Saturday, March 29, 2008

Teacher Pay Comparisons

KH, in an earlier comment, posted a link to a table of Ohio public employee contracts that have been submitted to the Employee Relations Board. This is a goldmine of information which I've been sifting through over the past couple of days. Thanks, KH.

Although you can look up the contracts for city employees like police officers and firefighters at this site, my focus is on data about the teachers' contacts of the same 19 central Ohio school districts the Hilliard Northwest News chose for its comparison of administrative costs.

One of the things I found was that the teachers' contracts are all constructed with much the same provisions and language. This is not surprising as all the local teachers' associations are also members of the Ohio Education Association, and the OEA no doubt advises the local associations on these matters. In fact, it is the primary function of the OEA to do so.

They are also maddeningly different when you're trying to do comparisons, especially in regard to salaries. As described in earlier articles, the basic pay grid for the teachers has two dimensions: educational level (columns); and years of service(rows). But in that basic structure, there can be all kinds of variability. In fact, no two school districts do it exactly alike.

All of the pay grids have a column for teachers with a Bachelor's degree and zero years of service, so that's a good place to start. The average salary of such a teacher is $34,916 (all data for 2007-2008 school year). Hilliard teachers start out for a little more - $35,107. The highest starting salary of these 19 schools is $39,322 at Upper Arlington, and the lowest is $31,072 at Big Walnut. The median is $34,868 at Westerville, meaning nine start for more and nine start for less.

Click to Enlarge

All of the districts also have a column for a teacher with a Master's degree. I picked 10 years as the length of service to make the comparison. A Hilliard teacher would make $59,050, again a little above the average of $58,828, but this is the median (half pay more, half less). Max is again Upper Arlington at $68,810 and the min is $50,026 at Big Walnut. But notice that the range is widening. At the Bachelors level, the gap between the highest and lowest pay is $2,133. At the Masters level it has widened to $4,374.

I picked Masters + 15 additional hours and 15 years of service for the next comparison point: Hilliard = $76,238; average = $70,063; median = $70,616; max = $81,200 (UA again); min = $59,503 (Big Walnut again); range = $5,473. Hilliard has the second highest salary at this data point.

For the last data point, I picked PhD and 25 years of service. But I need to note that only two districts, Upper Arlington and Bexley, recognize a PhD on the pay grid. Seven of the districts top out at Masters+30, and another seven top out at Masters+45. One tops at Masters+20. Interestingly, Hilliard tops out at the lowest level: Masters+15.

There is also a lot of variability in the ways years of service are handled: the so-called step increases. The Hilliard grid has steps for years 0-15, then 20 and finally 23 years. Other districts have different years 'filled in' and so give step increases more frequently in some cases, and less so in others. While the effect of these differences can be analyzed - and the effects are significant - I've not attempted to do that for this article.

So when I say I've picked PhD/25 yrs for the last anchor point, it means the number I'm using for Hilliard is actually the salary for Masters+15/23yrs, because that's as high as the grid goes for Hilliard. Here are the numbers:

Hilliard: $82,695 (MA+15/23yrs); average = $79,557 (so we're still more than average); median = $80,005; max = $91,283 (UA, PhD/30yrs); min=$64,257 (Hamilton Local, MA+30/15yrs). Hilliard falls to 8th place in this category - one above the median. This is primarily because of the the Hilliard pay grid stops at MA+15 and 23 years of service. Every district that pays more at this point has a grid that recognizes educational levels of MA+45 or PhD and service steps past the 23 years where Hilliard stops.

The other significant number in the contract is the contribution the teacher makes to the cost of health insurance - one of the key sticking points in the current negotiations with our teachers.

In most cases, the teachers' contribution is expressed as a percentage of the premium that will be paid. The problem with comparing percentages is that not every district pays the same dollar amount for their premiums. So 90% of one district's premium can be less than 80% of another's if the latter district has a very high premium. This might be the case in Hilliard by the way, as the games our leaders - in both the Administration and the Union - have played with the insurance companies by changing carriers every year in search of the lowest rates has come back to bite them: No other carrier would bid on our business and our current carrier has, not surprisingly, raised their rates 30%.

Nonetheless, the numbers are interesting. In most cases, the contract language is simple - the Board pays x% of the premium and the teacher pays the rest. Some distinguish between individual and family coverage, so I'm using family coverage for the comparison.

Of course in Hilliard, the Board has in the past paid 100% of the health insurance premiums and the teachers have paid nothing. There is only one other of these 19 districts who do the same, and that's Groveport-Madison. However Groveport-Madison pays their teachers 7% to 13% less than we pay ours, with varying degrees of difference depending on education and service.

On average, the comparison districts pay 83% of the premium, leaving the teacher to pay 17%. Southwestern pays only 65%, the lowest of the group. Reynoldsburg has a structure where the teacher pays $85/mo and the Board pays the rest. Whitehall teachers pay 30% of their premium, but it is capped at $245/mo. Bexley's formula is a little more convoluted, but the general idea is that the more the increase in premiums, the higher percentage the teacher pays.

The most obvious observation is that we have been paying both above average salaries and 100% of the health insurance costs. Our community has said that needs to change - the teachers need to start contributing to health care. And the teachers have said they would. The question is now much, and who's taking the risk if the premiums go up.

So how do we solve this contract impasse with the teachers? It turns out that there are lot of options just in terms of tweaks to the salary grid. For example:
  • The Base Salary (BA with no experience) could be raised. The effect of this is to raise all salaries because they are all indexed off this number. This number is usually the one that gets changed in contract negotiations, and is the one often reported as 'the raise' - erroneously of course because you also have to take the step increases into account.
    In the just-expired contract, the Base Salary was increased 3.65% each year. The agreement signed by the OAPSE members called for a 3%/yr increase to the Base Salary, which is what I understand has been offered to the teachers as well.

    Changes to the Base Salary benefits the highest paid teachers most because their current salaries are greater than the salaries of the newer teachers, making an across-the-board percentage increase mean more in terms of dollars for the highest paid teachers.
  • The size of the step increase can also be adjusted. It is 4.15% in the current contract, and to my knowledge, there has been no discussions in regard to changing it. However, with a 3% increase to the Base Salary, maybe a reduction to the step increase is appropriate.

    This would affect the younger teacher most, because they receive step increases more often (see next point).
  • The gaps in the steps can be filled in. Right now step increases go only to teachers who have 0-15 years of service, or exactly 20 or 23 years of service. In exchange for dropping the size of the steps, we could make years 16-19 eligible. Or maybe 21 and 22. Or maybe extend the step program all the way to 25 years.

    The benefit in this case is to the most senior teachers, because they would get steps in years that were formerly skipped.
  • Add more educational levels. Why don't we currently recognize educational levels in excess of Masters+15? I suggest we add both Masters+30 and Masters + 45. This encourages the teachers to get additional education, which should benefit our kids. It also transfers some of the burden for gaining raises to the teachers themselves.

    However, this should also mean that the current Masters+15 column should be decreased somewhat, as our current Masters+15 scale compares to the Masters+30 and Masters+45 columns of other districts.

    This kind of adjustment obviously benefits the teachers with the most education.
Which one(s) should we use?

It probably depends on the demographics of the teachers (and perhaps to some degree, the demographics of the union leadership, who are also teachers and work under the same contract). If the most influential voices in the union are the union leaders and the most senior teachers (which is often the case), they would favor filling in the step schedule, and might agree to a smaller increase to the Base Salary. Of course, this hurts the young teachers who are getting step increases anyway and need the boost from the Base Salary increase.

I expect that the most targeted increase approach would be adding educational levels, like Masters+30 and Masters+45. It would affect a small fraction of the teacher population, especially since there has been no pay incentive to reach these levels beforehand. But could be made available to a teacher regardless of length of service.

There are lots of options - many more than those discussed here. The only thing we know is that the community expects the rate of salary increases to be trimmed and for the teachers to starting contributing to their healthcare cost. The teachers have agreed to do both in principle, but we're hung up on details.
Maybe looking at some of these other options will help.

Thursday, March 27, 2008

Administrative Costs

More than one person has commented about how it was interesting that these two stories ran side-by-side on page 8A of the Hilliard Northwest News, March 12, 2008:
  1. "Budget cuts loom after defeat of district's operating levy"
  2. "School board approves raises for administrators"
I wrote an article last October titled "Bad Optics" - discussing how sometimes things which are okay can look bad. This seems like it might be another one of those cases. At the very least is seems that it was poor judgment on the part of the School Board to make this one of their first agenda items at the first meeting after the election in which an operating levy had been soundly defeated. Did they even think about it in these terms? None of the Board members could have been pleased to see page 8A with those two headlines side by side, and it didn't have to come out that way.
Could it be that the administrators' raises were somehow tied to the levy outcome? Perhaps promises were made like "We'll give out X dollars in administrative raises if the levy passes, but much less if it doesn't." We may never know because I suspect this is the kind of thing the Board discusses (inappropriately I believe) in Executive Session instead of during their Eight Minute public meetings.

Then on March 26, Hilliard Northwest News ran another story about administrative costs, in which the Administrators and School Board tried to defend our district's spending by saying it is the second-lowest of the 19 school districts listed.
Nice try, but bad analysis.
The assertion of the school leadership is that they do a good job of controlling administrative costs because our cost-per-student is the second lowest of this set. I disagree with the premise of that assertion. In December 2006, I wrote an article called "Fixed Costs, Variable Costs" which dealt precisely with this situation.
The problem is that doing per-student ratio analysis makes sense only for those cost elements which you expect to change as a direct result of a change in the number of students. For example, the number of teachers clearly must increase with the number of students. And indeed it has, with the ratio remaining approximately 20:1 for the past decade. The number of students would probably also influence the number of bus drivers and bus mechanics, and the number of guidance counselors.
Other costs are less related to the number of students, and more to the number of buildings. The more buildings we have, and the larger they are, the more people we need on the maintenance, janitorial and groundskeeping teams. For example, had we expanded Davidson and Darby instead of building Bradley, we would not need to increase the size of our high school building support team by 50%.
But other costs aren't related to the number of student or the number of buildings. Every school district must have one Superintendent and one Treasurer. After that, the number of administrators a district employs is mostly, if not entirely, optional. One Director of Business Affairs and one Director of Technology is sufficient - smaller districts have neither. There are a bunch of these kinds of costs.
So does that mean that the ratio of Administrative-Costs-per-Student (Admin$/Student) is meaningless? No, but it doesn't mean what many people assume. For example, if the number of students is growing, and the Admin$/Student ratio stays constant - it means the Admin costs are going up at the same rate as student growth, and my suggestion to you is that this might not be a good thing. If many administrative jobs are one of a kind, unrelated to student growth, we should expect the Admin$/Student ratio to go down as the district grows.

By focusing on the Admin$/Student ratio, the school leadership is training us to think it is okay to let administrative costs to grow with the number of students. In other words, if we get 500 more students - an increase of about 3% - we should expect Admin$ to go up 3% as well, which by the way lines up nicely with the kinds of raises which were given out to administrators this month.

So let's look at Admin$ in terms of absolute dollars: If our cost is $941 per student and there are 14,217 students (2006-2007 data used), our total Admin spending is $13.4 million.

Upper Arlington spends 30% more per student than us on Administrative costs: $1,220. However, with only 5,492 students, their total Admin$ is $6.7 million - half of what we spend. Bexley gets by on $2.8 million (20%). New Albany, $4.8 million (36%).

What about other districts of our size? Westerville spends a little more, both on a per-student basis ($1,061) and in total ($14.3 million). Dublin spends a little more per student ($1,049), but almost exactly the same as us in total.

What about Columbus City Schools? I found these numbers very surprising. At 53,674 students - 2.75 times larger than Hilliard City Schools - their Admin$/student is the highest in the region at $1,676, and in aggregate they spend $90 million just for Administrative costs. That makes no sense to me - economies of scale should be the greatest in the largest organizations. We shouldn't say we don't care either - Columbus City Schools is subsidized by the state taxes we all pay. But it's not something we can change easily, and it is not our top priority right now.

But we can demand that a closer look be taken at our own administrative spending. Forget the cost/student ratio - it's a guide at best and more likely serves as a smokescreen for the truth. Instead we need to look at each and every administrative position and expense, and decide whether it is necessary or 'nice-to-have'. These are tough decisions, and it's people's jobs we're talking about, so this has to be done with compassion.

But this is where we have to start if the mission is to cut expenses - which I believe is the mandate given to the School Board by the levy defeat.

By the way, if you rank central Ohio school districts by total Administrative spending, we come in fourth from the top, not second-to-last.

(The numbers I used in this analysis are available here)

Thursday, March 20, 2008

Teacher Pay (got your attention?)

This note is prompted by a comment by Jim Fedako in yesterday's post "You Think We've Got Problems." Mr. Fedako is a resident of the Olentangy Local School District, and a former member of their school board. Mr. Fedako said:
The current system benefits the staff as they continually receive salary and benefits increases twice that received by those in the private sector... Public schools continue to increase costs at an unsustainable rate.

Mr. Fedako believes the root of school funding problems is teacher pay. I disagree. I think it's ignorance and apathy (don't know / don't care). Quite a few people in our community have the mistaken belief that I am critical of teacher pay. However, at no time have I said teachers are overpaid.

From the beginning, the mission of this blog/website has been to educate and inform the people of our community about the economics of our schools (a task which should be a primary goal of our school leadership), as well as the political landscape as it affects our schools. The hope is that with better, and more accessible information, the people of the community would come together to fix economic problems, not just complain about them.

One of my very first blog articles, written over a year ago, described what I had just learned about teacher compensation. Prior to this article, I don't recall anyone saying that more than 85% of the operating budget was spent on salaries and benefits for the teachers, administrators, and staff. In fact, at a School Board meeting not long afterward my article was posted, I heard a school board member ask the Treasurer, during a regular meeting, if it was true that 85% of the budget was spent on salaries and benefits.

Since that time, I've learned more and more about how teacher pay works, and have written several articles describing what I've learned (6/30/07, 10/18/07, 11/22/07). In none of these articles do I say I think teachers are overcompensated.

But I'm not happy with the system.

A few years back, I remember a TV special about the diamond business. It starts in the mines (talk about being undercompensated, think about these miners), and ends in the jewelry store. The stuff that goes on in the middle is a black box to most of us.

One role was that of the diamond dealer. For a long time, the diamond market was controlled by deBeers, and they made all the rules. One of the rules is that not just anyone can buy raw, uncut diamonds from deBeers - you must be authorized by deBeers, and there aren't many people authorized to do so. But these dealers don't just go to some wholesale store and pick out the diamonds they want to buy. Instead, they get a call from deBeers saying their "box" is ready for pickup, and that the price is $1 million or whatever.

That box is about a quarter the volume of a shoebox, and holds a certain number of total carets of diamonds. The catch is, the wholesaler doesn't get to look inside the box before he hands over his money. He doesn't know if it's 100 stones or 1,000, or if they're large or small. The rule deBeers has set is: Buy the box for the price we say - sight unseen - or we'll terminate your status as an authorized buyer.

So if you want to be in the diamond wholesaling business, you buy the box. One dealer opened his box for the TV cameras. What he found was about 100 stones, some pretty good sized but potentially flawed, some around one caret in their raw form, and some smaller than that. From that point, it would be up to the skill of the diamond cutters to maximize the value of the contents of the box. The wholesaler said sometimes he made a lot of money, and sometimes he didn't even recoup his cost. This box looked promising, he said.

I think this is a lot like the way our employment relationship with the teachers works. Their pay is based entirely on educational level and length of service, and the compensation is spelled out in one big contract that treats the teachers as an amorphous mass rather hundreds of unique individuals. Like the diamonds in the box, some teachers are worth a lot, and some not so much. Yet we pay the same per caret for both kinds.

One often hears the statement that teaching is a vocation, and they don't do it for the money. But they don't do it for free either. The current and strained contract negotiations between the School Board (representing the community) and the teachers' union bears witness to that.

Are there people in the community who believe teachers are overpaid? Absolutely. Are there some who believe the teachers are underpaid? I'm sure there are. The vast majority of us are, I believe, unable to form a clear position on this. And I think it has something to do with the collective bargaining process, which is much like buying that box of diamonds without getting to look inside.

Our economy is in a time of stress right now. The collapse of the housing market has left many of us in a situation where our largest investments - our homes - have gone down significantly in value. We don't even know how much, because many houses sit on the market for months - even years - seeking buyers as prices continue to drop. And the rapidly rising prices of oil and corn are driving up prices for virtually all the things we buy. Few of us in the private sector are seeing increases in pay to match the price escalation. Luxuries are being pushed out of the budget as we become cautious with our resources. If you haven't already done so, I again recommend watching this interview with Elizabeth Warren to hear a good discussion of the precarious situation of the American middle class.

So teachers, I hope you understand it when those of us in the private sector express a little envy toward the deal you have: decent salaries, steady increases, excellent health coverage which up to now has been free to you, and promise of a nice pension and the ability to retire in your 50s. While few of us have the skills and demeanor (and courage!) to walk into a classroom every day as you do, more than a few of us would trade our employment arrangement for yours.

What do you think the diamond dealers would do if deBeers suddenly doubled the price of "the box?" I think one reaction would be for the dealers to say "Not unless we can look inside first!" They would want to be able to take the inferior stones out of the box and replace them with superior stones.

That's all I've been asking. As the cost of the teacher corps continues to go up, especially in relation to the private sector, I want someone to look inside the box and replace the inferior members with superior members. We all know there are ineffective teachers in the system. Our kids have had some of them. We remember the deadwood teachers from our own school days. And yes, I have no doubt that administrators can be divided in the same way.

There are two groups of people who can carry out this pruning activity.

One group is the administrators. As the owners and customers of the school district, it is reasonable for the people of the community to expect that the administrators would carry out this function on our behalf.

The other is the teachers' union itself - the Hilliard Education Association. One of the roles of a professional association is to ensure that its members live up to its standards. I complained to a lawyer friend once that his kind were responsible for driving up the cost of healthcare because of all the malpractice lawsuits. His rebuttal was that it was bad doctors who were driving up the cost of healthcare, and that was because the professional medical associations weren't doing enough to get them out of the system.

While not everyone will agree with my friend, his point has merit. In addition to all the good things they do, professional associations and unions can serve to protect individuals who have no business being in the profession.

If the HEA wants to show itself as compassionate, then take the steps necessary to help ineffective teachers shift to a different career path. But take seriously your role as 'keeper of quality' within your ranks.

And if you want the community to continue to underwrite your compensation expectations, you must assure us that the money is being well spent - not in aggregate, but in every classroom and during every hour.

Wednesday, March 19, 2008

You Think We've Got Problems...

While the leaders and citizens of our community struggle with a 9.5 mill permanent operating levy, imagine being in the position of New Albany-Plain Local Schools right now.

Half of their operating funds are generated by a single 20.7 mill emergency levy that expires in December 2009. And because they must deal with the same constantly-increasing personnel costs we do - and every other district does, they think they might have to put a 27 mill levy on the ballot just to keep up.

Can you imagine trying to get a 27 mill levy passed?

Without doubt, their leaders will make the point that this isn't all new taxes - that 21 mills of it is to replace the expiring levy, and only 6 mills of tax increase. But if New Albany is like many communities, many folks won't understand all the vocabulary of levies, and will just hear the 27 mills and reject it out of hand.

They have a real poker game on their hands.

One approach might be to break this levy up into pieces: 21 mills for the replacement and 6 mills for the increase. Then the voters could feel like they have a little more control. But the risk is that the people might vote down the 21 mills and pass the 6 mills - which is perhaps the worst outcome. A little more money does no good, yet voters will feel they're "done their part."

What about three 10 mill levies? Might be the same problem, but my guess is that they could get two of three passed. Twenty mills is better than nothing. I'd make them permanent levies this time.

They're also considering an income tax. New Albany is a pretty affluent community, so a small income tax could still generate a lot of money. An income tax also has the feature that it automatically increases with income, which can be pretty handy in times of inflation.

Ohio Law allows for two kinds of school income taxes. One is based on the full Adjusted Gross Income (the bottom line on the front page of your 1040). The other is an Earned Income Only tax, which excludes interest, dividends, pension income, Social Security and the like, and is targeted to protect senior citizens on fixed incomes. And because senior citizens are the voter group most likely to turn out, giving them an option to swap property taxes for essentially no taxes is a winning proposition.

Note that excluding interest and dividends not only benefits senior citizens, it also helps wealthy individuals who receive a lot of their income from investments. This is an extreme case, but take Les Wexner for example: Mr. Wexner and his wife currently pay $740,000 per year in school taxes for their estate (the total property tax bill is over $1 million/yr). About half of that - $370,000/yr - goes to New Albany's permanent 20 mill levy, and half to the levy that is about to expire.

Les Wexner is, of course, founder and CEO of Limited Brands. According to Forbes, Mr. Wexner is paid about $5 million/yr, so a typical 1% school income tax would generate $50,000/yr. To generate the same $370,000 that the expiring levy generates, the earned income tax rate would need to be 7.4%. Slim chance of that passing.

Mr. Wexner also owns about 8.6 million shares of Limited Brands stock, which currently pays 60cents/share in annual dividends. That's another cool $5 million/yr. But with an earned-income tax, his dividend income would be shielded from taxation. Bottom line is that substituting a 1% earned-income tax for the expiring levy would save Mr. Wexner about $320,000 per year.

Again, this is an extreme example, but the big numbers help make the point: an earned-income tax levy may be easier (not easy) to get passed, but it might not generate the outcome one expects. It will protect seniors with low incomes from pensions and retirement plans, and relieve them from the crushing effect of ever-increasing property taxes. Most people would support that.

But in the same breath, it will benefit the most wealthy individuals in the district, who tend to have very expensive homes (the Wexner estate is appraised at $47 million) and and substantial portion of their income from investments.

Where does the burden go?

The same place as always: The middle-class, two-income family who has mortgaged themselves to hilt to buy a nice house in a nice community in a good school district. The high home value means high property taxes. Shifting to a earned-income property tax doesn't change things much because most middle-class folks don't have much investment income outside their already tax-sheltered IRAs and 401(k)s. Except that the taxes formerly paid by the senior citizens and the most wealthy now have to be paid by the middle class folks as well.

By the way, I recommend listening to this interview with Elizabeth Warren. As a Harvard Law professor, she started a research project trying to find out if all the folks filing for bankruptcy were just taking advantage of the system (her belief at the time). What she found was that the backbone of America - the hardworking middle class - is in real trouble. Her punch line? That because of the way schools are funded (via property taxes) Americans have to mortgage themselves to the limit be able to afford a house in a good school system for their kids.

The only folks winning in this game are the land developers and the homebuilders. I for one am not sorry to see them suffering hard times right now, especially given the role some played in the sub-prime mortgage debacle. But I also recognize that the homebuilding industry propped up lots of other sectors and provided lots of jobs (and drew lots of immigrants to central Ohio).

I don't know of any districts which have actually exchanged a property tax revenue stream for one based on income taxes. The more common configuration is a mixture of the two. There are already three Franklin County districts who do this: Bexley (0.75%), Canal Winchester (0.75%), and Reynoldsburg (0.50%).

New Albany is in a jam. Do they go 'all in' and try to get one big 27 mill levy passed? Is it time to bring an income tax into the mix? How much of each?

We may face a choice like this in our future. It's not going to be any easier.

Tuesday, March 18, 2008

A Tale of Two Districts

An anonymous commenter on a previous post suggested comparing the financials of the Lakota Local School District in Butler county with those of our own school system. Lakota is about ten miles outside the I-275 outerbelt of Cincinnati, and like us, a community on the boundary of exurban development and agricultural land.

Some very interesting statistics have emerged from that comparison which I believe merit discussion as a separate post. So here goes (go here for an explanation of terms):

From the Five Year Forecasts
2007 Data
Enrollment: Hilliard 15,029 ; Lakota: 17,782
Total Revenue/student: Hilliard $9,571; Lakota: $8,513
Total Expenses/student: Hilliard $9,193; Lakota: $7,569
Salaries & Benefits as % of Expenses: Hilliard: 88%; Lakota: 75%

So one observation is that our school district spends a much larger fraction of its budget (13% more)- and a good deal more per student - on Salaries and Benefits.

2005 Data

Operating Expenditures (per student)

Administrative: $941
Building Ops: $1,610
Staff Support: $391
Pupil Support: $1,061
Instructional: $6,231
Total: $10,234

Debt Payments: $3,774

State Report Card: 28/30, 100.2, Continuous Improvement, AYP not met

Administrative: $1,006 (107% of Hilliard)
Building Ops: $1,783 (111%)
Staff Support: $380 (97%)
Pupil Support: $828 (78%)
Instructional: $4,521 (73%)
Total: $8,518 (83%)

Debt Payments: $654 (17%)

State Report Card: 29/30, 102.5, Excellent, AYP not met

and some other Districts I thought might be interesting:

Administrative: $1,049 (111%)
Building Ops: $1,935 (120%)
Staff Support: $583 (149%)
Pupil Support: $1,533 (144%)
Instructional: $6,344 (102%)
Total: $11,444 (112%)

Debt Payments: $1,436 (38%)

State Report Card: 29/30, 103.7, Excellent, AYP not met

Administrative: $841 (89%)
Building Ops: $1,798 (112%)
Staff Support: $173 (44%)
Pupil Support: $789 (74%)
Instructional: $4,906 (79%)
Total: $8,507 (83%)

Debt Payments: $2,139 (57%)

State Report Card: 29/30, 102.8, Excellent, AYP not met

Dawson-Bryan (Lawrence Cty, one of the poorest districts in the state)
Administrative: $922 (98%)
Building Ops: $1,931 (120%)
Staff Support: $149 (38%)
Pupil Support: $1,372 (129%)
Instructional: $5,522 (89%)
Total: $9,896 (97%)

Debt Payments: $137 (4%)

State Report Card: 23/30, 94.0, Effective, AYP not met

Some observations from these data:

  • Lakota spent $1,716 less per student on Total Operating Expenses than Hilliard, and almost all of that was in lower Instructional spending.

  • Dublin spent $1,210 more per student for operating expenses, but it was primarily for Staff Support and Pupil Support. Their instructional expenses were identical to ours.

  • Olentangy spent $1,793 less for operating expenses than we did, and were lower in every category except Building Operations, which was $188 higher.

  • Dawson-Bryan, which is almost completely funded by the State of Ohio, spent about the same in total for Operating Expenses as us, but only 89% of their expenses were Instructional. They had much higher Building Operations and Pupil Support expenses than us.

  • The most signficant difference across all the districts compared was how much was spent for debt payments. In 2005, Hilliard spent $3,774 per student, while Lakota spent only $654. Dublin was $1,436, Olentangy $2,139 and Dawson-Bryan $137.

One could spend hours on these comparative data of course. Some will argue that our expenses are high because of the large immigrant population in our schools. That's a difficult conclusion to support with these data, mostly because there is not sufficient detail breaking costs down by immigrant and non-immigrant populations.

For example, I believe our new neighbors from Africa are lumped into the category "African-American," meaning there are kids in that category from families who have been in America for hundreds of years as well as kids who just got off the plane from Africa last week. Same kind of story for each grouping: The category 'White' includes descendents of the Mayflower and Eastern European kids who are first generation in America.

I did find some interesting comparisons in the salary schedules however:

For a teacher with only a Bachelor's degree and no experience:
Lakota: $36,036
Hilliard: $35,107 (-2.6%%)

Master's degree and 10 years of service:
Lakota: $52,433
Hilliard: $59,050 (+12.6%)

Master's + 15 and 23 yrs of service (top of the Hilliard pay grid)
Lakota: $71,172
Hilliard: $82,695 (+16.2%)

PhD and 25 yrs of service (top of the Lakota pay grid)
Lakota: $77,478
Hilliard: $82,695 (+6.7%)

... in other words, a Hilliard teacher with a Masters+15 and 23 yrs makes 6.7% more than a Lakota teacher with a PhD and 25 years of service. And if I've read their contract correctly (see Article XV), the Lakota teachers pay 10% of their health insurance premiums. However, their health insurance is provided through the Butler County Health Plan, which is a self-funded insurance program for all school employees in the county.

That seems like a pretty good idea - my employer did this at one point and saved a ton of money. Our company still carried a 'stop-loss' policy with a multi-million dollar deductible, but up to that point, healthcare providers were paid directly by the company. The program was administered by one of the insurance companies (for a fee), so to an employee it felt the same as being covered by a big insurance company. The difference was that it was the company's money at risk, not the insurance companies. If Butler County pull together a self-insured system, it sure seems like we could here in central Ohio - especially after this 30% premium increase we got this year.

But here's the catch - you must have a significant cash reserve to start so you can prove to the state labor regulators that you have enough money to pay claims. After the startup, the withholding from the employees should offset the claims, but you need that seed money. Unfortunately our Board has run our cash balance down to about zilch, and with the failure of the levy, cutbacks have to be made to balance the books.

So this isn't an option for us right now, but it could be right after we pass the levy and get a slug of cash in the bank. But we would have to start getting ready now, including putting any needed provisions in the employee contracts.

This has been a fruitful exercise. Thanks whoever you are for the suggestion.

Monday, March 17, 2008

What I Mean by a Charter School

I've mentioned a few times lately that I support the notion of public schools funded via a voucher system - as envisioned by the late Nobel award winning economist, Milton Friedman. Unfortunately, we also use the term 'vouchers' in the context of the half-baked charter school system we have here in Ohio. These two concepts are not the same. In a dialog with Dave over at Into My Own, I wrote the following comment that I think might clarify what a Friedman voucher system looks like:

I have been a proponent of a voucher program ever since reading Milton Friedman's writings on the subject. In this case, I am talking about a universal voucher program, where every kid gets a voucher representing 100% tuition, and the voucher can be spent only at an accredited school.

The voucher system in Ohio is a bastardization of the concept -- badly conceived and poorly implemented. The funding is screwed up, giving the charter school only a fraction of the per-pupil money a public school gets. And the licensing is deficient - there are many examples of people running charter schools who have no business being in the business - because they think it's a business and not a vocation.

The basis for my belief in vouchers is simple: if each individual family can make their own rational decisions where to send their kids to school, then only schools that deliver what is needed will get kids and their money. Effective schools will thrive and ineffective schools will die.

This is the core concept of a free market system.

There needs to be standards of course. A school must be licensed by the government to accept vouchers as payment (and to be allowed to submit vouchers to the government in return for cash). To be licensed, the school must show that it has faculty accedited and licensed to teach, it must offer a curriculum that meets standards set by the State, and it must demonstrate that it is effective in educating kids in the basics.

A charter school could not be a for-profit entity, as is currently allowed in Ohio; it must operate as a not-for-profit. Many people are confused about the difference. The important difference is that a not-for-profit does not have investors or owners, so no one gets to pocket any profits. All the money that comes into the not-for-profit organization must be used for the stated purpose of the organization - in this case, to educate our kids.

I do not propose any change in the way teachers are licensed or schools are evaluated in terms of performance. However, there would be some teeth behind the evaluation: a school which fails to perform at "Continuous Improvement" or better, for example, would lose its license to accept vouchers.

Any kid may take his/her voucher and use it to pay for 100% of their education in any school licensed to accept vouchers. A regional transportation network would be developed to allow a kid to attend any school within a reasonable distance (e.g. 25 miles) at no cost.

I think the outcome of such a system would be a mixture of boutique schools - that have perhaps only a few hundred students - all the way to regional organizations which operate many buildings and serve many grade levels. We have one of these boutique schools here in Columbus. It's called Metro High School. It specializes in math and sciences, and accepts only 100 kids for each of its four grade levels (9-12). Right now, each central Ohio school system is given a quota, based on the current size of the system (i.e. Columbus City Schools with 56,000 students gets the most slots). It has no competitive sports or performing arts facilities because it chooses to allocate all of its budget to basic education requirements and to advanced study in math and science.

With 400 students and vouchers worth $10,000/student, this school would have a budget of $4 million/yr. Assuming a student/teacher ratio of 20:1 and $75,000 in salary an benefits, payroll would be around $2 million once a few administrators and staff are added. Figure a $10 million building, and the annual financing and operations cost would be about another $1 million. That leaves $1 million/yr for supplies, transportation, equipment and all kinds of good stuff. The same kind of philisophy could be applied to a school specializing in arts, or gymnastics, or foreign language/culture studies (imagine a school in which only Mandarin Chinese is spoken, for example).

Another configuration might be a regional school organization that can serve let's say 50,000 kids. All those vouchers would generate $500 million of income for the organization. Such a system might offer a broader diversity of programs, including some which require considerable capital outlays, such as athletic and performing arts facilities.

Other schools might offer vocation programs for kids who choose that kind of education. Our country cannot be one of only engineers and burger flippers. We need folks who are ready to take on the highly skilled production and service jobs a strong economy requires: Computer and communications technicians, manufacturing technicians, medical assistants, transportation system specialists, etc.

What if some folks want to get together and raise some money to build a nice lacrosse stadium at their school, or maybe a professional quality performing arts center? Or something else that will cost more than can be raised just from voucher income? That's okay. But you still have to let any kid attend, and have their voucher be all the tuition they need. Such endowments are a common thing at colleges - public and private.

There are some important details missing in my plan of course. For example, how do we serve the needs of kids with physical, mental and emotional disabilities? I think part of the answer would be to give such kids a voucher worth more money than the standard voucher. That might encourage a group of educators to form a school just for such kids. I've seen such schools. A good friend of mine who teaches in Germany has a daughter who attends one, and despite her severe disabilities - she is given the opportunity to experience life to her full capacity.

But note, I'm not suggesting some kind of retreat to the 'institutions' of the past - but rather an alternative for the parents - and the kids. Any time a parent believes their kid is ready to be mainstreamed, they can pull out of the specialized school and enroll their kid in the general population of any school they want, taking the higher value voucher with them to fund special needs the kid might have at the new school.

Other than the tradition of the thing, I don't know why we have let K-12 school systems grow into these bureaucratic and monopolistic entities performing far below their potential. We can have food stamps without dictating where people can buy food with them. We can have Medicare without restricting a person's choice of which licensed doctors or accredited hospitals can provide their care.

When our kids graduate from high school, they are free to apply to the college of their choice. Do we, or our kids, suddenly become more capable consumers of educational services when the kids graduate from high school?

Or is it that we restrict choice to only those who can afford to move to a different district?

Every kid deserves an education, and I'm willing to pay taxes to ensure that every kid gets the opportunity, just as I help pay for food stamps and Medicaid.

But let's get rid of the K-12 education monopolies.

Okay - that's what I'm talking about when I say 'charter schools' or 'a voucher system.' But I think we all realize that it would take a small miracle (or a big disaster) for our public school system to evolve to such a thing.

Our here-and-now option is the school system we have, and that's what we need to focus on. After all, there are 15,000+ kids attending Hilliard City Schools right now.

But I do ask you to consider what Ohio might be like with a system I've proposed (with the help of Dr. Friedman). If it makes sense, let's spend some energy on thinking about how we might transition to it. I think it's possible.

Thursday, March 13, 2008

Levy Vote Analysis

The unofficial results of the March 4 Primary have been posted by the Franklin County Board of Elections. Here's the results of a little number crunching:


10,757 FOR (43%) to 14,070 (57%) AGAINST
71 precincts, won 17

Brown Twp:

259 FOR (26%) to 736 AGAINST
2 precincts, lost in both


4,950 FOR (50%) to 5,003 AGAINST
34 precincts, won in 13


377 FOR (36%) to 665 AGAINST
4 precincts, won in 1

Franklin (township)

5 FOR (28%) to 13 AGAINST
1 precinct

Hilliard (City of)

4,041 FOR (42%) to 5,613 AGAINST
21 precincts, won in 3


601 FOR (36%) to 1,090 AGAINST
4 precincts, lost in all


457 FOR (37%) to 781 AGAINST
4 precincts, lost in all


77 FOR (31%) to 169 AGAINST
1 precinct


I'll make a few observations, then see what you folks think. As always, please keep your tone respectful.

  1. Why was the strongest support from the precincts in the City of Columbus?

    For those folks who think the solution is to chop off the parts of the district which has been annexed to the City of Columbus, note that almost all the precincts in which the levy passed are in Columbus.

    Possible answers include:

    a) the people living in Columbus are extraordinarily well informed, understand the situation the school district is in, and are willing to support the school financially;

    b) the Columbus folks aren't particularly well informed (like most of our community), but are willing to commit more tax dollars in support of the schools anyway;

    c) the urban legend that people in Columbus pay less Hilliard school tax than everyone else is pervasive in the Columbus community, and so they voted in favor of the levy believing that someone besides them was going to get stuck with the tax increase.

    If this is the true situation, the consequence is that as the truth replaces legend - the truth being that Columbus residents pay exactly the same amount of school tax as the rest of us - levy support in Columbus, where 40% of those who voted in this election live, might trend towards the distribution in the rest of the district.
  2. Other interesting statistics:

    The precinct with the highest percentage of FOR voters was Columbus 78-A at 62% (140 to 85), which is primarily Youngland Estates, north of Feder Rd between Hilliard-Rome and Alton-Darby.

    Highest number of FOR votes: Hilliard 4-C with 305. However, the AGAINST was 323 votes, so it was just about a tie. This is the area around Cross Creek Elementary.

    Largest number of AGAINST votes: Brown-A with 480 (vs 179 FOR). This is the part of Brown Twp west of Walker Rd (the westernmost part of the district). Brown-A also had the largest spread - 301 votes (27% to 73%).

    The levy did not carry in any of the townships, with the aggregate vote being 1,399 (33%) to 2,789.
  3. How did the precincts of our district leadership vote?

    Denise Bobbitt: Norwich-B: 201 (38%) - 325
    Andy Teater: Hilliard 2-D: 257 (41%) - 368
    Doug Maggied: Brown-A: 179 (27%) - 480
    Lisa Whiting: Columbus 78-B: 133 (44%) - 169
    Dave Lundregan: Dublin 2-G: 121 (34%) -234
    Dale McVey: Hilliard 2-B: 238 (40%) -359
    Bobbi Mueller: Columbus 76-D: 255 (50%) - 256
  4. The number of voters in the District is about 40,000, but only 25,000 voted in this election. Actually, 62% turnout is pretty high, and can be attributed to the voter interest generated by the Presidential primary.

    For the November election, we might have on the order of 75% turnout, maybe higher. At 75%, it would mean 30,000 people would cast votes, or 5,000 more than in this election. If every single person who casted a voted in the Primary votes exactly the same, then 82% of the extra 5,000 people would have to vote in favor of the levy to get it passed.

This does not seem likely, so unquestioningly the burden is to change the minds of many of the 14,000 who voted against the levy this time.

ps - a copy of my spreadsheet is available here

Schonhardt (Now) Supports the Big Darby Accord (kinda)

This Week Hilliard reports that Hilliard Mayor Don Schonhardt has decided to end his holdout on signing the Big Darby Accord, saying that he thinks it is wiser to wage his battles as a signator of the Accord than to get thrown out of the process, as he believes might happen.

But he has conditions: He wants it to be understood that he feels the Accord is merely a set of guidelines, not law, or even a binding contract. The mayor says he wants to "retain home rule" on City of Hilliard territory within the Big Darby Accord area.

The thing is, I'm not sure there is any City of Hilliard territory within the Big Darby Accord area. To my knowledge, all of the Big Darby Accord planning area lies on unincorporated land, not (yet) annexed into any municipality. The whole idea of the Accord is for the various municipalities and townships to come to a shared agreement of how all that land is to be developed and protected for the common benefit of all of central Ohio.

The mayor's concern is, I believe, over a relatively small but significant chunk of land defined by Alton-Darby Rd on the east, Roberts Rd on the south, and a line running north roughly from the corner of Roberts Rd and Walker Rd (the site of Brown Elementary and Bradley High). While this land is currently in Brown Township, it is included in the area the City of Hilliard may annex and receive water/sewer services from the City of Columbus, who controls (with an iron fist) the regional water/sewer system.

A central concept of the Big Darby Accord is that there is a better way to develop land than just packing in four or more houses per acre, and covering most of the remaining ground with streets and sidewalks. When you do this all that acreage -- which once absorbed rainwater to be taken up primarily by farm crops and evaporation -- is converted to hard surfaces such as rooftops and concrete, meaning rainwater has to be dealt with via man-made engineered solutions.

In central Ohio, the most common solution is to dump storm runoff into a holding pond designed so that most rainfall is retained in the development. However in a high rain event, like the one we had on Election Day last week, the retention ponds fill quickly, and the excess water is typically dumped into some nearby creek, which is already swollen from dealing with the natural runoff in its watershed. The best designed ponds, like the ones in Heritage Lakes (no, they are not just water hazards for golfers), release the water at a controlled rate. The water retention system at Bradley High School is supposed to be state-of-the-art in this regard.

One consequence of converting open land to hard surfaces can be downstream flooding, especially when a other floodplains have been compromised, as happened when Homewood Homes laid down thousands of cubic yards on their land on the corner of Alton-Darby and Roberts, which they have since left as a muddy mess of weeds. The Darby Creek Association reported that the permit granted to Homewood Homes to perform this landfill had been signed by Dan Nichter, who was the Director of Development for Franklin County, but is now a newly elected member of the Hilliard City Council.

By the way, at the time this happened, Brown Township Trustee Gary Dever was (and is) serving on the Franklin County Board of Zoning Appeals, the government body which should have heard objections from the public regarding any land use changes for this property Homewood Homes. One would think Mr. Dever could have been a important voice for our community in this matter, but as it turns out, Mr. Dever is also a farmer, and had for years been renting the Homewood land to grow cash crops. He was therefore advised by the ethics people that he had to excuse himself from any official discussion about this land because he had an economic interest in the outcome (and in fact at the time had corn planted on the property).

The thing I have never understood about the Mayor's interest in this land (he already has a development plan drawn up), is that it is to be almost entirely residential. Adding more homes is beneficial to neither the City of Hilliard or Hilliard City Schools. The economic viability of our community requires that tax-paying commercial development occur at the same, if not greater pace than commercial development.

The building of thousands of dwellings without corresponding commercial development is is what is wrong with our school funding right now!

So why doesn't the Mayor just ignore that land? It seems like it would be wise to let it remain in Brown Township and be managed under the Dig Darby Accord agreements. That would save the City of Hilliard the cost of constructing infrastructure to support a residential development, as wells as the ongoing expense to provide city services.

I suspect that it comes back to the fact that a good deal of the land in this area in question is already owned by developers, including Homewood Homes, Planned Development and others. For some reason, I believe, these developers must feel more comfortable having decisions regarding the zoning and servicing of their land being made by Mayor Schonhardt and Council members like Mr. Nichter. I'd love you hear your comments on why you think that might be.
The Norwich Township trustees have also voiced their adamant opposition to the Big Darby Accord. Note that Mike Cope just recently stepped down from Hilliard City Council after running successfully for Norwich Township Trustee. Why was it important for him to get on the Board of Trustees for Norwich Township before serving out his term on City Council? Was his vote needed to ensure that the Norwich Board of Trustees would not join the Big Darby Accord?

Chuck Buck, a long-time Norwich Trustee, says the Big Darby "tramples upon individual property rights... creating easements without just compensation." What he is referring to is a core concept in the Big Darby Accord - that some land will be restricted permanently from development, but those property owners would be compensated for lost value through a mechanism where other land within the Accord area would be assessed a fee in order to be developed at high densities, such as the so-called Town Center. Those fees would be distributed to the landowners whose land has been restricted from development, and the landower gets to keep the land. The theory is that the landowner could pocket the no-development compensation, sell the land for agricultural use, and get about the same amount of total money as if the land were sold to a developer.

The challenge is that no one knows what the land is worth until someone actually writes a check to buy it. As the many people who are trying to sell a house right now know, the amount the seller wants and the amount a buyer is willing to pay are often quite different. The final price is arrived at by negotiation culminating in the exchange of hard cash for a title. Until then it's all hypothetical.

This Accord compensation scheme is a little different. The landowner isn't being asked to sell their land exactly, only the development rights. They get to keep the land. So there are a couple of critical variables: a) what would a developer be willing to pay for the land; and, b) what would a farmer be willing to pay for the land? The difference is supposedly the compensation the landowner should expect to receive in exchange for giving up his development rights.

But how do those values get determined without an actual negotiation between a real live buyer and seller over a particular piece of ground? Absent that negotiation, landowners (of which Mr. Buck is one), are going to say things like "my land is worth $50,000/acre to a developer and $1,000/acre to a farmer, so the Accord must pay me $49,000/acre for my development rights. " Of course the first number will be overinflated and the latter lowballed. How do you settle these things when the truth is that every piece of land has unique value as either developable land (e.g. what kind of access does it have to sewer/water, which school system?), or as farmland (how much of the acreage is tillable, what has been the typical crop yield, how does it drain off rainwater?).

This is the reason the Big Darby Accord needs to be a binding contract between the ten parties and not just a 'recommendation' as Mayor Schonhardt wants. The land which can support high density development (and generate density fees) may not be in the same jurisdiction as the land that is designated for no development (and would be the recipient of density fees in exchange for development rights). There is no chance this thing will work if the landowners, who first and foremost have to be satisfied that they being fairly compensated for giving up their development rights, can't even be confident that their land is under the control of a contractural party to the Big Darby Accord. After all, if Hilliard gets to choose when it will and will not play by the rules, why should the buyers of land designated for high-density development feel they should have to pay any density fees?

By the way, one of the big hunks of land the Big Darby Accord declares a 'no-development' area is much of the 200 acre parcel at the corner of Alton-Darby and Roberts owned by Homewood, which is mentioned at the top of this article. I suspect this has a lot to do with why the Mayor wants to retain 'home rule' in regard to this area - that Homewood wants him and the Hilliard City Council to have the final say on zoning and development density. However, it worth noting that the Mayor's own plan shows a good deal of the Homewood property as green space as well. But of course the Mayor can change his plan if he wants.

It sounds like he wants the best of both worlds - access to the water/sewer services provided by Columbus, but no yielding of zoning authority to the Big Darby Accord process. We'll see how Columbus reacts to that. Or maybe the Hilliard City Council, with a couple of new members (other than Mr. Nichter), will take a different position than the Mayor.

So this is a blog about our schools - why am I going on (and on) about development politics and development economics (which are the same thing)?

Because while I may question the motivations of Mayor Schonhardt, one thing he says is correct: a signficant consequence of the Big Darby Accord is that thousands of acres of land - that would have otherwise been transfered to Columbus Public Schools under the former policy requiring annexation to Columbus to get water/sewer - will now remain in Hilliard City Schools, potentially increasing our school population by thousands of kids (although not likely the 10,000 kids the Mayor estimates). I just don't know that he's particularly concerned about the schools, or we wouldn't be in quite the funding mess we find ourselves in now.

The people of our community, and specifically the members of our School Board, need to take a position on the Big Darby Accord. They can no longer say things like 'we don't have any control over development, we have to take what comes.' They have a voice, and the power to educate and mobilize the community to make the municipal officials yield the the public's will.

And I think it was stupid to have not included a member of the Hilliard and Southwestern school boards on the Accord's 'Committee of Elected Officials.' After all the school districts are the largest political entities in the area (save the City of Columbus), and the organization that has the most skin (our skin!) in the game. This can still be fixed, but the School Boards have to demand it - it won't be given to them.

What do you think about all this?

Tuesday, March 11, 2008

Eight Minutes...

... that's how long the public portion of the School Board meeting was last night.

The Board then retired to Executive Session, as is their custom after every meeting.

There were maybe eight people in the audience who were not school employees or reporters.

To the 12,000 people who voted against the levy - if you want things to change, your involvement needs to be more than just casting a vote. Here's some things you can do:
  • Get educated on the basics of school economics. While you are certainly welcome to do the research on your own, I've spent a lot of time over the past few years pulling information together, and I'll be happy to spend time with any person or any gathering of people who want to know more.
  • Attend a School Board meeting. The schedule is posted on the District's website. I'm not suggesting that you attend every meeting, but go to a couple to observe the process our Board uses to make decisions. I recommend taking a moment to read this guide from the Ohio School Board Association first.
  • Ask questions of and give feedback to our Board members and senior Administrators.

It is not sufficient to just armchair-quarterback when it comes to our schools. Our leaders need to hear from vast silent majority, not just the small circle of folks who (thankfully) volunteer for everything.

Monday, March 10, 2008

Charter Schools: Good or Bad? - Part II

The Columbus Dispatch today published an editorial arguing that charter schools do not diminish the funding to the public schools, as many public school advocates will claim.

I wrote a blog post about this back in Nov 2007, in response to a Northwest News article in which HCSD officials seemed to be saying that charter schools bring financial harm to public schools. I don't think they do.

This Dispatch editorial describes that when a kid goes to a charter school, the only funding that gets diverted is the State Aid components. Readers of this blog know that the State Aid provides less than one-third of the funding per pupil, and that percentage has been going down. The home school district gets to keep the other two-thirds without bearing the cost of educating that kid.

Yes, I know we have to acknowledge that some costs are fixed and some costs are variable, a point I also discuss in an earlier post. The argument is that the loss of one kid from the HCSD does not really reduce costs by the full per-pupil-spending (PPS) amount - about $10,000 - but rather most of those costs remain.

But you have to ride that argument both ways: the addition of a kid has no incremental cost either. You can't add 1/20th of a teacher or 1/1800th of a school building just because one additional kid shows up. There's not even that much change in the cost to heat/cool the building or provide water.

There are times to do what is called a marginal analysis (the actual cost of adding just one more kid), and times when the fully loaded (the total cost averaged over all kids) calculation makes sense. You really have to do both to get the true picture.

The truth is that charter schools can ease the growth pressure on the HCSD. There will be no economic benefit realized this week, but the more we have kids who go to charter schools, the longer it might be before we have to build yet another building.

So who is opposed?

The folks who are employed by the public school system mostly. Dick Hammond lost his endorsement by the Hilliard teachers' union, and perhaps consequently his school board seat, because he sits on the Board of a charter school. Charter school employees are not typically unionized, and are paid much less than the public school employees. That's one of the main reasons charter schools can run on a third of the funding of public schools.

Some will say that's because the charter schools provide an inferior education, and lack the facilities of a full-blown public school system. And I think some of them do. Whenever the government creates a new money spigot, there are always unscrupulous folks standing by with a scheme to get some of it. There are accusations that White Hat Management is not on the up-and-up. They might be true.

But there are plenty of other charter schools which are helping kids that were failing in the public schools.

If I could have it my way, we would have only charter schools. Any kid could attend any accredited school, regardless of which neighborhood the kid lived in, and the voucher would serve as 100% of the tuition. Professor Milton Friedman made an elegant and compelling argument for voucher systems, but I doubt that any politician has the bravery to suggest such an approach, given the political power of the education labor unions that represent the employees of the public school districts.

This is not a criticism of our local school system. In spite of the tension surrounding the levy vote, funding challenges, and the negotiation with the teacher's union, we get a lot of things right in our district. There is much to improve - starting with the relationship between the school leadership and the public - but our school district is not broken.

Yet it doesn't serve every single kid well. For those kids who fall through the cracks, a charter school can literally be a lifesaver.

If it's really about the kids, and not paychecks, then the charter school option should be something we're all in favor of.

Saturday, March 8, 2008

Making the Cut

A friend asked me this week if I knew anything about the spending on things like athletics. I don't. In fact, up to this point my concern has been mainly the revenue side - where does the funding come from?

But with the defeat of the levy this week, and the need for cutbacks in response, it's time to start looking a little more closely at the spending side of our operation.

In the upcoming weeks, the Board is going to need to deal with making $4 million in cutbacks. The question will be - in what areas? Since nearly 90% of the operating budget is salaries and benefits, one would assume that a great deal of the $4 million will have to come from a reduction in employees.

Some quick math: In FY07, we spent $126 million on salaries and benefits (see FY08 Budget, page 36). In the same year, we had 1,653 employees on the payroll (see CAFR, page 100) . That works out to roughtly $75,000 per employee per year. If we said 90% of the $4 million cutback had to come from personnel costs, that would be $3.6 million.

And so to eliminate $3.6 million of spending, the employee population would have to be reduced by 48 employees, or 3%. This chart shows the distribution of employees as reported in the 2007 Comprehensive Annual Financial Report (CAFR).

Where do you begin?

Well, 48 is exactly the number of "Planning/Curriculum" people we have on staff. This function has grown from 11 FTEs (Full Time Equivalents) in 1998 to 48 in 2007, an increase of 339% - much higher than the 34% growth in students over the same timeframe. These folks are "intervention teachers, technology teachers and Literacy Collaborative Coordinators" according to info I received from our Treasurer, Brian Wilson.

Or how about the "Other Professional" category, which has grown from 10 to 76 FTEs (638%) in the past decade. These are "Intervention Tutors, Gifted Intervention Specialists (teachers of gifted kids) and ELL (English Language Learner) Teachers," according to Brian.

Or we have 20 more on the Administrative staff than 10 years ago, growing from 46 to 67 (46%).

We've also added 69 Teaching Aids in the past decade - growing 148% from 46 to 115.

If you do some ratio analysis of functions versus student population, the "Other Professional" category has the top change, going from approximately one employee per 1,200 students to one for every 200 students. Planning/Curriculum dropped from one employee per 1,000 students to one employee per 300 students.

One ratio which has remained most constant is Regular Teachers to students. Even though we have added 185 Regular Teachers in ten years, the student-to-Regular Teacher ratio has been about 20:1 the whole time. However, we must also observe that the two high growth categories identified above are also comprised largely of teachers.

One fallacy in my analysis is the assumption that the spending reduction would average $75,000 per employee, which allows us to arrive at 48 as the number of people that might have to be cut. But staff reductions are normally carried out in a way that it is the employees with the fewest years of service which are laid off first, and they typically have well below average salaries. Therefore, to achieve $3.6 million in spending reductions with newer employees, many more of them will need to be laid off.

No doubt some of the spending reduction will come from not replacing folks who retire or otherwise leave the district. That's good - not only does it avoid a layoff, these are often the highest paid individuals. Others will come from not hiring for positions that were budgeted but not yet filled, because the $4 million is a budget reduction. In other words, we have to reduce what we planned to spend by $4 million, not cut out $4 million of existing expenses.

But please, my fellow community members, remember that every job we cut means that there is a family which is going take an income hit, and will have to scramble to find another job - a tough challenge in today's job market. It is a hard thing to lay off people - I've had to do it a couple of times in my career. In one case it was a fraternity brother I had gone to college with.

It made me resolve to never let organizations I was responsible for get overstaffed. It's far better to ask the team to work a little harder in the good times than to have to lay off folks in the down cycle, which always eventually happens. Corrections are tough - it's better to manage tight all the time than it is to have to make big cuts.

It might be time for our Board to make the strategic decision to hold our staff size relatively constant over the next several years - through normal attrition - but reconfigure the staff so that critical functions (like classroom teachers) are not shortchanged.

Wednesday, March 5, 2008

Much Work to be Done

Issue 26, the 9.5 mill Permanent Operating Levy which would have generated over $20 million in annual operating funds for our schools has been soundly defeated. The margin looks to be substantial - unofficial results suggest about 12,000 Against vs 9,000 For.

District officials have indicated that they'll try again in November 2008, an election that will have perhaps the largest turnout in US history.

Things have to change.

The school leadership needs to understand that this was a vote of 'No Confidence' by the people of this community. The next eight months until November need to be spent regaining that confidence, and the levy campaign committee needs to be cranked up immediately - because it has a lot of work to do.

The communications strategy needs to go directly after the basics of school funding:

  • What are the major components of school funding? Ans: local residential property taxes, local commercial property taxes, the State of Ohio
  • How has that changed in the past decade? Ans: Both the commercial property tax revenue and State funding have been flat, which transfers almost all of the cost of funding growth to the homeowners.
  • Who controls growth? Ans: The municipal governments: City of Hilliard, City of Columbus, City of Dublin.
  • Do people who live in the City of Columbus pay the same school tax as the rest of us? Ans: Yes!
  • Will the proposed Constitutional Amendment fix our funding problems? Opinion: Perhaps, but it will cost Hilliard residents a lot more money, not less.
And there needs to be more information published about how the money gets used:
  • While the student/teacher ratio has remained fairly constant at 20:1 over the past decade, the number of district employees has grown at 1.8x the rate of student growth. Who are all these other people? How are they compensated?
  • How has the large influx of kids still learning English affected the cost of operating our district?
The trust of the community is not going to be gained by saying the same old stuff, but louder. The whole approach to community communications needs to change.
If the school leadership chooses such a strategy, I'm happy to help.

Monday, March 3, 2008

Preying on Ignorance

The primary purpose of the blog is to help educate the folks of the Hilliard about the economics of funding and operating our school system, not to take positions on political matters which don't affect that pretty directly.

But we have something going on in tomorrow's (March 4, 2008) primary which disturbs me.

As a registered Republican, I received from the Franklin County Central Republican Committee what is called a "Slate Card" - which is a list of candidates that the committee endorses. I was surprised to see a picture of Dorothy Teater on the card as a candidate for Clerk of Courts.

Prior to retiring from public life, Mrs. Teater served in a variety of elected offices in Franklin County, including a stint as County Commissioner. I had a chance to meet and talk with her only once, but felt her to be an honorable public servant, and she received my vote in many elections.

So what is she doing running for Franklin County Clerk of Courts? I didn't know she was going to be on the ballot. "She'll certainly get my vote," I thought when I saw the slate card.

But then I found out what was going on.

We have to remember that the election we're having tomorrow is a partisan primary election. It is the mechanism the political parties invoke to select who will run as their candidate in the General Election this coming November. To some degree, a political party is free to use whatever mechanism it wants to select its candidates for the General Election.

At the national level, the Democratic and Republican parties use a convention approach for selecting their candidate for President of the United States. When voters go to the polls tomorrow, they will tell the poll workers whether they are there to vote in the Democratic or Republican primary. If the voter selects Democrat, the voter will have the choice of Barak Obama, Hillary Clinton, John Edwards, and Dennis Kucinich. If Republican, the choices will be Rudy Giuliani, Mike Huckabee, John McCain, Ron Paul, Mitt Romney and Fred Thompson. If the voter chooses not to take part in either partisan primary, the voter can still vote on the issues such as the 9.5 mill Permanent Operating levy for our schools.

Wait, didn't most of those guys withdraw from the Presidential election? Yes. But note what the words say on the ballot. We are not voting for the candidates directly, but rather for delegates to the National Convention of our respective parties. So it is perfectly legitimate to vote for a delegate that supports John Edwards or Fred Thompson. But if that delegate is sent to the national convention, the delegate will almost surely change their vote to one of the leading candidates. There is room for all kinds of maneuvering and deal-making at a political convention in the quest to get enough delegate votes to name a candidate. Remember that many of the actual delegates are political office holders, and will not pass up the opportunity to use the power of their vote to broker a political deal within the state delegation (e.g. "okay, I'll cast my vote for candidate X if you promise to support me in my run for County Commissioner")

In other words, it's a lot messier than most voters would like to think. But it's the way political parties work, and that's the kind of system we have these days.

What does that have to do with Dorothy Teater?

Well, it turns out that she has no intention of running in the General Election even if she wins the Republican primary. She will step aside and allow the Republican Central Committee to name a replacement candidate. This is all perfectly legal. Most of us would also say it is pretty slimy.

You see, there is a man named Phil Harmon who would also like to be Franklin County Clerk of Courts. He wants to be the Republican candidate, but apparently the Republican Central Committee really doesn't like him. But their problem seems to be that they don't have another candidate identified.

So they have talked Dorothy Teater into letting her well-recognized name get put on the Republican primary ballot along with Mr. Harmon.

The Republican slate card I got in the mail has Mrs. Teater's picture prominently displayed on the front page, along with a couple of bullet points that I'm sure are designed to remind voters that this is indeed the Dorothy Teater who used to be County Commissioner and member of Columbus City Council. Beneath her picture is a large graphic that says "Republican Endorsed."

But nowhere does it state that she will step aside and let the Franklin County Central Committee name a replacement candidate for the General Election.

In other words, the Republican Central Committee is purposefully trying to trick voters into picking a candidate that has no intention of running. This is both alarming and disgusting.

I have some sympathy for Mr. Harmon. I don't know anything about him, but as a recent candidate for elected office, I know how hard (and expensive) it is to run against the machine (which is the HEA in the case of Hilliard School Board elections). The Republican Party has taken an 'anybody but you' stance, which is their prerogative.

I don't know about you folks, but this kind of stuff is what made me be apolitical for a lot of my life. It's a feeling that there are a bunch of ole boys (and women) in the smoke-filled back room who are really in control, and that my vote means nothing.

When a political organization chooses to operate in this way, they cause damage to the spirit of the voters - the very thing that defines democracy. The result is apathy, and we end up in situations like we have in Hilliard (and indeed all over the country), where the power is held by big-money interests, and not the people of the community.

The 2008 Presidential race is a rare thing, with a selection of candidates who give motivation to Americans who have heretofore cared little about the political process. The turnout should be high.

That means a lot of people will also be involved in the decision on the school levy. My fear is that because our school leadership has failed to implement an effective community education program, the people will make choices that are driven by emotion and not thoughtful, fact-based consideration. That makes the outcome entirely unpredictable, and I'm sure many of us will be glued to our TVs tomorrow night to see how the vote comes out.

See you at the polls!

Saturday, March 1, 2008

Hilliard Schools for Hilliard People

We regularly hear comments that go something like: "Make Hilliard Schools for Hilliard residents only." Such comments are usually made in response to the revelation that fewer than 50% of the kids who attend Hilliard City Schools live within the boundaries of the City of Hilliard. The thinking is that this the best way to fix the seemingly neverending problem of overcrowding and growth.

I think a little history is in order.

The first thing to realize is that while every square inch of Ohio is within the boundaries of some school district, not every square inch is within the city limits of a municipality. In fact, the most common political geography in Ohio is that municipalities are islands surrounded by a sea of unincorporated land. So - looking at the whole of the state - it is not that common that a municipality shares a border with another municipality.

Franklin County used to look like this. The City of Hilliard was an island surrounded by Norwich Township. But what about the Hilliard City Schools - was it an island too?

Nope. All school district boundaries are shared with another school district. There are no square inches in Ohio that are not within some school district. The boundaries of our school district touch those of Columbus Public Schools, Dublin City Schools, Southwestern City Schools and the Madison County line. And they have for more than a century. Our district boundaries have not grown. In fact they have shrunk, but that's another story.

So what has changed?

Well - the name for one thing. When my wife and I moved to this area in 1979, the school system was called "Scioto Darby Local Schools." In 1982, the School Board renamed the district "Hilliard City Schools," beginning the confusion that remains to this day, and prompted this article. Some people think the school district is somehow 'owned' by the City of Hilliard simply because of this name.

More concerning is that people think that the priviledge of attending Hilliard City Schools should be restricted to the residents of the City of Hilliard, much like the Hilliard municipal pool memberships.

As I said, our family has lived in this community for nearly 30 years. In fact, we have never owned a home anywhere else. Our two kids attended Hilliard City Schools from kindergarten to graduation. I've served on the Hilliard Education Foundation Board of Trustees. We've paid over $100,000 in school taxes.

But we have never lived within the boundaries of the City of Hilliard.

Our first home was in Golfview Woods - one of the very first houses built in that subdivision. That tract of land was always within the boundaries of Hilliard City Schools, and we bought into that neighborhood because of the reputation of the school district. But to build a subdivision like Golfview Woods, the developer needs to secure water and sewer services, and under the rules established by the City of Columbus - who has absolute control over our regional water/sewer system - the land that became Golfview Woods had to be annexed into the City of Columbus.

Not a problem as far as we were concerned. We would have a Columbus mailing address, be protected by the Columbus Police and Fire departments, and have access to Hilliard schools.

Then the folks at Columbus Public Schools began to raise the argument that the Columbus Public School system was going to crumble if the 'White Flight' wasn't brought under control - a situation created by the busing program ordered by the Federal court to correct segregation in the Columbus Public Schools. The threat was that neighborhoods like Golfview Woods would be shifted to Columbus Public Schools and that school boundaries would henceforth shift with annexation so that school district and municipal boundaries stayed together.

You can imagine the alarm this caused. Folks who lived in such developments, even those without kids like us at the time, would see their property values crumble as current residents tried to get out with no one really wanting to get in. More importantly, the developers knew it would end their incredible windfall as a direct result of the White Flight. The arguments from the public were passionate, but the political power of the developers ultimately drove the resolution.

That resolution is called the "Win-Win Agreement." It was first signed by various school districts of Franklin County in 1986, and has been renewed periodically since then. This agreement essentially says that the suburban school districts can keep their territory even after annexation into the City of Columbus provided that the suburban school district continue to pay what amounts to a ransom to Columbus City Schools. Our current ransom payment is $1 million per year.

Some of our school leadership believe the Win-Win is a financial positive for Hilliard City Schools. That is a mistaken belief. There are over 2,000 kids living in the Win-Win areas, generating $20 million in annual operating cost, but only $10 million in property tax revenue. The school district would be better off - financially - if those areas were shifted to Columbus Public Schools. This is especially true in the case of the high-density, multi-family housing that was built along the Rome-Hilliard corridor.

But that kind of revenue-to-cost relationship is true for every development in our school district - not just the ones in the City of Columbus. Indeed, new residential developments in the City of Hilliard generate much more cost for the schools than they pay in property taxes.

The problem is the imbalance of residential and commercial development. We need them to proceed at the same pace. Our current funding problem is caused by allowing houses and apartments to be built by the thousands with little expansion of our commercial tax base.

And to tell the truth, there has been a good deal of commercial development in the part of the district which is in the City of Columbus. For example, the owners of the buildings that make up the western part of Westpoint Plaza (where the Wal-Mart sits), pay over $300,000 in school tax each year. The Wal-Mart pays $250,000 per year on top of that.

I agree - it should be "Hilliard Schools for Hilliard people."

But "Hilliard people" is a lot more than just the residents of the City of Hilliard.