Monday, October 25, 2010

New Five Year Forecast

At tonight’s meeting, the Board of Education approved an update to the Five Year Forecast as published by Treasurer Brian Wilson. Click here for a copy.

I consider the Five Year Forecast to be one of the most important documents published by the Treasurer. It gives the Board, Administration and Employees – and the community – insight as to how the Treasurer sees things going from an economic perspective. Money isn’t the most important thing for a school district to be concerned about, but it’s the gas in our tank. No matter how good the race car, the driver, and the crew, you can’t win the race if you run out of gas.

The fuel strategy is critical for an auto racing team. They have to figure out how to run fast enough to have a chance of crossing the finish line first, but yet not run so fast so as to burn fuel at a rate that forces them to make pit stops for gas too frequently, which costs time and position. It’s impossible to win a race without a good fuel management strategy.

Same thing with a school district and money. Our financial strategy has to be a combination of management of the rate in which we consume cash, the frequency in which we can ask for more (via an operating levy, which takes an emotional toll on the community), and yet staying near the head of the pack in terms of the quality of the educational experience enjoyed by our kids.

Here are the comments I made in regard to this most recent forecast:

Tonight, we are considering the approval of a Five Year Forecast to deal with a technicality* associated with executing the 1 year extension of the contracts with the Hilliard Education Association and OAPSE.

The Board still needs to have a discussion about whether there will be a levy on the ballot in May – I believe there will need to be – what size that levy will need to be, and how it will be structured.

While projected growth in student population is always a concern, I believe that in this next levy cycle the two factors that will be most significant in our planning are – first – how funding by the State of Ohio may change, and – secondly – the pace in which we will allow our spending to grow.

We have little control or even influence over how the leaders of our State will choose to deal with a revenue vs spending gap that is on the order of $8 BILLION in the next State budget. We hope to learn more about how the wind is blowing during the annual meeting of the Ohio School Boards Association in a couple of weeks.

But the rate in which we allow spending to grow IS something we can address within our community. It’s largely a conversation about compensation, benefits, and headcount, and will require all of our stakeholder groups – parents, employees, homeowners, businesses, and the municipal governments – to engage in a well-informed, empathetic and respectful dialog about how to go forward in an economic and political climate that seems destined to shift more and more of the public school funding burden to the suburban communities.

I look forward to having that conversation. The Breakfast with the Board which Lisa has organized is a great opportunity for the people of our community to ask questions and make their views known.

* The technicality is that Ohio law prohibits a School Board from signing a multi-year agreement which spans a year in which the Five Year Forecast projects a negative cash balance. In the prior Forecast, this was the case with FY12, because the one year contract extensions signed by the two unions reach into FY12. Therefore a slight adjustment has been made so as to show the FY12 year end cash balance to be zero.


  1. Paul, very much appreciate you posting the 5 year forecast on the blog here.

    I am hopeful to make the breakfast, but if not will hopefully put together some ideas to get this budget in order.

    Not interested in ponying up 90 mill out of local taxpayers pocket.

  2. Paul, after looking at the 5 year, I really believe we could avoid a levy until May of 2012 by flat lining spending in 2012 and 2013 to the
    2011 107m level. We would save 5m in 2012 leaving us a cash balance of 5.7 mill then in 2013
    we would save 14m in 2013 and have a breakeven scenario

    When you take into account the cuts ? ! that have occurred imagine what this budget would be !
    We have some spending issues, not revenue issues, and by holding the fort for two years flatlined, we would have the same programming.

    We are still spending significant revenue per pupil, and when you look at bottom line expenditures, from just this past school year we are projecting a spending increase of about 35 million dollars , and every single dollar will have to come locally,

    Not possible, given our economic situation.
    There may have to be a few adjustments, however this forecast puts the entire burden on the local homeowner.

    Another factor is that we mostlikely will face a
    bond issue for infrastructure repairs, improvements etc. I fully support that as it is a maintenence of facilities that we have poured millions into.

    FAIR WARNING !!!!! We have facilities that are among the best SUPPORTED by continued support of the community. The first utterance of YOU DONT GET IT, or YOU DONT CARE ..... will be met by a focused door to door effort to bring some reality to the situation.

  3. Rick:

    Thanks as always for your input.

    You are absolutely correct that if expenses were frozen, we could put off a levy for a year, maybe even two. But would mean running with virtually no cash in the bank, and I think that's a dangerous place to be given the great risk presented by the $8 BILLION hole in the state budget (assuming that number is real). I'm sure we're gonna get zapped, the only question is to what degree.

    The community would have to show a great deal of collective will in order to pull off an expense freeze as you suggest, because as we all know, that really means a freeze in compensation for multiple years - something the teachers' union has not agreed to, and is unlikely to accept. There would be surely be an unpleasant level of conflict, and perhaps a strike.

    If the public is willing to draw that line in the sand, they need to tell the Board members who represent them, and then hang tough when the battle begins.

    Or they can be silent, and let their feelings be revealed via their levy vote this coming May. But just defeating a levy and crawling back in their hole won't solve anything.

    We need to start talking now. I hope the room is packed for the Breakfast with the Board.