Monday, April 28, 2008

Dear Rep. Ted Celeste --

Below is the text of a email I just sent to the office of State Rep. Ted Celeste, who will be holding a "District Dialog on Education" tonight (4/28 7pm) at Hilliard Crossing Elementary School.

Representative Celeste:

I look forward to attending your District Dialog on Education tonight at Hilliard Crossing Elementary School. I have to admit that I'm not a resident of your district (or even a Democrat!), but I am deeply involved in issues of school funding.

There are four kinds of school districts in Ohio: a) the rural/agricultural areas; b) the rural/Appalachian areas; c) the urban cores; and, d) the suburbs. Hilliard is of the last type.

Whatever next school funding mechanism you and your colleagues in the General Assembly develop, it is clear to me that school districts like Hilliard will be net contributors. By that I mean that the residents and businesses of our school district will pay more in aggregate income, property, corporate activity and other taxes than we will receive back in school funding and other state government services.

To some degree, that's the bed we've made for ourselves. While we weren't watching, the developers and the politicians who enable them have, for their own profit, shaped Central Ohio into a region with unsustainable economics - at least as far as school funding goes. But if our schools fail, the region fails as well.

The combination of the water/sewer service agreements with the City of Columbus, the Win-Win Agreement, and soon the Big Darby Accord have allowed ten of thousands of new residences to be built in the suburban school districts while keeping significant commercial development within the City of Columbus. At the same time, the State of Ohio has frozen State Aid to what it considers the more affluent suburbs, leaving it to us to figure out how to raise enough money to run our schools.

One could argue that we in the suburbs, by not paying enough attention to the impact of development, brought this on ourselves. I think that this is true. The question is what we should do going forward.

I believe the single most important tool the General Assembly could give Hilliard, and the other suburban districts like us, is the ability to enact impact fee levies. I've spoken to both Rep. Wolpert and Sen. Stivers about this in the past (see my attached letter).

Rep. Wolpert was one of the sponsors of HB299 in the 126th General Assembly - a bill which would have been a start in this direction. It is my understanding that this bill never made it to the House floor.

As member of the House Education Committee, I would hope you would support, if not sponsor similar legislation in the future.


Paul H. Lambert

If you agree with this position, it wouldn't hurt to let Representatives Celeste and Wolpert know you feelings.

Rep Celeste:

Rep Wolpert:

Sunday, April 27, 2008

News of the Cutbacks, Part III

The Agenda for Monday's School Board meeting has been posted. It names some of the people who will be laid off or given reduced hours:
  • 16 teachers laid off
  • 6 teachers reduced to 50%
  • 3 other certified laid off
  • 2 other certified reduced to 50%
  • 17.5 FTEs of other certified position
  • All the noon assistants
  • 4 secretaries reduced from 260 days to 223 days
  • 1 Technology technician
  • 1 Coordinator of School/Community Relations
  • The Director of Gifted Services

And so, the failure of our School Board to enact the community education program I've been demanding for years has resulted in the upheaval of the lives of real people. Don't blame this entirely on the people of the community.

Friday, April 25, 2008

Getting it Wrong for Ohio's Future

Once again, this is instigated by an important question asked within the comments of a prior post. Here is the comment:

I have a question about state school funding and permanent levies. Once there is a state solution, will district-by-district levies be phased out even if they are called "permanent"? If not, and a state funding solution is coming soon, why lock ourselves into another permanent levy now? Why not wait and see what the solution is, especially if it raises funds from increase sales tax or income tax? Once there is a state solution, will there be no more district by district levies?

You ask a very good question regarding what happens to permanent levies which had been enacted prior to some potential new funding scheme. The final answer will depend on the actual legislation that is enacted into law, but we can look at one possibility that's on the table.

A group called Getting It Right For Ohio's Future has proposed an amendment which deals with this through a phase-in procedure. It goes like this:

  • The first three years after approval are business as usual. If our district needs more money, we'll need to pass a levy.
  • In the 4th-6th year, each district must keep its current levies in force up to a maximum of 34 mills. We are currently at 42 mills, so presumably this means any new levy we pass from now on would be cancelled and another 8 mills mills knocked off our current property taxes.
  • In the 7th-12th year, 2.33 mills of property taxes would be knocked off each year so that by the 13th year, our required contribution to our own funding will have been reduced to 20 mills.

Sounds pretty good, albeit a long way off. The kids who are in school now will have graduated by the time this amendment would be fully phased in.

But this amendment is a trap being set to catch the suburban districts, and they're counting on our not caring enough to really dig into the meat of the thing. The bait is the promise of lower property taxes, and that's all the supporters of this amendment (notably the teachers' unions, our Superintendent, and even our own School Board!) want us to hear.

There's much more to it. I wrote about this a year ago, when it looked like this amendment might be up for voter approval in Nov 07. Fortunately, they failed to collect the 400,000 petition signatures required.

What are the traps? There are several:

  1. The first and most obvious is that the money to fund this new system won't just fall from the sky. If local property taxes go down, it means state income taxes, state sales taxes, corporate taxes, and who knows what else will have to go up. The amendment supporters have so far refused to answer what the net effect will be on Ohio families - how much our total tax burden will change. After all, a tax is a tax to us. Is the total going up or down? I think it is clear that it will go up, or there wouldn't be any reason for the amendment in the first place.
  2. While this amendment requires a school district to continue to tax its property owners at least 20 mills toward the cost of running the local school district, this does not mean that this 20 mills plus the money from the state will even come close to what we currently spend to run our district. So the amendment continues to allow local school districts to tax themselves over and above the 20 mills as necessary to fund the programs the people of that community desire.
  3. Current Ohio law requires the county auditor to adjust property tax millage rates to counteract the effect of increasing property values. If a 10 mill levy causes $500 to be added to your property taxes, then it doesn't matter how the appraised value of your home changes in the future, you will continue to pay exactly $500. This amendment removes that protection. If your property value increases 20%, your property taxes will go up 20% as well.
  4. There's an extra-special trap for the senior citizens. Supporters of this amendment will say that it exempts the first $40,000 of "market value" from taxation. However, it is only the "required" portion of the local contribution - the 20 mills - which has this exemption applied.

    Any additional local levies, as discussed in the previous point, have no such exemption. By the way, the "assessed value" of a piece of property is only 35% of the "market value" so that $40,000 gets reduced to $14,000 before the millage is applied. The value of $14,000 at 20 mills is $280.

    I won't say that's insignificant - $280 is a lot of money to some of our seniors. But remember, they'll be paying on the full assessed value for any additional local taxes we levy, and those taxes will go up automatically if future appraisals declare their home value to increased. I'm not confident that seniors would see any savings at all versus the current system.

We have to understand that the loudest voices regarding public schools in the halls of our statehouse is not Jane and Joe Public - it's the lobbyists from the teachers' union and the construction industry (who is building all these new schools around the state) who get the ear of our elected officials. These organizations make significant campaign contributions to any candidates who would be in a position to tilt the tables in their favor - all the way to local school board races by the way.

There's even an interesting 'treat' in the amendment designed to garner the support of local politicans, like Mayors and City Council members: the establishment of a "Local Government Trust Fund." While it would be initially funded at the same level as current state grants to local government, the amendment calls for the funding to increase annually at the same rate as the personal income of Ohio citizens. Again, we would have a funding mechanism that increases automatically without voter approval. The local politicians have got to love that, especially since it's the State government that takes the heat for the higher taxes.

This amendment is not designed to benefit the general public. It was crafted to create a school funding mechanism that protects the income streams of school employees and suppliers by removing the risk that local communities might turn down a levy. You might not care who your representative on the State Board of Education is right now (ours is Michael Cochran), but you would if this amendment passes, for the State BOE gets to decide how much money our schools are allocated from the State budget - not the Governor or the General Assembly. In fact, they get first dibs on the State treasury.

Did any of our School Board actually read this amendment before they threw their support behind it? One member of Worthington's BOE certainly did...

Tuesday, April 22, 2008

Cash Management and Sales

The following dialog took place at the end of a very long string of comments on a prior post. I felt it important enough to highlight as its own post:

Chris said:

I think you need to understand that no one wants to have the children suffer, but the thoughts are that we can just keep throwing money at the problem. Yes, we may need to pass the levy, but is that the only thing we can do? The concern really is that no one trusts the school board here, and I think that stems from the fact that they keep coming to the community with their hand out simply expecting that they're entitled to an increase without due diligence on their part. And maybe that due diligence is truely there, but it's behind closed doors so that we, the very people their asking more money from, aren't privey to these behind doors conversations.

In fact, I spoke with several teachers recently and have been enlightened a little on the situation with their medical and contract negotiations. There's real problems here.

So you pay a $1000 for your son to play football. That's for what 4 years? The alternative is that you pay increased taxes of $800 for the next 20 years or until you decide to move. That's a savings of $12,000. Yes, I'm being a little cavalier here, but what we're saying is that before we decide to give them another chunk of money have we truely trimmed all the fat (and I'm not saying people or insurance is fat) from the expenses?

As the head of a household I constantly have to look at where and how my money is being spent. It's only prudent to do so. It's when I get lazy and coast for awhile that my expenses go to crap and then I look at my check book and say, "Dang, where did I spend all that money?" That's what we're asking the board to do, and here's the critical component, share all the information with us, not just the fact that they think they've got a money situtation.

Did you remember that the school board reported an estimated $15million overage last fall? That rainy day fund is still there just in case, but hasn't been spoken about because the board doesn't want to remind anyone. Get my point?

The teachers are mad because they're working without a contract. The biggest outlay of the budget is related to them, and the point of contention is around the medical insurance. Are you aware that they have been changing insurance companies yearly (just like my company does) all in the interest of seeing which company is cheapest. Yes that's an unforunately, pain-in-the-butt reality of medical insurance, but has anyone considered other options. Currently they're looking at a 27% increase in their medical (I went 32% nearly 5 years ago). How about giving them options such as an HSA. Those that are healthy will migrate towards the HSA because it's a good deal for them. Those that use the insurance heavily will pay higher premiums. That's the way it works in the private sector.

My response:


Thanks for your comment - well said.

On your point about the $15 million overage:

What you are seeing the balance of the General Fund - the amount of money in the bank. It's not a rainly day fund like a savings account, but rather the active checking account where income is deposited and from which checks for expenses are written.

The way levy funding works is that on the first years of a new levy, the tax revenue is greater than the operating expenses, and the balance of the checking account (general fund) increases. Then in subsequent years, the spending catches up with the revenue, and eventually surpasses it. When that happens, the general fund balance starts going down. The trick is to not let the account run dry.

The Income minus Expenses for last year was $5.8 million (seen on line 6.010), meaning the general fund would be increased by that amount. Indeed if you look at the last line of forecast in the column for FY06, you'll see $9.4 million. Adding the $5.8 million surplus for FY07 causes the General Fund to grow to $15.4 million.

But look at FY07. Line 6.010, Excess of Revenue over Expenses is a negative $4.5 million. We have hit that crossover point. The projected balance of the general fund at the end of this year is $10.9 million.

The real problem is next year. Revenue minus Expenses is $14.5 million (nearly 3 times what it will be this year). This spending deficit sucks up all the money in the general fund and still falls $3.6 million short.

That's the reason for the $4.5 million in cuts going on right now.

So while it may be common practice for a School Board to allow spending to go from generating a surplus to running a deficit, that's okay as long they manage the balance of the general fund. But our School Board felt it was more important to be able to say they "stretched the levy for four years" than it was to make sure we had enough money in the checking account (note that it was an election year for Board members...)

And so they have taken us right to the brink of disaster. A school district cannot deficit spend, so when the levy failed, they had to take the $4.5 million out of the budget to keep from bouncing checks.

I've been in business a long time. Protecting your cash is one of the top 2-3 things a business owner must do. Just ask the folks at Skybus. When they ran out of cash - they were done.

While the members of our Board are good people, none of them are business owners or business executives (until Dave Lundregan was elected). They have no experience with the harsh reality of cash management, especially not in a $150 million enterprise. They simply think the money is due them because, after all, it's our school system we're talking about.

That's because they don't understand the 'sales' part of their job (one of the other 2-3 most important things). As long as it is true that the people of the community have a choice in how well to fund our schools, there is a need for the school leadership to build and maintain a relationship of trust with the people who exercise that choice. In my experience, that requires a long and sustained commitment to communicate, educate, and listen.

But our Board doesn't understand the need, nor know how to pull it off. That's the reason they support the Getting It Right For Ohio's Future amendment - because it relieves them of that burden.

And it takes away our choice.

Saturday, April 19, 2008

Information Sessions

Notice of these two meetings was published as a comment in another posting, and deserves to be repeated:

  • Representative Ted Celeste, who represents a significant portion of the Hilliard City School District, wants to hear from Hilliard School District residents on educational issues facing our community.
    What: Community Forum on Public Education
    When: Monday, April 28 at 7 pm (ironically, the same date/time as the School Board meeting)
    Where: Hilliard Crossing Elementary, 3340 Hilliard Rome Rd

  • School Funding Basics: ACT for Schools Presentation

    What: “School Funding Basics.” Residents of the Hilliard City School District are invited to attend “School Funding Basics,” an informational meeting to learn more about how school funding works in Ohio and its implications to the Hilliard City Schools community.

    Who: Presented by ACT for Schools (Advocate, Collaborate, Teach), a school district volunteer community committee

    When: Wednesday, April 30, 20087:00 PM

    Where: J.W. Reason Elementary School, 4790 Cemetery Road

    Why must so many Ohio school districts be on the ballot so often? Residents will have the opportunity to learn why during the “School Funding Basics” presentation. ACT committee members will explain how school funding works in the state of Ohio and how the Hilliard City Schools community is impacted. There will be opportunity for questions at the end of the presentation.

I have my doubts that the ACT Committee will actually "explain how school funding works" because they will almost surely espouse the official party line, which can be summed up as: "everything would be hunky-dory if the General Legislature would just obey the Ohio Supreme Court and come up with a completely new funding system that doesn't depend on property taxes."

Please understand that the people who are really powering the argument for school funding reform are the teachers' and employees' unions, and in this case the teachers, employees and the school administrators are on the same side. While stories of the truly needy districts are trotted out every time school funding reform is mentioned, the real objective is to create a funding system which automatically escalates funding with the ever-increasing salary and benefits costs associated with running a school district.

Both the administrators and teachers want to get rid of this system we have which requires the district leadership to periodically ask the community for more money in the form of a levy. They want to take that choice away from us and by doing so relieve them of the burden to justify their spending.

If a new school funding system is developed in Ohio, do we think there is any chance that the aggregate amount of funding to schools will diminish? Of course not - it will certainly increase in the aggregate.

And what are the chances that the additional dollars allocated to school funding will take away money from other programs funded by the state government (e.g. Medicaid)? Don't you think any new school funding will have to depend on additional taxes of some sort - income, sales, corporate?

The key question is if we believe Hilliard will be a net winner in a new funding paradigm. If new school dollars comes from new tax dollars, will our state school funding go up more than our taxes increase?

I see little chance of this. This is only my opinion of course, but what other conclusion can be reached when Hilliard is considered one of the more affluent districts in the state? Haven't we already seen our state funding flatlined so that more money can be doled out to the less affluent districts? Why would we think that a new funding algorithm would treat us any better?

The basic facts are simple: new homes produce more cost than revenue for the schools (bad thing), while new businesses produce revenue and no cost for the schools (good thing). These two components must be kept in balance. We in Hilliard have enjoyed a long history of these two components being nearly equal, and that allowed us to build a great school district with modest property taxes.

But in the past decade, thousands of homes have been built in our district, and thousands of additional kids have started attending our schools. Without commensurate business growth, the cost burden of educating those kids has fallen on the residential homeowners, manifested by the need for an additional permanent property tax levy every 3-4 years.

The collapse of the housing market gives us the opportunity to take a breath and get ahead of this problem. But not if our school leadership isn't willing to take bold action, and break out of their "we've always done it this way" mode. They need to:

  • Oppose (not support!) the Getting It Right For Ohio's Future proposed amendment, and any like it until the backers of the proposed amendment answer the question as to whether it will be a net winner or net loser for Hilliard. I bet the latter.
  • Quit blaming our funding problems on the state government and instead figure out what we need to do to fix things locally - within our school district.
  • Lobby the legislature for Impact Fees as a funding option. This can do more to fix our funding problems that any other option being considered. Impact Fees would take away no money from the struggling districts, and give us a powerful tool for ensuring that growth is adequately funded.
  • Demand a seat on the Big Darby Accord council of elected officials so that the needs of the school district - which spans the boundaries of many municipal jurisdictions - are heard. It is not the purview of the Hilliard mayor to speak for the school district when a minority of the kids lives in the Hilliard city limits.

Hope to see you at these presentations.

Monday, April 14, 2008

News of the Cutbacks, Part II

At tonight's meeting of the School Board, Superintendent Dale McVey gave his macro level plan for implementing the $4 million in spending cuts required due to the failure of the levy. Because 88% of the spending for the school district is personnel related, most of the cuts will be achieved through jobs eliminated, said Mr. McVey. At the next Board Meeting on April 28, he will present the list of specific employees who will be laid off. This is the broad brush view:

Administration: 5 positions; cost reduction of $552,000
  • Coordinator of School/Community Relations

  • Director, Gifted Services

  • 2 Assistant 6th Grade Principals

Certified Employees: 38 positions; cost reduction of $2.48 million

  • 16 K-5 teachers (it was explained that K-3 class sizes would kept close to what they are currently, but 4-5 classes will likely grow to 30 kids)

  • 2 6th grade teachers

  • 3 middle school teachers

  • 6 high school teachers

  • 3 K-5 Guidance counselors

  • 2 K-5 unified arts teachers

  • 1 school psychologist

  • 2 adaptive physical education teachers

  • 3 gifted teachers

Classified employees: 50 positions, cost reduction of $484,000.

  • 47 K-6 Noon Aides (this is a two hour position that is mostly filled by bus drivers between their morning and afternoon trips)

  • 2 high school hall monitors

  • 1 district repair technician

Program cuts: cost reduction of $257,000

  • eliminate Camp Joy program for 6th graders

  • eliminate industrial arts program

  • eliminate the middle school foreign language survey course

Administrative: The specific cuts in this category will be announced at the next Board meeting.

  • All buildings and Central Office: 5% additional ($470,000)

  • Additional Central Office Cuts: 5% ($247,000)

The Board members had a chance to respond to Mr. McVey's presentation. The most extensive comments were from Doug Maggied. I agree with his observation (paraphrasing) that this cut means real people with their own families to provide for are going to lose jobs, and that the loss of each of these people will be felt personally by a set of kids and parents who have a relationship with the person.

Doug went on to blame the General Assembly for failing to cure the school funding problem in Ohio. While that may be true, the cure may be worse than the disease, at least for Hilliard. The dollars to fund our schools don't magically appear from a bottomless bank account. They come from taxes collected from us in one form or another. Doug's affinity for a new funding paradigm must come from one or both of these beliefs:

  • In a redistribution of current statewide tax revenues among school districts, Hilliard City Schools will get more than we do now.

    This is extremely unlikely. Our community is viewed as one of the more affluent ones in the state, as evidenced by the fact that the Governor, with the approval of the General Assembly, has frozen the dollar amount of funding that comes back to us from the State. The first place any incremental funding dollars will go is to the truly struggling areas of the state, and we are more apt to be the source of that new money, not a recipient.

    If the funding comes from new taxes, be they income, sales or something else, we'll pay a larger-than-average share of that too. Whatever new tax model is generated, the net flow will be away from Hilliard, not toward us.

  • The community cannot be trusted with making decisions about the financial support of our own schools, therefore those decisions must be turned over to the Governor and the General Assembly, who we can count on to make sure all our current programming is fully funded.

    There is indeed a trust problem, but it's not that the Board doesn't trust the community - it's the other way around. Our school leadership has very weak communications skills. The School Board does most of its work, in my opinion, in the secrecy of Executive Sessions rather than seeing the necessity of being more, not less communicative in times such as this. In the last community survey, only 15% of the respondents gave the school leadership an "A" in listening.

We can't dump this financial problem on someone else. We have allowed the problem to develop by ignoring, and therefore choosing to remain ignorant of the implications of thousands of new houses being built without commensurate commercial development, and we'll have to live with the consequences.

As Pogo said:

“We have met the enemy and he is us”

Friday, April 4, 2008

Administrative Costs, Part II

Mike Antonucci of Elk Grove CA runs a one-man outfit called the Education Intelligence Agency. I don't know anything about his political views, but he posts some pretty interesting data which he says is extracted from government reports. Here's one that ranks the US states by the number of teachers versus district level administrators.

It places Ohio 49th out of 51 (the District of Columbia is included), with a ratio of only 19.7 teacher full-time-equivalents per administrator. Mr Antonucci says: "Pennsylvania and Ohio have almost the same number of teachers, but Ohio has four times as many district administrators."

I wonder what it is about Ohio's approach to running schools that makes our level of administrative overhead so much higher than Pennsylvania. I wouldn't think the urban/rural mix is all that different - PA has big post-industrial cities and lots of farmland too. I wouldn't think the ethnic mix is all that different either. Their schools are organized on the community level rather than county - just like ours. If anyone has any insights into this, please comment.

Michigan beats us soundly as well. While we have only 19.7 teachers per administrator, Michigan has 47.4 - meaning we have 2.5 times as many administrators per teacher.

Only South Dakota and New Mexico have teacher/administrator ratios lower than ours. These states have tiny and dispersed populations compared to the states of the Great Lakes region and the northeast, where you would think our large school districts would produce economies of scale.

I'll continue to look through his research and post links as I find information that might provide some clarity to our situation.

Thursday, April 3, 2008

News of the Cutbacks

At the request of one of the readers, here is a place to communicate facts about actions being taken by the District leadership to enact the $4 million in budget cuts they told us would need to take place if the levy failed.

Hopefully, this week's editions of the Hilliard Northwest News and This Week Hilliard (and maybe even the Columbus Dispatch) will contain stories about the cutback decisions, but I haven't seen anything in the online editions yet. When stories are posted in any of the papers, I'll put appropriate links here.

Please post only facts you know first hand -- no rumors or gossip please!


Wednesday, April 2, 2008

Blog Censorship

Some readers of this blog may not know that I read every comment you make before posting it to the blog.

I do this because there is such a thing as blog-spam, and I regularly have to reject comments from automated spamming programs that want to encourage readers to buy Cialis or some such thing.

This blog system has the option to require commenters to enter those funny looking letters to confirm that you are in fact human, but I always find those controls to be a pain, and would rather filter out the junk myself than introduce an obstacle to our dialog.

I can also reject comments from legitimate commenters. I can think of only two occasions when I have done so since starting this blog in Dec 2006. In both cases it was because I felt the tone - not the substance - of the comment was not in keeping with the spirit of this blog.

If you want to read about the latest comment I rejected (to this post), visit Jim Fedako's blog, Anti-Positivist, and tell me if you feel my rejection of his comments was inappropriate.

After all, this is your blog as well.