Friday, December 12, 2008

Revising History

Two important financial presentations were made at the Board of Education meeting on December 8.

First, District Treasurer Brian Wilson presented his new Five Year Forecast. The Board members had already received the forecast, so Mr. Wilson's presentation consisted of a couple of PowerPoint slides in about the same number of minutes. There was no substantive discussion by the Board.

The Superintendent Dale McVey gave a presentation on how the Administration proposed cutting an additional $3 million from the budget.

Cathy Wogan, reporting for This Week Hilliard, wrote: "Last summer when the board voted to move forward with a 6.9-mill operating levy, McVey said, it was understood that passage would not be enough to keep the district from later making cuts."

The Hilliard Northwest News similarly reported: "Hilliard school district residents were told from the get-go that proceeds from a 6.9-mill levy they voted in last month won't be enough to stop red ink from appearing on the operating budget."

I don't think either one of those statements is true.

I was at the Board's special meeting on August 4 when they discussed levy options. I wrote then that I had done a quick back-of-the-envelope estimate at the meeting suggesting that if the Board reduced the levy to 6.9 mills, they would still have a $3 million annual shortfall to deal with. I went on to write that this number was in the ballpark of what a couple of knowledgeable people I talked with after the meeting had guessed as well. But to my knowledge, there was no official statement from the Board that they had any inkling that the implications of a 6.9 mill levy included cutting another $3 million/yr from the budget.

The campaign website has been taken down, and I don't have any of the official campaign communications pieces any more, but I don't recall seeing any mention of $3 million in cuts being required even if the levy did pass. If anyone still has any of that literature, please take a look and see if this is mentioned.

Nor does the Superintendent's State of the Schools Address on October 6 mention the need for this additional reduction.

I'm not sure the $3 million is even the right target. In fact, I'm suspicious that it's nothing more than the $3 million estimate I did in about 2 minutes during the August 4 meeting, and used in my comments to the Board on August 11.


Because according to Mr. Wilson's new Five Year Forecast (to be posted soon), it doesn't fix the problem. It shows – even with the cuts announced by Mr. McVey – that we will still have an operating deficit of $1.5 million in both 2009 and 2010. In other words, we should be cutting more like $5 million from the budget, not $3 million (by the way, $5 million was the high end of the range estimated by one of the folks I talked with on August 4).

The consequence is that we'll be dragging our cash balance down more quickly than estimated, and without question will need to put a levy on the ballot in 2010 – unless we get some control of spending before then.

How big would the cuts need to be to avoid another levy prior to 2013 (the horizon of Mr. Wilson's forecast)?

In excess of $50 million! During the next five years, we would have to spend, in total, $50 million less to live on our currently projected revenues, without another levy. Is that even possible?

Here's another fact from Mr. Wilson's forecast: our employee costs are projected to go up $39 million over the next five years. In other words, we could get most of the way there by freezing salaries and benefits at the current levels. That's not so outrageous. I think many of our teachers and other employees might be surprised how many people in America have been working for a number of years with virtually no raises. Some have even backstepped in terms of take-home pay, as gross wages have grown little while benefit contributions have increased.

Things aren't any easier for retired folks like me who are living off the income produced by our nest egg. Did you know that as of yesterday, the interest rate on T-Bills issued by the US Treasury is zero percent? Apparently so many people are freaked out by the state of the economy that all they want is a place to put their money that won't lose value. That used to be the banks, but folks aren't so sure any more.

Our Board and Administrators have signaled to us that, with the passage of the 6.9 mill levy last month, they intend to go forward on substantially the same trajectory as we've been on for a number of years - a time when our economy was much more healthy. Mr. Wilson's forecast shows us that this trajectory will cost us an additional $50 million. We surely can't expect the State of Ohio to ride to our rescue given its looming budget crisis. Nor can we expect much help from the commercial sector – I don't see a lot of commercial construction in the next few years.

This is why I've said a Strategic Planning Committee is substantially more important than an Audit and Accountability Committee (notice that we haven't heard much about the formation of the A&A Committee now that the election is over). An A&A Committee looks backward in time and reports whether the organization did what it said it was going to do.

How can you possibly do that if there is no Strategic Plan?

We have to start dealing with this $50 million problem now. If we take action starting in 2009, it's a $10 million/yr problem. If we wait a couple of years, it becomes a $20 million/yr problem.

Things will simply get away from us if action isn't taken soon. If you want to be part of the solution, please consider becoming part of our activist group, and come to our next meeting, Tuesday, Jan 6, 6:30pm at the public library. Bring your friends.


  1. Paul, in the forecast, you also have to plan for addtional compensation
    for the employees in the next contract. In doing the math I dont see those increases really factored in.
    So with the district not interested in planning, willing to continue to
    pay huge increases in compensation
    you really need to add another 20 to
    25 million dollars to the short fall
    minimum to take care of the next set of pay raises. If we add in
    just a slight reduction is state aid we really are looking at two
    12 mill levies in a 5 year period.

    Plus if you look at the capital budget bond levy situation we most likely will need another bond
    issue passed for continuing captial
    expenditures which is seperate from an operating levy.

    All of us should start planning
    our own 5 year plan on increasing our taxes about $1500 min, based on
    a 100,000 value, for those who are in higher home values, the costs will be staggering. Hopefully the housing market can rebound and some can move.

    It is unfortunate that our board
    district leadership and its employees do not appreciate what is
    happening in the private sector.
    I see the same contract content as
    I do not see the will by our district and its employees to make
    the necessary short term adjustments to the compensation module. But the community despite its past investment will continue to be chastised as being against education and the students. Somehow the district and its employees get a free pass on this one.

    With the next contract certain to be similar to the last 3, I wonder how 7% increases again will be sold to the electorate.

  2. I still say a 3 to 4% annual raise is reasonable. Elimination of the step raise gets us there. It's rather simple, IF the union allows. I can't remember the exact number and honestly didn't take the time to look, but I think around 60 to 70% of the district employess get both a step and cost of living increase (7%) while the balance gets the 3% cost of living incease.

    3% is reasonable in today's market. No one should complain about receiving OR paying a 3% increase. That still means our labor costs are going to increase by at least 3% annually, but it does slow the growth and increases the span between levy needs.

    Paul, at 3% increases, what is the "life" of the current levy? What is the project amount and duration of the next levy under this scenario?

    We need to slow the rate of growth, no doubt, but we can't eliminate cost increases as we have no revenue-generating capacity (other than sports and bake sales).

    So, what is the slowest reasonable rate of growth, assuming 3% annual increases and x% medical cost increases) over the next 10 years? THAT, is my personal goal. It would be hepful is state funding increases, corporate taxes increases, etc. However, for a baseline, let's calculate our theoretical minimum rate of growth given these numbers and our subsequent taxpayer liability given that same set of numbers. To me, THAT is our baseline.

  3. Oh, and yes Paul, you are correct.... the only mention of $3M in cuts for 2009 was on this website. No Board minutes nor verbal communication of any meeting I attended did the Board/Admin acknowledge a shortfall post election.

    Any discussion either occurred on this website or BECAUSE of this website. Also, $3M wasn't REALLY cut.... $1.7M came from renegotiating the medical package (which was known well before the election) and most of the other $1.3M was from not spending on PLANNED expenditures, not actual budget items.

    I'm fine with that.... but let's not act like we actually cut fat... we just didn't gain any weight. Kind of difference there.

  4. Rick,

    You have had and will have the right to elect the folks who agree to these "ridiculous" contracts. The old saying goes,

    "Every time you point your finger, 3 more point right back at you."

    We speak with our vote, and apparently we have spoken poorly. However, it AMAZES how willing you and others are to quickly throw all the teachers in this district under the bus, many of whom are themselves upstanding members of the community.

    From the pictures painted by some on here, I picture teachers/administrators in HCSD as money-grubbing criminals who don't give a lick for kids, and only want to get paid. Lucky for me, I know many HCSD teachers, and I KNOW that not to be the case. They are honest hardworking people who care about the children in YOUR community, and they deserve more than to be depicted as anything less than that.

  5. I do have to agree with Musicman. I myself have been, perhaps, overly harsh on the administration of this district. They are good people.

    The discussions here are on how to deal with a very challenging and important financial situation that is NOT uniqie to Hilliard. As Paul, myself, and others have stated many times, the big issue is the growth in Hilliard and the lack of state funding. However, in the meantime, everyone has to make concessions and that includes taxpayers.

    Taxpayers, in my opinion, made concessions in November by agreeing to yet another levy. The district has been reactive and not proactive in dealing with these issues, but for the most part have made concessions as well. However, the ball is now BACK in the district's hands (hea, admin, boe). We gave the district time... what will they do about it? Moderate growth is reasonable to expect, and if anyone doesn't agree with that then they need a serious reality check. But at the same time, we have to continue to be diligent in reducing that rate of growth while maintaining the quality education we expect in Hilliard. Education is a "team" sport.... each member must play their part.

    Pointing fingers is easy to do, but is frankly unproductive in solving the problem. Action and involvement is what is required here, by all parties. Problem is, we are a "3-legged stool" where 2 legs won't talk with the other.

    If I were a candidate, that would be my first initiative: increase communication and build a REAL team environment to solve the issues we ALL face.... TOGETHER! Moving in 3 different directions moves us off of our target. However, all going in the same direction is efficient, effective, and impacting!

  6. Yes KJ!

    I also think a clear plan by the board, perhaps INSISTED UPON by the public, as to how the financial picture would be handled in the next 3-5, and 5-10 years, would be very helpful.

    And there is always the option of doing our homework and electing candidates that will do our bidding.

    One final devil's advocate point, nobody seems concerned about the academic offerings that have been cut, and seeing to their return. My understanding is that students still cannot, in the MS, take foreign language (or other electives) and music.

  7. I also think a clear plan by the board, perhaps INSISTED UPON by the public, as to how the financial picture would be handled in the next 3-5, and 5-10 years, would be very helpful.

    Couldn't agree more! I believe it is more than helpful, I belive it is imperitive that this happen! And happen witht he utmost transparency and with all major factions of the district involved.

  8. It would appear my thoughts are out of bounds as it relates to my
    concerns on how we expect to handle the next four to 5 years

    1. Limit spending as I presented to the board to about 3% over the next
    3 to 5 years. Apparently this is an issue no one wants to tackle as my proposal was greeted by laughter from employees in the audience and silence to this point from the board.
    2. Apparently it was missed and I am out of bounds by suggesting that we dont CUT compensation but rather the growth in compensation
    3. Trying to understand that two
    levies in the next 4 to 5 years
    that are in the double digit range are somehow palatable

    Musicman, I think the word greedy has never entered my vocabulary here. I have questioned simply how we can continue to give 7% pay increments and minimal benefit changes when the private sector is struggling

    I believe the district and its employees were given a free ride during the last contract that had
    adverse effect on students by the job actions that took place.

    I dont think that our graduating seniors should have had to go through the hoops they did to get proper documents to their prospective colleges. Because of
    "working to the contract" perhaps
    Musicman, KJ and others involved
    should understand that some seniors lost out on valuable scholarship and awards
    because of the purposeful slowdown in the obtaining proper documents and signatures. Can you possibly explain how that is fair to an
    18 year old taking on 8,000 dollars in additional loans versus having that
    8,000 dollars in an award or a scholarship, because at the deadline time we were working to the contract ?
    KJ and Musicman
    I have supported each levy including the last one, despite some severe economic challenges
    with cuts in compensation, medical benefit increase. I have allways supported the district, its teachers, so to paint me as someone
    who is anti teacher, I would suggest you speak to my childrens past and present teachers.

    I am in the wrong I guess if I feel that more than just the individual
    taxpayer should make "concessions"
    I just want to know how we are going to afford double digit levy
    millage, when we wont make any adjustment to our compensation model.

    What I expect is that the only
    "concessions" to be given are from the individual community member with a significant raise in their property tax. The state is not coming to the rescue with the current economic situation. It appears that the contracts will remain the same as that seems to be what we are expected to hand out.

    We have entered a phase in this district about 3 years ago that we are no longer welcome to ask questions or make statements unless
    it is in lockstep with the HEA and
    the District.

    I think everyone should be able to speak at the table, no matter what their viewpoint or ideas.

    I just think many voters will have second thoughts about raising their
    taxes $1,000 per year or more if we
    wont address our spending patterns

  9. Rick, I think we agree on most things. And my comment about "being too hard on teachers, admin, etc) is still true, in my opinion.

    Expecting teachers to behave in a professional manner is NOT expecting too much, nor is it unfair to ask teachers to "sacrifice" for the good of the team. In fact, I believe I have been consistent in saying both.

    I do think we, as a collective group, tend to villify the district (all components) when it's not exactly fair. These are good people with good intentions (for the most part) and we just have to figure out a way to all work together. That's the biggest issue!

    If you are speaking of the most northern of Hilliard high schools, then I can agree that I've also heard that this group of teachers were the most resolute in the negotiations last year.

  10. Rick, I don't disagree with you. Why are you pointing me out as somehow disagreeing with you?

    Your "graduation" experience is well documented. I didn't disagree with you or even comment on that. I certainly didn't paint you as anti-teacher. My point was that I think we ALL (myself included) have at times, villified, the district (teachers, admin, etc.)

    At no point did I call you out nor infer that you were anti-teacher.

  11. KJ, I think that the community has been criticized significantly as
    not caring about educating its students by the district, the HEA
    OAPSE, staff admin, and teachers.

    This despite the fact that bond levies and operational levies have
    been passed consistently. We have an outstanding infrastructure that the
    community has paid for.

    Apparently we should not question or criticize the HEA, admin, the district etc. But yet it is expected from the staff that we
    fund compensation increases that
    those of us in the private sector are struggling to pay.

  12. Anonymous....

    Apparently we should not question or criticize the HEA, admin, the district etc. But yet it is expected from the staff that we fund compensation increases that those of us in the private sector are struggling to pay.

    If you are talking about me, then you are so sadly mistaken I'm not even sure how to address this. First, I've never said we shouln't question the district. Second, if you've ever read any of my posts you will find that I believe the exact opposite. And third, if you only knew how many emails, unflattering at that, I've sent to the district leaders, you would never say I believe we shouldn't question or criticize.

    Believe me, I've put my questioning into action well beyond this board. Have you?