative costs.

Al DiMillo is a retired CPA who lives in South Portland.

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