Friday, December 5, 2008

Runnin’ on Faith

The passage of the 6.9 mill operating levy on November 4th buys us a little time – very little – to put our school district back on the right financial track. Our School Board and the levy campaign committee didn't talk about how long it might be until they'll be asking for another levy, or how large that levy might need to be.

Here's the truth – if spending growth, which is driven almost entirely by the ever-increasing cost of employee salaries and benefits, continues on its current trajectory, the next levy will be need to be on the ballot in 2010, and will need to be at least 6.15 mills. To restore the 10% operating reserve which the Board adopted as its policy a couple a years ago, the 2010 levy would need to be 11 mills. As large as these millage rates might be, the bigger story is that we have likely entered an era of two-year levy cycles.

And I'm sorry to say that this isn't the end of the bad news.

In June 2005, Governor Taft signed into law the phase-out of personal property tax on businesses. This is the tax on the contents of a commercial building, which includes furniture, manufacturing equipment, and inventory. For most Ohio businesses, this tax will be eliminated by 2009, and for all businesses by 2011.

School districts are one of the primary beneficiaries of this tax, and so to protect the schools, the new law required that through 2010, the State of Ohio to reimburse the full amount 'lost' due to the Personal Property Tax phase-out. In other words, so far we haven't been hurt by any of this because the State is currently reimbursing us about $6.7 million per year.

But that changes starting in 2011. In the period between 2011 and 2017, the size of the reimbursement will be reduced approximately $800,000 per year, and will be completely eliminated by 2018.

To be fair to district Treasurer Brian Wilson, he brings this up every time he presents his Five Year Forecast. Invariably, there is no reaction from the Board. I can understand their being frustrated by these things over which they seemingly have no control, but it has to be discussed and planned for nonetheless.

Someone once said that the rhinoceros is the example of "running on faith," because it weighs 3,000 pounds, can run 30 miles per hour, and can see only about 30 feet ahead. That could describe our school board as well. The 'weight' of our organization hasn't really changed. If anything it continues to get larger and more expensive. The velocity in which we are traveling is as great as it has ever been, especially now that developers have convinced Mayor Schonhardt and the Hilliard City Council that it's a good thing to annex hundreds of acres of land into the City of Hilliard – the first step toward the construction of thousands of new homes, meaning thousands of additional kids in the school system.

And our forward vision is still about as far as the toes of our shoes.

It is a fairly straightforward task to build a forecast that takes into account the growth in students, the growth in personnel costs, and the reduction in state funding and come up with a schedule of projected levy amounts and levy dates. It wouldn't surprise me if it would take on the order of seven mills every two years to keep our district solvent – unless something changes.

The Superintendent and the Board hopes that the something that changes is the way the state funds public schools. The School Funding Subcommittee of the Ohio Board of Education has just released its Final Report, describing the approach they recommend should be adopted by the Governor and General Assembly. Some aspects of this report are troubling, while others show that these folks understand our challenges. In particular, they recommend the creation of impact fees "especially for districts experiencing significant growth," something I've been advocating for some time.

There is also an astounding admission buried in the middle of a long paragraph in the discussion about how to determine spending benchmarks:

The "best buy" approach to defining the base cost was reached after a review of the spending patterns across the state did not reveal a clear pattern of expenditures that led to high levels of academic achievement. In other words, increased funding did not guarantee improved performance.

Nonetheless, the state government will get a lot of pressure to shift more money from those districts perceived to be wealthy (like us) to those who are perceived to be poor. That is because the majority of members in the General Assembly are from the urban and rural districts, and while not at all alike in their problems, shares a belief that whatever those problems are, more money will fix them.

We suburbanites aren't blameless. Most of us came to the suburbs to escape whatever we thought was wrong with the urban and rural schools without giving a thought as to what the implications might be to school funding. That's certainly true for me. We allowed developers and developer-friendly politicians to profit from our desires and ignorance, leaving behind an economic configuration which is unsustainable.

Many believe that if the General Assembly would just heed the decision of the Ohio Supreme Court and stop using property taxes as the primary funding mechanism, all would be better. But if public school funding isn't raised with property taxes, what will replace it as a funding mechanism, and more importantly, will it cost Ohioans any less?

Certainly not. You would be hard pressed to find any government official or education group saying that the problem is that too much money is being spent on education in Ohio. So if they decide to heed the ruling of the Supreme Court and stop using property taxes as a revenue mechanism, the money will need to come from other kinds of taxes, be they sales taxes, income taxes, gasoline taxes or whatever. As taxpayers, we'll lose the direct vote we have on school levies, and all taxing and funding decisions will be turned over to elected officials.

We have to be careful what we wish for, because sometimes we get it…


  1. Paul, in doing my own math, and taking into consideration the next contract. I really think we will have to be closer to9 to 10 mills plus we are due for a bond levy again
    for investment, repair, purchases,
    buses, computers etc.

    I see a small increase in the medical contribution possibly on the next contract, but the same
    3 + 4% == 7 comepensation increase.

    The HEA, city leaders, local tied in to the district groups IE banks, developers,, pour huge money contributions behind 3 candidates to insure that the status quo continues.

    We will see the same cuts proposed
    busing, sports, music, arts as before and the voters will approve

  2. Rick, I think I disagree with your final sentence. If nothing changes as far as expenditures goes, I do NOT think the voters will say yes. And if history is correct, it will take more than one attempt to pass a new levy, which will push it closer to the next 3 year (or whatever) contract renewal. I, for one, will be adamant in fighting the terms of the last contract, as well as looking at administrator numbers and salaries. And hopefully, we will be better represented on the school board by that time, with members who are more capable in both managing a 150 million + budget and explaining it to the taxpayers. If the Big Three can do it with the UAW, we should be able to do it too. Of course, the jury is still out on that last part.

  3. I agree with Hillirdite, I think more educated eyes are watching and many of the "yes" votes last month were, in fact, conditional. I know mine was.

    First, I don't know who I am voting for in November 09, but I can guarantee it will NOT be an incumbent. Within the next cycle of BOE elections, we will see a complete purge of the board. I think that will lead to a change in leadership at the top of the district. The voters have spoken, and the "yes" the school district heard in November was NOT a mandate for more of the same. Without keeping their end of the agreement, the BOE and Administration could find themselves in a very uncomfortable and significant stalemate with the paying public.

    I was one of the biggest supporters of the latest levy. I am also proud to say that I expect something significant for my vote, including, but not limited to,

    - a reduction in expenditure growth rate

    - a clear plan for expected growth and increase costs (not just a canned 5-year forecast, but a REAL plan - one like you would find in any high-functioning business)

    - Transparency in the operation of the BOE and district. I'd like to actually hear a board member speak, other than to pat each other on the back with meaningless "discussion" of a topic that has already been rubber stamped

    I have been very clear, and I think many of the voters in Hilliard agree, that there will be no “yes” vote without a significant change in operations, budget, and rate of growth. In fact, I will be as forceful in my opposition of the next levy as I was in my support of the last one, should these conditions of my vote not be met. I truly believe, and hope, that most of the voters in this district feel the same way.

    Here’s my fear though. We are 2 years away from the next contract negotiation and likely 2 years away from another levy (Perfect Storm Part II). Not being impressed with how either side handled the last negotiations, I am concerned of what this next round might look like. There is no doubt that the BOE will have to draw a pronounced line in the sand. And I’m hopeful that the HEA will be reasonable in their financial requests in the next contract (I said HOPE). But I think there will be certain conditions that will push many teachers to ask for some relief of non-financial matters. Other teachers will obviously side with the union and push for retaining everything in the current contract, while the BOE and administration (until replaced) will likely bury their heads until the next levy/contract negotiations and avoid any meaningful conversation on either topic.

    Why is it so hard to contact leadership from all 3 sections of the negotiations and lay out the obvious, settle the major issues, announce to the public what has been agreed upon in principle (hopefully financial), and announce that remaining issues will be worked out before the next contract expires?

    Here’s what I hear… and see: Most teachers understand that raises need to be lowered and that health care costs need to be shared more broadly. But at the same time, and believe me this is true especially at the elementary level, teachers are strained to their maximum with testing, IEP’s, no planning, etc. We can discuss the merits or demerits of this at a later time (I see it firsthand; I see the issues that many good teachers are facing), but the point being, I’m hearing that teachers are stressed, not about money, but about support (noon aides, unfunded mandates, etc). If that’s true, then I hope we can settle the financial portion of the contract easily. If it’s not, then this will be a very bad episode for everyone. This is why I’d like to see discussions start now!

    Now, here is the part that scares me…..a strike. While I believe most teachers “get it”, unions weren’t built on making concessions. And like any other union that has ruined our country, I fear the powers of the OEA/NEA will push the teachers into a strike. Before you say it, I understand that teachers should think for themselves, but I also realize that the power of persuasion and propaganda techniques used by organizations such as this can be very impacting in a time when emotions run high. Let’s not forget that at negotiation time the OEA and NEA are heavy “advisors” of the local HEA and its leadership. That is a large and powerful organization and their persuasion can be significant.

    Likewise, I wasn’t overly impressed with the negotiation and PR abilities of our BOE and Administration in the last negotiations. Basically, I see it as 2 entities that are ill-equipped to meet the challenges before them. In this scenario, the kids and the taxpayers are sacrificed.

    So, to recap, I think the voters of Hilliard are certain of their position and are resolute in their efforts. I think the teachers will push for more support, the HEA will be pushed to strike, and the administration/BOE will fumble this last drive to score with the public. Maybe it’s the short days of late fall that are making me a pessimist, I don’t know. But if we are being candid, of all involved I put the abilities and common sense of the students of Hilliard first, the taxpayers resolve second, the majority of the teacher’s desire to decrease rate of wage increase third, and far far far behind is the union and BOE’s ability to meet the challenges they face or the foresight to see the error of their ways.

    Lol… I got some rest after the election…. Guess I’m BACK! Strap it up boys and girls.

  4. Hillirdite and KJ, I commend both of you for your concerns, input, involvement.

    Runnin on Faith is very appropro

    My faith in this district is waning

    I really dont think that this district or the HEA OAPSE gives two
    hoots about what we thinK, Kind of a waste of time.

    Shut up and ante up. We dont understand, we dont get it. Basically I am tired of hearing that this community doesnt get the above, but yet have supported consistently the infrastructure through the bond levies and provided operating levy support consistently.

    We try and present proposals, and they get met with silence or laughter, or worse yet retribution.

    It is interesting that our district asks for input, but yet if it is not in lock steop with their thinking it is totally dismissed.

    We do need new board members, leadership, not beholden to the
    employee groups. However our
    city leaders, developers, banks,
    employee unions will pour huge dollars to back their candidates for the next election.

    Given our economic situation it is pretty bad when our employees, many with advanced education, cant seem to fathom that many people out in the private sector are struggling.
    If they did, they would step forward IMMEDIATLY to begin help planning toward a solution NOW.

    I am not buying into that the teachers and employees understand or care. Their previous and current actions speak for themselves.

  5. Great post KJ!

    However, for all those that keep saying the teachers don't care:

    I feel that you are missing the boat on the problems facing our district. Let's place blame on:

    State funding: YES
    Board of Ed: YES
    Admin: YES(ish)
    HEA: YES(Emphatic)
    Teachers: Not so sure

  6. Musicman:

    I can understand you wanting to distance yourself from the union leadership. I hope there are many HEA members who feel the way you do.

    But you're letting a militant minority speak for you. I was at one of the school board meetings when hundreds of teachers showed up in black as a 'show of solidarity.' They packed the meeting room at the Annex and filled the parking lot outside.

    Weren't HEA members asked to wear black on Fridays (for the benefit of the kids!?), and stop after-hours activities while the negotiations were stuck?

    I won't ask if you participated in these actions - it's not my intention to accuse you. But if you don't think the union leadership is representing you the way you want to be represented, and you believe there are many other teachers who feel the same way, then why don't you take control of the union before the next contract expiration?

    Better yet, why not withdraw from the union? Doesn't hurt by the way - even as a non-union member you have to work under the contract negotiated by the HEA. That's what the HEA leadership insists on (with OEA counsel), and our Board agrees to. Don't think it saves you much if any money though - you still have to pay a 'fair share' fee to the union to compensate them for negotiating on your behalf.

    So why not just drop out of the union? If enough of you did that, the Board could drop the exclusive negotiating rights clause from the HEA agreement, and you guys could negotiate your own individual compensation packages.

    My guess is that few teachers would want to do that. And the truth is that the Administration isn't geared up to handle, or even competent at negotiating individual compensation plans. They can bitch about the HEA agreement, but the truth is it makes their lives a lot easier.

    The sense we get on the outside is that a slim majority of HEA members thought the current contract was the best they could get at this time, while a sizable minority voted against the contract thinking not that it was asking for too much, but that rather that it would be settling for too little.

    The community won't forget what went on during the last negotiation. HEA has a big public relations challenge ahead of it for 2010. A good start would be to hear teachers say they understand the stresses on the people of our community, and that they won't add to them.


  7. I have always been a huge supporters of the teachers and the work they do. I also realize that the funding situation is not completely caused by teachers but rather by a number of factors. Now, with that said, up to 90% of the budget is salaries so we have to discuss teachers if we want to control costs.

    I work in the business industry and therefore 45-60 hours of work per week is the norm. Over my lifetime of work experience, I have routinely been asked to do more with less (and that was even in the good times) so the fact that there are more requirements on the teachers really does not sway me as a community member/investor.

    If the teaching profession is professional, extra time in is part of the job and yes, that includes evenings and weekends sometimes. Even in a 45 hour work week with two weeks vacation and a week for holidays, I think a business professional averages something like 2205 hours per year. How many hours per week/year is a teacher expected to work? I am astounded that teachers get an extra day off of work because they have evening conferences and let's face it, there is a lot of time off built into the schedule that, if it were "kids first" I'd suspect they should be in school learning.

    The majority of teachers are members of the HEA and select the leaders so really, the teachers are the HEA. They may not all agree with the stances BUT they have sure profited from their membership. Ah, to have such a retirement plan and not be compensated for performance but rather tenure...but I digress.

    I think Paul's suggestion about teachers seperating themselves from HEA makes a lot of sense. That sure would allow the BOE to pull out some of the requirement language and possibly, just possibly, get things moving in a positive manner. Alas, I so doubt this will happen but wishfully thinking, I'm wrong.

  8. Musicman:

    State govt: Candidates and office holders supported by teachers and teacher unions with huge campaign contribution. Everyday folks have no influence to match up with big money contributed

    Board of Education: Winning candidates in Hilliard supported by teachers and HEA !

    Admin: Many former teachers in ranks of admin.

    HEA: 7% raises and minimal medical contribution rejected as worth striking for

    Teachers: Contributed to contract negotiation challenges by taking
    negotiation into the buildings.
    Talking to graduating seniors about
    no ceremonies, slow downs in trying to get college aid, and other information to get in to school
    Also OAPSE group leadership talk
    about community not getting it

    I think that we again will see a similar contract in two years.
    Same 7% formula, minimal health contribution, more time off.
    This is so excessive compared to what the private sector is receiving but yet the teachers keep telling us how selfish we are

    Have we not passed consistent levies here Musicman ? Both bond issues and operating levies.
    There certainly is an excellent
    infrastructure to teach in, plenty of resources.

    But somehow we just dont get it.
    we are against the kids, the schools etc. Also our suggestions are met with disdain and utter silence.

    So what is it that the teachers really want ? Besides another 7%
    and no medical contribution, more planning time, more time off ?

    Didnt the Big 3 have this not that long ago. ?

    I have a clear disdain for charter schools because I dont believe in the concept as they can pick and choose who stays and goes. Public schools cant do this. They have many challenges to face with students. But then again maybe it is time to look at this alternative
    because otherwise many people wiil not be able to keep up with the
    significant school tax increases\
    that are unnecessary

    I think at some point folks are going to say, Why is a slight reduction in compensation and having to contribute to a medical
    program viewed as a huge cut.

  9. Paul,

    Just to clarify, I am NOT a member of HEA, nor do I work in the district. I am a part of another union in a district close to this one.

    I AM a part of the union in my district however. Reason? I must pay fair share dues if I do not participate, equal to the cost of being in the union. However, I would receive no chance of receiving the free legal counsel unions provide employees for events that occur during school.

    Unfortunately, at this point in my life, giving that up on principle does not make sense to me.

    The problem I see with fighting a union is "fear". Many I talk to in my district disapprove of the unions actions, but don't see a benefit to them acting against, when their union openly tells of how you will be "put-out" and "alienated" if they go against the union. I personally have been screamed at, lectured, semi-threatened, and talked down to due to my stance in our last negotiation. Many teachers will not risk that.

    "Fear" is a powerful thing, and I think that plays a huge role in how these things work.

  10. musicman,

    I certainly empathize with your frustration for the union and the unfair treatment you receive when you speak your mind, especially given the pure principles you hold for your profession. I am getting the feeling that the struggles, persistence and overcoming fear that was required in the original creation of unions is only overcome by the struggles, persistence and overcoming of fear that is needed to break them up (or change their purpose) from within.

    musicman, with your experience, do you have any suggestions on how the teachers unions could change their tune as it exists now, before it is too late?

  11. Mark,

    Unions will be fixed when they no longer exist, in my opinion. Too many folks get caught in Union rhetoric, which clouds the air in situations where rational thinking and reasonable thought should prevail.

    We would be MUCH better off with no union and merit pay, and with a fixed state funding system.

    What I cannot stomach, not necessarily from you, is the assertion that teachers are to blame here. As if there is a higher expectation for them than the "common man" when it comes to standing up for things.

    Coming to a web blog and posting comments is no more noble than what most teachers do. They are led to believe they are being mistreated or underpaid, and many believe it.

  12. Musicman:

    Your comments seem pointed toward me, so I'll say again that if I've offended you, I apologize.

    But I really don't understand why you seem to be saying 'don't blame the teachers' for the excesses of the HEA (or the OEA for that matter) because teachers should not be expected to be any more brave than any other group.

    The answer is of course is that in the context of this matter, no one except the teachers can change anything.

    I realize that you aren't an HEA member, and I don't know the situation in your district. But here in Hilliard, the HEA members who feel their union is no longer representing them need to start talking about it, then start taking action.

    Remember this observation (often attributed to Burke):

    All that is necessary for the triumph of evil is for good men to do nothing.

    At some point, someone, or some few, need to be brave.