2025 Budget Question & Answers (Q&A): East Stroudsburg Borough

Submitted by john.galt on Tue, 12/17/2024 - 06:33

We have received a response (link to previous article) from Kelly Lewis, Borough Manager of East Stroudsburg Borough:

2025 Budget Question & Answers (Q&A):

East Stroudsburg Borough Independent Audits are posted on the Borough website. When the 2023 Audit is received and accepted by Borough Council the 2023 Audit will be posted on the website.
The 2024 independent audit cannot be started before the year, 2024, is completed.
Transparency: The 2025 Proposed Budget is posted on the Borough website.
Transparency: Every two weeks, the Borough financial statements are posted on the Borough website in the Meeting Minutes.
The General Fund-Fund Balance deficit at the end of 2023 was ($580,000).
The Borough use of Covid funds has been 100% transparent.
1. $1.8 million funded the Borough's extensive water meter replacement project.
2. The remaining $543,743.09 was invested in the General Fund.
The public notice indicates that the majority of the mill rate for the tax rate would be allocated to the General Fund?
1. Yes, For the fiscal year 2025 the proposed allocation of the total 7.9654 mills is as follows:
  1. Tax Rate for General Fund 6.3841
  2. Tax Rate for Street Fund 0.0
  3. Tax Rate for Fire Apparatus Fund .0575
  4. Tax Rate for Recreation Fund .4464
  5. Tax Rate for Street Lighting Fund 0.0
  6. Tax Rate for Pension Fund .1107
  7. Tax Rate for Debt Service Fund .9668
In dollar amounts the 7.9654 mills is projected to collect a total of $3,641,094, allocated as follows:
1. $2,918,261 General Fund
2. $26,270 Fire Apparatus Fund
3. $204,036 Recreation Fund
4. $50,591 Pension Fund
5. $441,935 Debt Service Fund
Keep in mind the $2,918,261 allocated to the General Fund from the 7.9654 mills, doesn't even cover the $3,066,493 annual expense for our Stroud Area Regional Police Department.
While 2024 Budgeted Expenses totaled $14,214,616. the 2025 Proposed Budget Expenses are $13,290,983 (a 6% reduction primarily due to lower water fund expenses)?
1. Correct. Despite the impacts of global inflation, contractual salary increases, and extraordinary litigation/RTKL expenses we will be operating the 2025 budget as closely as we can.
2. The 2024 Budget included the $1.8 million water meter replacement project, only $400,000 is identified for 2025 expenses to complete the Water Meter replacement project.
3. We are strategically restructuring our debt in January 2025, so our operating expenses are paid with operational revenue, and capital expenses are paid with low interest financing.
4. We are also undergoing cost savings projects in our largest expenses to find as much savings as we can.
The three largest line item increases outside of Debt Services (a combined total of $366,847) are as follows:
1. Major medical (BC/BS): 27% increase, totaling $204,847.
  1. Despite global inflation, and contractual salary increases, our health coverage cost/employee increased less than 2% in 2025. The sole reason major medical is projected to increase in 2025 is correcting the number of employees covered by health insurance from the prior budget year.
2. Legal Services WTP: 429% increase, totaling $109,500 (allocated to the water fund).
  1. These accounts are significantly impacted by RTKL, related requests, and litigation.
3. Legal Services WWTP: 162% increase, totaling $52,500 (allocated to the sewer fund).
  1. These accounts are significantly impacted by RTKL, related requested and litigation.
The General Fund’s 2025 proposed budget shows a 9% increase from 2024, with major medical (BC/BS) representing 44% of that increase.
1. The sole reason major medical expenses are projected to increase in 2025 is correcting the number of employees covered by health insurance from the prior budget year.
Why is there a 27% increase in medical costs, especially when industry averages suggest increases of around 6–12%?
1. Despite global inflation, and contractual salary increases, our health coverage cost/employee increased less than 2% in 2025. The sole reason major medical is projected to increase in 2025 is correcting the number of employees covered by health insurance from prior the budget year.
Has the borough negotiated with BC/BS or initiated a request for proposals (RFP) to explore alternative insurance carrier plans? Are there specific factors, such as high-risk claims or demographic shifts among staff, contributing to this significant cost increase?
1. The Borough's health insurance increased less than 2% in 2025. In fact, the Borough's health insurance has performed well for the past three years. Health-related claims submitted by individuals covered by the Borough health insurance have been below projections.
What is driving the 429% increase in Legal Services for the water fund and 162% increase for the sewer fund?
1. These accounts are significantly impacted by RTKL, related requests, and litigation.
If these expenses are tied to Mr. Prevoznik’s services, could you confirm whether this results in over $345k in payments for borough legal services? If accurate, this seems unusually high.
1. As above referenced, the Borough has been significantly impacted by RTKL, related requests, and litigation.
2. In 2024, Legal fees through December 6, 2024, were $755,187.65, of which Attorney Prevoznik has been paid $206,221.
  1. Water Fund legal fees were $478,682.72, predominately relating to the Middle Dam and RTKL litigation.
  2. Sewer Fund legal fees were $128,789.90.
  3. General Fund legal fees were $147,715.03.
3. In 2023, Legal fees were $322,048.17, of which Attorney Prevoznik was paid $155,162.37.
  1. Water Fund legal fees were $100,485.
  2. Sewer Fund legal fees were $50,663.54
  3. General Fund legal fees were $180,899.63
Cost Savings Initiatives: The Borough is and will be conducting cost savings initiatives across its largest cost centers to find savings, efficiencies, and better ways to deliver services to our residents and guests.
The Borough is and will be consistently reviewing its capital spending needs to capitalize and restructure appropriate expenses. Long-term equipment and investments in our Borough, street, water and sewer infrastructures can be financed with low-interest debt.
By strategically restructuring the Borough debt, the Borough can accelerate street paving projects, as well as needed water and sewer investments.
East Stroudsburg and Stroudsburg comparisons:
1. East Stroudsburg has 10,000 residents, Stroudsburg has 6,000 residents.
2. East Stroudsburg has 9 more miles of Streets.
East Stroudsburg leads Monroe County in non-taxable properties:
1. ESU: East Stroudsburg proudly hosts East Stroudsburg University. With 5,400 students ESU occupies 258 acres in the Borough with 57 buildings, including residential housing for 2,970 students.
2. Pocono Hospital: East Stroudsburg proudly hosts Pocono Hospital, the only fully accredited Level III Trauma Center in Pennsylvania. With 264 beds, Pocono Hospital is Monroe County's only on-site open-heart surgery program as well as a Level IV Neonatal Intensive Care Unit.
3. Cancer Center: East Stroudsburg proudly hosts the Dale and Frances Hughes Cancer Center and many other medical facilities.
4. Affordable Housing: East Stroudsburg proudly hosts 7 affordable housing complexes, 120 Section 8 apartments, 90 public housing units, and 119 approved low-income housing units.
TAX MILLAGE: The proposed East Stroudsburg millage would be 7.9654 mills.
1. The proposed Stroudsburg millage will be 11.202 mills.
2. The Stroudsburg millage rate is 3.2366 mills higher than East Stroudsburg.
3. For a property assessed at $100,000, East Stroudsburg taxpayers pay $323.66 LESS.
4. A property assessed at $100,000 is worth ~$265,000.
WATER RATES: East Stroudsburg's base water rate will be $60/quarter in 2025.
1. For Stroudsburg and Stroud Township, the Brodhead Creek Regional Authority base water rate is $63.55.quarter
SEWER RATES: East Stroudsburg base sewer rate will be $45/quarter in 2025.
1. Stroudsburg base sewer rate is $55/quarter.
2. Stroud Township base sewer rate is $170/quarter.
SCORECARD:
1. East Stroudsburg
  1. Tax Millage: 7.9654 Mills, 40.6% lower
  2. Base Water: $60/quarter, 6% lower
  3. Base Sewer: $45/quarter, 22.2% lower
2. Stroudsburg
  1. Tax Millage 11.202 Mills
  2. Base Water: $63.55/quarter
  3. Base Sewer: $55/quarter
Despite having 40% more residents, 9 more street miles, and major non-taxable institutional impacts, East Stroudsburg tax millage is 40.6% lower than Stroudsburg taxes. East Stroudsburg water rates are 6% lower and our sewer rates are 22% lower than Stroudsburg.
In other words, taxes, water and sewer rates are much lower in East Stroudsburg.