Tuesday, December 2, 2008

Two-Legged Stool

I regularly read just a few blogs. One of those is State of Ohio Education, written by Susan Haverkos, a member of the State Board of Education, and Colleen Grady, who was also serving on the State Board of Education until elected to the Ohio House of Representatives last month. It is rare to find a political official speaking out on a blog, especially ones with as much openness and objectivity as these two.

Colleen recently wrote an article that has significant importance to the Hilliard Schools community. She talks about the drastic turndown in tax revenue at the state level – so severe that it will be all but impossible for the Governor to propose a budget without taking a bite out of school funding. She writes:

The pain also occurs at a time when Mr. Strickland has said he will deliver on his campaign promise to propose an overhaul in how the state funds schools. That plan would be an answer to repeated rulings from the Ohio Supreme Court that the state's reliance on local property taxes places students in poorer districts at a competitive disadvantage with those in wealthier districts.

There are a couple of gems in that paragraph. The first to note is that the rulings by the Ohio Supreme Court have been driven not because they think property taxes are bad thing in abstract, but because they believe funding schools with property taxes puts poorer districts at a "competitive disadvantage" to wealthier districts. In other words, the thing they have a problem with isn't necessarily the form of taxation used, it's that the outcome is that the poorer districts still aren't getting enough money.

Therefore wealthier districts – and Hilliard is considered one of those – are more than able to fund themselves, and shouldn't need so much aid from the State.

I suspect the Governor agrees with this. He is after all from the same part of the state that my family settled over 200 years ago – the Appalachian counties of southeastern Ohio. If he has to cut the overall school funding budget, I don't see him taking a big bite out those districts, which are barely afloat anyway. And when he broadens his political perspective out to encompass the whole state, he'll note that taken together, urban and rural voters far outnumber the suburban voters.

It doesn't bode well for us. Our school funding has long been a near-equal balance of local residential property taxes, local commercial property taxes and state funding – the three-legged stool that has been stable for many decades.

Readers of this blog know that the stability of the stool has been threatened by the fact that over the past decade, residences have getting built at a rate far higher than commercial development. That means the local residential property tax leg has been growing, but not as fast as the funding need generated by all those new kids living in those houses.

Now the state funding leg looks like it's going to get another good sized hunk sawed off. Our state funding is currently on the order of $35 million per year, and it has been held there for a number of years through a 'guarantee' program related to the phase-out of business personal property taxes. This year, that guarantee will bring $3.8 million to our district.

If the Governor decides to take 10% out of the state education budget, we – as a so-called wealthy district – will likely see our state funding cut by more than 10%. One way to do that would be to rescind this guarantee program, or perhaps just accelerate the phase-out. My calculations suggest that we'll need to carry an additional 3 mills of local taxes to compensate for this loss of state revenue.

That means our next operating levy – which will be needed no later than 2010 – will likely need to be on the order of 10 mills.

That is, unless we can get some grip on the runaway costs of compensation and benefits of our employees.

1 comment:

  1. The recommendation by the State Board of Education Finance Committee was to reduce the guarantee by 5% in the next biennium budget, however, that was before the budget meltdown. Since Governor Strickland and Senate President Harris have both said they will not raise (statewide) taxes, it is logical to assume that rich school districts will see a decline. The only logical action is to plan for the decline as to minimize its effects. Worthington has budgeted for a 5% reduction in the guarantee and I'm concerned that even that might have been optimistic.

    Given the budget meltdown, districts that have been on transitional aid guarantees for years or decades must look like tempting targets.

    There are actions that could be taken if the state has the political will to do so. For example, over $100 million dollars could be saved by pooling health care for school district employees across the state. There would be (arguably) no real loss of benefits, merely the loss of the perception of local control. Is that little bit of local control worth saving if the price is to cut programs for the kids?