Thursday, November 1, 2007

Big Decisions

Over the next couple of weeks, the Board of Education has two critical and interconnected decisions to make. These two decisions will affect our community for years to come. I think it's a crock that these decisions are being timed so as to fall after the election, so that neither Doug Maggied nor Dick Hammond can be held accountable. The decision will also be made before the new Board is seated in January 08, meaning that one or two of the members might cast their votes as lame ducks.

The first decision is to reach agreement on a new contact with the Hilliard Education Association, the labor union representing our teachers and other staff members. Salaries and Benefits represent 90% of the total operating expenses of the district, projected by the Treasurer to increase from $121 million in 2007 to $172 million in 2012. This $52 million increase represents 96% of the total increase in spending by the end of 2012, and calculates out to a compound annual growth rate of 9.3%.

I attended the Board meeting this week (11/29, at Hoffman Trails Elementary), and was the only member of the public who rose to address the Board during the time for public comments. My request was simply this: Before the Board takes the vote to ratify the HEA contract, please publish the contract on the district website so as to give the public a chance to review, analyze and comment. I asked the Board to seek community input prior to their decision. There was no response from the Board, and my guess is that they will ignore my request.

The Ohio Sunshine Laws allows the Board to use Executive Sessions when "preparing for, conducting, or reviewing negotiations or bargaining sessions with employees." However, they must vote on the contract in a meeting open to the public. It is appropriate, in my opinion, for the Board members to comment on their reasons for believing the contract is a good deal for the community.

The second decision is a derivative of the first: How large will the next operating levy have to be - the one that will be on the ballot in the Spring?

More than six months ago, I wrote that based on my analysis of the 2006 Treasurer's Five Year Forecast, that this levy would need to be on the order of 16 mills. However, the Board has in mind that it will be less. The Treasurer has even stated that "It will be less than 10 mills."

At this week's Board meeting, the Treasurer presented his new Five Year Forecast. As of the time of this posting, this new forecast is not available online, but Mr. Wilson was good enough to give me a hardcopy.

The news isn't getting better. Revenue and spending continue to diverge, so the numbers for 2012 look worse than 2011. The accumulated funding shortfall by the end of 2012 is now projected to be on the order of $111 million, with a burn rate of $45 million/yr.

I've built a spreadsheet*, using the Treasurer's numbers, to estimate the number of mills required to raise this much money. A key factor is one I got from the Franklin County Auditor's office: 1 mill of taxation raises $2.4 million based on the April 2007 tax base. Here's what the analysis suggests:

One option is to ask the community to take on a single levy that will provide enough funding for six years (assuming the State of Ohio doesn't further cut our funding). To ensure that our General Fund Balance remains at least 10% of our operating expenses, which is current Board policy, the levy would need to be 17.7 mills.

Another option is to pass one levy this Spring, knowing that another levy will need to go on the ballot in May 2011. Let's assume that both levies are for the same millage. Again, to ensure that the General Fund Balance stays at least 10% of operating expenses, both levies would need to be 11.9 mills. One can mistakenly believe this sounds better, but what it means is that we would be paying 11.9 additional mills for the first three years, then 23.8 mills for the last three years.

But here's what I believe the Board is thinking: Let's get as small a levy on the ballot as we can in 2008, and we'll put off the bad news not only until after this election, but after the upcoming levy vote as well. Their fear is that if the levy request is too large, it won't pass, and they would rather be underfunded a couple of years out than in a crisis next year.

So what if a 9.5 mill levy were put on the ballot on May 08?

The first consequence will be that our General Fund will be exhausted by the end of 2011. Another crisis will be looming. To restore the General Fund Balance to 10% of operating expenses, we would need to pass another levy in 2011 for 16.4 mills. As a consequence, from 2011 forward, we will be paying nearly 26 mills more than now.

That 26 mills represents a 61.5% increase in our current property taxes.

Does that wake you up?

The Board of Education is elected to serve the people of the community, acting as our agents in the management of the school system. Unfortunately, our Board of Education has developed a mindset over the years that their mission is to manage the community and manipulate us into passing levies by appealing to our emotions (Do you love your kids? Then vote for the levy).

By failing to educate our community about school funding, and by not being open and clear on financial matters, our School Board will find that the community will be suprised and shocked when the truth of our funding mess comes to light. It will take years to recover from the resulting loss of trust...

... if something doesn't change - right now.

I'd like to drive that change from a seat on the School Board. If you agree, please tell all your Hilliard friends to make the effort to get to the polls next Tuesday (11/6), and cast a vote for PAUL LAMBERT.

* If you would like a copy of this spreadsheet, email me at

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