Wednesday, November 17, 2010

Millage Math

At our last School Board meeting, Treasurer Brian Wilson presented a couple of simple charts showing what the district's future cash balance is projected to be given three different levy scenarios: 6.9 mills, 8.9 mills and 9.9 mills. He developed these scenarios by starting with the most recently approved Five Year Forecast and dropping in the revenue stream that would be generated by these various levy amounts.

Of course, this is from the perspective of the school district. What would these various levy amounts and funding periods mean to you, a homeowner or business owner in our district?

Here is a chart that I hope helps answer that question:

You read it this way:

  • Each row is for a different millage amount, from 4 mills to 10 mills. I'll not insult your intelligence by tacking a ".9" onto the numbers as though you don't know 6.9 mills is pretty much the same thing as 7 mills.

  • If you pick the row for say 6 mills, the "$Incr" column shows that this would increase your property taxes by $184 per $100,000 of market value, or 7.9%.

    So if the Auditor has said your home is valued at $250,000, you would multiply the $184 by 2.5 and arrive at $460 for the amount your taxes would increase if a 6 mill levy were passed.

  • The columns show what the effective annual percentage increase is based on how long the Board tells you it will be until yet another levy is placed on the ballot. If the plan is to wait for three years before asking the community for more money, then a 6 mill levy is equivalent to increasing your taxes at an annual rate of 2.6%.

    But if the district spends the money faster than forecasted, or the revenue - notably the state funding - is less than expected, then it might later be decided that another levy is needed in just two years. If that's the case, the effective annual rate of increase rises to 3.9%
You can also 'work backwards' using this chart.  For example, if you decide that you're not willing to have your property taxes increase at an effective annual rate greater than say 3%, look for numbers close to 3% on the chart, and see what combinations of levy millage and years yield about 3%.

It looks like something between 4 and 5 mills on a two year cycle would be about a 3% annual growth rate.

Or 7 mills on a three year cycle.  Or 10 mills on a four year cycle.

I hope this helps you gauge the impact of various levy sizes on your property taxes.  The decision as to the levy amount that will be on the ballot is going to happen in December or January.  If you wait around until April, the only choice you'll have is whether or not to vote for the levy.

If you want to influence the Board as to the levy amount, you'll have to speak up now. The Breakfast with the Board this Saturday, November 20, from 9am-10:30am at the Central Office Annex is a great place to make your voice heard. Come any time during the hour-and-half gathering, speak your mind and leave, or stay the whole time if you like.

Just don't be silent and expect things to come out the way you want.


  1. Evidently my comment is too long (4,096 character max). So I will break into two comments. I apologize for my lengthy response.


    While I wish I had all the data I need to answer your fundamental question of what I feel is a "reasonable" annual growth rate for school funding, I do not have all of the data necessary nor the expertise in education programming to make that call. For that, I have to rely on the subject matter experts hired by the BOE and their officers (Superintendent and Treasurer). As we have witnessed over and over again on this board, and I suspect in all communities, what is "important" programming is subjective. For me, it is more than just passing the test or even preparing students for college. It’s a rounded education that includes “experiences” in addition to core competencies. For others, it may be purely academic.

    So, for that reason, I can't really surmise if we are spending too much, too little, or the appropriate amount to adequately educate our young people. However, I do know that the district, and its employees, has reduced the PROJECTED spending forecast (notice I didn't say reduced the overall spending) over the past several years. Can more be cut? Absolutely! From where? I don't know.

    Obviously it has to come from compensation, but that really translates into programming cuts in the long run. Sure, we can freeze, or slow, the compensation growth rate, but at some point 87% of our budget WILL grow unless we continue to eliminate positions (ultimately programs). My point is that, while I agree we have to "correct" compensation, it is not, in itself, a formula for a permanent tax freeze. That’s my long way of saying that, barring a major change in the state funding allocation, levies are going to continue to be a major part of our future. In the short term, we can potentially flatten the growth curve, or perhaps decrease it with cuts or early retirement (I’m not sure what the ROI is when early retirement packages are offered, but I know they come at a cost upfront). Regardless of the methods used to flatten or reduce the overall budget, at some point we will reach maximum efficiency and will need to incur reasonable increases to our budget to "maintain" that level of efficiency.

    Short of offering early retirement (again, I’m not sure how cost effective this is or what kind of return we get on that initial expense), we can only reduce costs by eliminating staff or by reducing the amount our current staff is paid. Either way, this is a temporary “dip” on our spend curve. One, in my opinion, that we NEED to have! I have my personal opinions on what should be cut, as I’m sure most of us do. For me, when I look at the largest area of growth in our staff costs, it comes in the area of ELL and other special education programming. Much of this is paid by grants (federal or otherwise) but I’m not sure 100% of it is covered the legislators that mandate it. Please note, I AM NOT saying special education is not necessary and please don’t misread that I am anti-special education. That’s not my point at all! My point is that the greatest area of growth has been in areas tied to ELL, No Child Left Behind, and other unfunded mandates. What can we do about this? I am not knowledgeable enough about how these programs work to know why they have generated such a significant cost nor can I argue their necessity.

  2. Part 2

    Likewise, how big of a cost are our athletic programs? Our band program? I really don’t have a clear understanding. I suspect they are not as big of a cost as the district leads us to believe but are usually the first things on the chopping block when a levy is required to pass. Now, I happen to be a huge fan of high school sports and the band. And I believe they add tremendous opportunities to achieve the rounded education that I seek for my children. And I further expect that these programs tend to recover a lot of their own expenses, but I have no proof. How could I? Who can tell anything with the ambiguity of the School budgets?? There just isn’t enough detail for a layman to fully understand the true cost of a program. And even if we did, how do we measure the cost-benefit of that program?

    All I can really answer is what I “feel” is a reasonable amount of annual increase for basic services. Yes, I consider schools to be a basic service provided back to me for my taxes, much like I would sewer, roads, police protection, fire departments, green space, etc.

    So, assuming we reach maximum efficiency (that is, the appropriate level of programming at the ideal price) then I “feel” 2.5% to 3.5% annual growth is acceptable (that’s probably less than annual inflation growth over the last 20 years, and feels “ok” to me). That means, per the table you provide (which is awesome by the way), a 7 mil levy would have to last 3 years or a 10 mil for 4 years. I would be ok with either a 3 or 4 year span between levies, but not longer. I believe anything longer than 4 years is not in the best interest of the tax payers OR the school district. Too much can change in that span that may need a re-calibration for either the tax payer (economic downturn, poor school financial planning, etc) or that may require additional taxes (say, cuts in state funding). So, I think 3 to 4 years is a good span. 2 years is probably too soon as it could hamper the ability for long-term planning on the part of the school district, but greater than 4 years reduces the opportunity for checks and balances in the system. Just opinion, not a scientific law.

    Now, my question for you and the rest of the BOE and administration….. If I am satisfied with a 7 mil (3 year) levy or a 10 mil (4 year) levy, that still leaves the district very short of its’ forecasted budget….. by a significant amount. What has the district determined will be cut to meet this gap? What programs, staff, or expenses are available for reduction to meet the difference between my suggested annual growth rate? I would like something of substance and with adequate detail and rationale. If it is athletics, tell me why. If it’s band, tell me why. If it’s ELL, tell me why. Show me the math. REAL math! I ask, because I know if anyone in the district will do it, you will. For instance, please don’t tell me the “cost” of athletics without factoring in the revenue generated by these programs (I suspect overall they are a cost, but I suspect football MAKES money and basketball probably breaks even. To omit this from the calculation is not a fair representation of the cost).

    Let’s put the discussion out there on what the district proposes to cut and let us debate that as well. As I said, we all have our own views, but just having the conversation will help educate the public while providing transparency to the decision-making process. For instance, transportation is a huge cost to our district, but I suspect is worth it for safety, if nothing else. Perhaps many don’t agree, I don’t know. But it would be interesting to have that debate to see if that is a cost we really want/need. My youngest is in Kindergarten and doesn’t currently have transportation provided. I definitely do not believe a 5 year old should be asked to walk up to 2 miles to school and from school. That’s my opinion, and I’m willing to pay for it. But maybe the majority disagrees with me. Let’s have that discussion.

  3. KJ:

    Wow. Thanks for the discussion. I can't give you answers to every question you raise, but here's what I can:

    - my question wasn't so much what I think a reasonable growth in spending would be, but rather what rate of growth in your property taxes would you find reasonable. The difference in those two questions is that property taxes are only a portion of the total funding picture. In our case, 35% of the funding comes from the State, and 65% from local property taxes.

    So if State funding were to remain constant in dollars (it's likely to decrease 10-15%!!), then a 2% increase in property tax collections would increase total revenue by only 1.3%.

    In other words, the growth rate of your property taxes needs to be about double the rate in which you want to allow spending to grow.

    - Every spending area in the budget has its constituency, and making any cuts will anger someone. We have gotten to where we are by adding new stuff here and there in small chunks over the years, and it's hard to unravel any of those little changes from the overall fabric of the district.

    I truly don't know how you come to a measure of efficiency in a school district. My research isn't exhaustive, but I do spend one afternoon each week in an elementary classroom, helping the teacher work directly with her kids. The group of kids she has this year has a different makeup that the ones she had last year - in both ability and personality. I know that if you compared day #84 from last year to day #84 this year, it wouldn't look very much alike because she's had to adapt the pace and content to the kids.

    It's not like a manufacturing line where you can control the quality of the input parts and hire selectively to ensure you only have workers who can do the task repetitively with few errors. Nor can you apply statistical process control approaches to the classroom, because when Johnnie B shows up on Monday morning, he's at one level of stamina and concentration, and maybe a completely different kid the next day.

    The kids in our schools aren't homogenous units of production. They have differences in ability and differences in their home environment. Some come from families who have been in America for generations, some were born somewhere else in the world.

    If the objective is to have every kid cross the finish line, we have to accept that the cost of doing so isn't easily predictable.

    Despite all this, we must as a community decide how much we want to spend to run our schools, which is substantially the same as asking how many people we want to employ, and how much we want to pay them. The problem is that we can't easily predict any of the inflection points, ie - how much less could we spend and still achieve "Excellent with Distinction" (a rating system with its own set of flaws and limitations)?


  4. - Cost of our extracurricular programs: That's a question the Audit & Accountability Cmte has tackled, and I don't think we have a clear picture yet. These programs spend a mixture of taxpayer money, money raised from concessions and other sales, sponsorship dollars, and donations.

    Then you have to decide how to account for the cost of facilities, both construction and maintenance. Of course, the construction costs are sunk - money already spent, and you can't make it go away.

    I think it would be reasonable to say that if we shut down all extracurricular activities, the impact would be to save about 1 mills worth of spending.

    If there were no levy in May, and the State of Ohio really does whack our funding by 15%, then there will indeed have to be decisions about what to cut. You have to start with the list of stuff that the State doesn't require a school district to offer, and extracurriculars are on that list. So is busing within a certain radius.

    And yes, you have to look at all the non-teaching positions and decide which administrators and staff personel could be cut.

    And finally you have start looking at teaching positions. Do we have to offer more than one foreign language in the high schools. Do we have to offer AP classes?

    We've not asked those kinds of questions in our school district. We haven't had to because there have never been any really serious threats of funding cuts as there are now - at least not in past couple of decades. Before that, our school district was tiny, and years would go by between levy requests.


  5. I agree with you comments about how long we should plan to go before next putting a levy on the ballot, and it's the reason I was opposed to the levy for the Columbus Metropolitan Library. Notice that their levy campaign was completely emotional - there was no discussion whatsoever about economics. And it passed convincingly.

    You're asking the right kind of questions, and we don't have good answers to all of them yet. My gut tells me that looking a programming changes won't make much of a difference - we have bring compensation and benefits into the conversation.

    Hope to see you Saturday at the Breakfast.


  6. Thanks for the response Paul.

    Was the “wow” because I talk too much? Lol

    - I understood your question regarding growth in spending. My answer is I feel like I can accept an increase to MY costs annually in the neighborhood of 3%. Assuming of course that I feel the financial efficiencies are adequate. Additionally, should a catastrophic need arise, like the state removing 15-20% of our funding, then I may be inclined to increase that amount to maintain services/programming I felt were important. I don’t wish it to happen, but if something so drastic were to happen, I think I would have to help recover costs to maintain critical programming (again, assuming financial efficiencies are met)

    - Your comment about teachers adapting pace and content based on the makeup of the students in the classroom is interesting. I believe that is one of the major hurdles to achieving merit pay. No one has developed a system that allows for subjective evaluation of a teacher’s performance. Not saying it can’t be done, I’m just pointing out that one of the reasons it hasn’t gained traction is because a teacher’s ability to teach is not entirely based on test scores. I don’t believe Ridgewood has all the best teachers and Horizon has all the worst teachers, yet the test scores are used as indicators of building performance. By those standards, Ridgewood is a “better” staff. Many fear that until the intangibles that you describe can be included in a merit system, it can not be fair or equitable. Personally, I think the BEST teachers should be placed in the classrooms with the highest risk students. A merit system should incentive a good teacher to take on the toughest challenge and reward them for significant progress, if not able to meet state minimums.

    - Regarding Audit & Accountability Committee: Are they currently working on the very scenarios we are discussing? Are they digging into the details and analyzing the data to help us understand where the “fat” exists and what changes they recommend? Can you give me some insight into their current activities and when the next report is expected?

    - Regarding this comment, “My gut tells me that looking at programming changes won't make much of a difference”: Can you expand upon this thought? I understand fundamentally what you are saying, but can we really cut costs without changes to programming? Seems our growth in spending is 2-fold: 1) Total compensation increases, and 2) increase in total staff. We may be able to freeze or even reduce compensation temporarily, but isn’t the greatest benefit in reducing staff count? And how do we do that if we don’t reduce programming?

    Thanks for your efforts! I do appreciate the dialogue and the opportunity to learn more about these topics!

  7. KJ: Here's a list showing all the job titles in the HEA, and the number of people in each position:

    1st Grade 49
    2nd Grade 50
    2nd/3rd Gr 7
    3rd Grade 52
    4th Grade 43
    4th/5th Gr 7
    5th Grade 42
    6th Grade 45
    Adapted Phys Ed 3
    Art 35
    Asst Ath Dir 6
    Autism Interv Spec 1
    Business 12
    C B I - A 1
    C B I - B 2
    Computer 5
    Counselor/Elem 15
    ELL Tchr 23
    English 43
    English/Speech 3
    Fam & Cons Sci 10
    Fam Prevent/Intv & Pre-Sch 1
    French 5
    French/Lang Arts 1
    German 4
    Gifted Intrv Spc 14
    Guidance Counselor 19
    Health/Phys Ed 21
    Hlth/Trainer 2
    HOPE 1 3
    HOPE 2 1
    Interv Spec-SBP 14
    Interv Spec-SLP 54
    Interv Spec-SLSP 12
    Intervention 3
    Intervention Tchr 13
    Kdg Intervention 17
    Kdg/1st Gr 8
    Kindergarten 32
    Language Arts 37
    LC Coord 13
    LC Coord 1
    LEAD Tchr 1
    Math Coach 3
    Mathematics 61
    Mathematics/Computer 1
    Mathematics/Intervention 1
    Media Spec-Elem 13
    Media Specialist 9
    Mental Hlth Spec 2
    Multi-Cultural 2
    Music 20
    Music/Instrumental 13
    Music/Orch/Tch Lead 1
    Music/Orchestra 2
    Music/Strings 5
    Music/Vocal 9
    Nurse 13
    Occup Therapist 8
    Online English 1
    Online Math 1
    Online Science 1
    Online Social Studies 1
    Performing Arts 3
    Phys Ed 19
    Physical Therapist 3
    Pre-Engineering 4
    Preschool Sp Ed 12
    Psychologist 16
    Psychologist-Intern 2
    Science 58
    Social Skills 1
    Social Studies 55
    Sp Ed Work Study Coord 3
    Spanish 23
    Speech Pathologist 16
    Study Hall Tchr 1
    Supplemental Services 2
    Teacher Leader 5
    Technology Teacher/D 14
    Title Reading Tchr 36

    Grand Total 1,170

    I personally don't see a lot of extraneous programs in this list. I don't think it's a quantity issue, it's a price issue.


  8. Audit & Accountability: No, they're not working on scenarios right now, but I've suggested that we have a working session in which we ask them in to help us think through what kind of levy is needed.

  9. Keep an eye on Pickerington LSD, a community that shares many things in common with Hilliard CSD. Their levy recently went down and now some very difficult decisions will need to be made.

  10. Indeed. However, Pickerington is somewhat different than Hilliard because they have so little commercial property tax revenue. With State funding being flat for years, and heading downward, the only source of new revenue they have are more taxes on the people of the community.

    This is why I press so hard for residential development to be paced to commercial development. It's like having a partner who matches your contributions. It was dollar for dollar for many year in our community, until the residential building boom of the last decade.

    Pickerington is indeed in a pickle. It's a classic 'failure of the commons' situation where the very thing that attracted so many people to go there (the school system) is now failing due to the unsustainable demand for services.

    There's no way for them to solve the problem without every member of the system - employees and public alike - making some sacrifices.

    I think that's going to be our story as well

  11. I agree with your post, Paul. Exactly why I said, Hilliard & Pickerington share "many" things in common, rather than "almost everything" in common. I was mostly thinking of the similar socioeconomic makeup of the two communities, than anything else.

    I'm aware that as daunting as Hilliard's circumstances are, that Pickerington's are probably even more grim. Pickerington has almost no industrial/commercial tax revenue. Hilliard has a somewhat more non-residential tax revenue, but still not enough.

    As you indicated, sacrifices will need to be made from ALL quarters. There's really no other way out of this, without seeing HCSD crash and burn. In the meantime, (IMHO), we need to keep an eye on the developments out east. Could be a cautionary tale.