Tuesday, September 28, 2010

Teacher Contract Extension

If you have not already done so, I recommend reading an earlier article I posted titled "Teacher Salary History," to help understand some of the terms and concepts used in this article.

At the Board of Education meeting held Monday, September 27, 2010, the Board passed unanimously a resolution authorizing President Andy Teater and Superintendent Dale McVey to sign an extension to the Master Agreement between the Board of Education and the teachers' union, the Hilliard Education Foundation (HEA). The terms of this extension are straightforward:
  1. The current base salary of $38,362 will remain in effect through December 31, 2011, an extension of one year.
  2. While HEA members have already received their step increases for the 2010-2011 school year, the step increases for the 2011-2012 school year will be delayed six months – until December 31, 2011.
  3. All other provisions of the 2008-2010 Master Agreement remain in effect.
As is obvious with the vote being unanimous, I voted in favor of this contract extension, reading the following into the record:
I would like to say thanks to the members of the Hilliard Education Association for agreeing to this one year contract extension at no base pay increase and a delay in the next step increase.

It has taken many years of hard work and community support to build one of the finest school systems in our State. Hard work on the part of the teachers, students, parents, staff and administrators, and financial support from all those – homeowners and businesses alike – who have continued to generously fund the mission of this district.

This is a time of great uncertainty for our school district, our community, our State and our Country. I suspect that nearly all of us know a neighbor who has lost their job and is struggling to avoid losing their home as well, often at the expense of their already-battered retirement savings. Many more have seen their pay reduced – enough to force unpleasant changes to their lifestyle.

And we have a state government that is seemingly clueless as to how they will deal with a mismatch between revenue and spending that is reportedly on the order of $8 BILLION over the next two years. Balancing the state budget will require spending cuts of a magnitude that are not easily comprehensible.

Without question, the State will solve some of its problems by decreasing its funding to districts like ours – districts which most members of the General Assembly view as having more than enough local financial resources to cover any reduction in state funding. I'm sure we all took note when at the dedication of Bradley High School, Governor Strickland thanked us for constructing that building without benefit of state money. The people who run our State think there is more money where that came from.

The state budget situation is going to hurt us in the wallet – we just don't know how badly yet. While we wait to see what happens after the November elections, I appreciate that the HEA understands the situation, and is willing to stand by until the funding picture becomes clearer.

A year from now, we'll be right back at the table with the HEA, trying to decide whether to tack on another year of extension to the 2008-2010 contract, or whether it is time to dig deeper into the relationship and negotiate a new master agreement. What will we know then that we don't know now?

For one thing, we'll know the outcome of this November's elections. Will Governor Strickland be reelected, or will John Kasich be our new Governor? Regardless of who is elected, they'll have the same immediate budget crisis to fix. No matter what strategy the next Governor might have for generating new revenue, I have little doubt that the Governor and General Assembly will have to implement drastic spending cuts. Forecasting revenue gains is an exercise in speculation; spending cuts are definite and immediate.

What will happen at the Federal level?

Hilliard City School is slated to receive a one-time shot of $1,856,748 from the Education Jobs Fund legislation passed by Congress in August 2010. If the Democrats hold power in Washington, will there be more of this kind of funding coming down the pike? If the Republicans take the majority in either or both of the houses, will it be the end of such Federal largess?

I'm assuming what some will call the worst case – that neither the State nor Federal governments will be sending any money our way in excess of our current funding. In fact, I'm relatively confident that our State funding will continue to decrease in the next few years.

This will bring great financial pressure to our school district, and will force us to strip away all the ancillary conversations and deal with the central equation:

The amount we must pay in local property taxes is directly determined by the compensation and benefits negotiated into the contracts with our teachers, staff and administrators.

The next big issue we all must deal with is balancing our own budget for the school district. While FY2011 looks to be generally okay, the Five Year Forecast paints a picture every bit as scary as of the State's budget. As it stands, the Forecast shows an accumulated deficit of $55 million by the end of FY2014 (the year ending June 30, 2014).

To cover that solely with new local taxes, and with no reductions in forecasted spending, would require a levy on the order of 7.6 mills to be passed in May 2011 in order to end FY2014 with zero money in the bank. To restore a 10% cash reserve, as is Board policy, the levy would need to be 10 mills.

Even if we held spending to FY2011 levels (the year we're in right now), we would still need approximately 1.75 mills just to run out of money at the end of FY2014. To end FY2014 with a 10% cash reserve requires a 4 mill levy this May – if we were to hold spending at FY2011 levels for the next three years. This is because we are already spending more than we take in – to the tune of $5 million this year.

The implications of that statement are clear: for there not to be a levy on the ballot in May, we would have to cut annual spending by at least $5 million – more if we think funding from the State is going to diminish, and I do.

I accept that there will be a levy on the May ballot. The question is how large it will be.

This is where you come in. You have to participate in the discussion of what this school district is going to look like in the coming years, and how much we are collectively willing to pay to make it so. Central to this will be the parameters of the collective bargain agreements with the unions representing the teachers and staff of the district, as well as the administrative contracts.

Sitting at home fuming over newspaper and blog articles won't help. Bitching about things with your neighbors doesn't cut it. Comments made on this blog article are helpful, but we frankly don't hear from enough folks – a small fraction of the total number of readers.

You need to come to Board meetings and speak during the time for public participation, write letters to the Board, submit letters to the editors of our weekly newspapers, and rally your neighbors to do the same. Your elected representatives serve you best when we understand what you want.

Democracy is not a spectator sport...

Tuesday, September 14, 2010

Issue 4 – Levy for the Columbus Metropolitan Library

Item F2 on last night's Board of Education agenda was a resolution "that the Board of Education support Issue 4 for the Columbus Metropolitan Library." I voted NO on this resolution, which passed by a 3-1 vote (Board member Dave Lundregan was out of town on business). During the time for discussion on this item, I read the following statement into the record:

While I am both a user and fan of the Columbus Metropolitan Library System, I cannot support the levy they are bringing to the voters this November as Issue 4, which would triple the amount of property taxes collected from Franklin County property owners. My reasons are as follows:
  1. The forecast provided by Mr. Losinski indicates that the intention is to grow the spending for Salaries and Benefits at a rate of 4.7% per year - for the next 10 years. Of the $90m of new spending planned over the next 10 years if this levy passes, $85m or 95% will be applied to salaries and benefits.

    While I believe that it is appropriate to raise enough money via additional property taxes so that the employees of the library system could be awarded increases in salaries and benefits over the next 2-3 years that are in alignment with the general condition of the economy in our region, a CAGR of 4.7% for ten years for salaries and benefits is not in alignment with our current general economic conditions.
  2. Mr. Losinki's forecast also shows their reserve balance rising from $5 million in 2011 to a peak of $37 million in 2016. I understand how levy funding works, building a surplus in the early years which is drawn down in later years as spending continues to increase.

    But in this case, the library system management is asking the taxpayers to trust the library system to hold tens of millions of dollars of taxpayer money, and consume it at the pace and for the purposes they are committing to right now. As honorable as I believe the library system's leadership to be, things change, and future leaders could easily decide to spend the money differently, or more quickly, and would not need voter approval to do so. It will very hard to not spend that $30 million reserve when it's just sitting there, which would leave future years underfunded and generating the cry for still more tax money.

    As challenging as levy campaigns may be, I believe that it is better to ask the taxpayers to fund a maximum of the next 3-4 years, and then see what things look like when we get there. I feel this is especially the case when the public entity is asking for a permanent levy, as is the case here, rather than one which will automatically come up for renewal at some point in the future.
So I reiterate that I am a fan and supporter of the Columbus Metropolitan Library System, and would support a levy that funds a lower rate of growth for personnel costs, and fewer years of operation. The future is too uncertain to make this kind of commitment right now, in my opinion.

So if the Library is asking simply to replace a 2.2 mill levy we're already paying, why do I say that this vote would result in a tripling of the amount of property taxes we pay to the Library?

It has to do with a state law – ORC 319.301 – commonly referred to by the education community as "HB920," which says that once a levy is passed, the amount of tax it collects on pieces of property that existed at the point in time when the levy was passed will never go up. It is enacted by adjusting the "effective millage" of a levy downward when the County Auditor increases the assessed value of a piece of property (owners of property constructed after the levy passes also pay this effective rate).

That has happened with this levy. When it was originally passed in 1986, it collected $67.37 for each $100,000 of property value. In 2010, that same levy is collecting $22.97 for each $100,000 of property value.

But that doesn't mean the amount of money being collected has gone down!

If you had a home valued by the County Auditor at $100,000 in 1986, you paid $67.37 in property taxes to the Library due to this levy. And in 2010, you will still be paying $67.37/yr to the Library. However, your property will have increased in value (in the eyes of the County Auditor) to $295,000. Without the protection of ORC 319.301 (HB920), the amount you would be paying to the Library annually would have increased to nearly $200/yr without you having any say in the matter.

When an expiring levy is replaced, as is the case with Issue 4, the prior adjustments are wiped out, and the millage rate is restored to full value. Therefore passage of this levy will increase your property taxes from $22.97/yr per $100,000 of current value to $67.37/yr per $100,000 of current value.

The library is also asking for an additional 0.6 mills, bring the total new tax rate to $85.75/yr per $100,000 of current value. So I was understating the situation by saying it would triple the amount of money going to the Library system. It's actually 3.7 times the current rate.

The Library system also wants to end the practice of asking for levies which have to be renewed every so often. This request is for a "permanent levy," which means that, if it passes, it will collect $85.75/yr per $100,000 of 2010 property values forever.

Here is the source data I used to make my analysis. It was provided by Patrick Losinski, the Executive Director of the Columbus Metropolitan Library.

Any questions or comments about my vote?

Tuesday, September 7, 2010

How much money did we get?

Here's a cool website that came to my attention via Colleen Grady over at the State of Ohio Education blog:


I've not spent any time looking at it yet, but will include it on my list of favorite links to the right.