Radnor Unveils Five Year Plan, Large Liabilities Still Unaddressed

Monday night’s fiscal policies meeting of the Radnor Township Board of Commissioners was as notable for what it didn’t include as for what it did.

While the township unveiled its five year revenue forecast and a capital improvement plan for vehicles, equipment, and software, it didn’t, to the frustration of several members of the public, include in its projections the Other Post Employment Benefit (OPEB), pension, and compensated absence liabilities it is on the hook for.

OPEB is a $54.5 million liability, with annual costs of $5.12 million, while the unfunded pension and compensated absence liabilities amount to $12.3 and $4.5 million.

"The question is, what is going to happen about this?" Wayne resident Martin Heldring asked the board during public comment. "Are you going to address these issues in a legitimate, transparent, fiscally responsible manner? Or are we going to keep kicking this can down the road?"

"This is an elephant man. This is really bad."

Commissioner John Fisher admitted the solutions won’t come easily, but promised they were forthcoming.

"This board is going to have a hard time addressing these shortfalls," he said. "We’re going to have to make some tough decisions and some tough choices….it’s not going to be resolved tonight, but I’m hoping by midyear we’ll know [what is required]."

Though incomplete, the five year forecast itself—presented by finance manager Bill White and constructed by White with the help of citizen financial advisory group CARFAC—projected the township’s financial future under three different economic scenarios: an Optimistic projection that assumes revenues growth of 2.73 percent annually; a Normal projection that assumes annual revenue growth of 1.46 percent; and a Pessimistic scenario that assumes township revenues grow at only 0.08 percent annually.

For this exercise, township expenditures were held at a constant "baseline"—that is the forecast assumed present levels of service and programs would continue, albeit at an annual rate of expenditure growth of 2.75 percent.

Under the Pessimistic revenue scenario, the township would have to raise the millage by an average of 7.46 percent annually over the next five years to have a balanced budget for each fiscal year, while the Optimistic scenario would only necessitate a 0.12 percent annual millage increase to break even, and the Normal scenario would require a 4 percent annual millage hike.

In addition to the OPEB, pension, and compensated absence omissions, the forecast also didn’t include storm water management funding, on-going capital program funding (the forecast summary estimates this at $1 million annually), township facility and infrastructure improvement funding, changes in future fire company funding, and changes in future community organization contributions.

Capital replacement funding

Also on Monday, public works director Stephen F. Norcini walked the board through projected capital equipment replacement costs

On vehicles, equipment, and software, the township is looking at replacement costs of $874,000 in 2013, $1,181,100 in 2014, $925,600 in 2015, $702,700 in 2016, and $926,500 in 2017.

Most of the vehicles would be purchased through what is called a "capital lease"—a, in this case, five year loan. These loans spread the often large upfront cost of such purchases (one refuse vehicle the township is projected to replace in 2013 will cost $180,000), but, unlike bonds, force the township to pay them back in a timely manner.

Norcini said he considered recommending the township purchase vehicles that run on alternative-fuels, but determined that at this point they don’t make practical or financial sense for Radnor.