Wednesday, November 24, 2010

More Millage Math

NOTICE: If you read this article prior to January 8, 2011, the calculations I had performed showing the effective percentages increases of various levy amounts were incorrect. An updated chart has been posted, and the numbers in this article have been corrected, as shown by strikethroughs. I apologize for my error.

First, allow me to begin by saying "Thank you" to all the members of the community who participated in the Breakfast with the Board last Saturday. There were great questions and lively discussion, lasting well past when the session was formally concluded. Most of the conversations were about the cost of running our school district, what Ohio's budget crisis is going to mean to school funding, and how large the next levy will be.

I hope two things were achieved during this meeting:  1) that folks learned some things about school economics that they didn't know before; and, 2) that the members of the Board heard how much the people of our community love their schools, yet are still concerned about the ever-increasing financial burden of funding its operations.

We are rapidly nearing the time when the School Board will need to vote on the two resolutions required by law to put a levy on May ballot. There is a regular School Board on Dec 13 (@ Horizon), then the next two will be Jan 10 and Jan 24. The first of those resolutions will likely be on the agenda on Jan 10, and the final resolution on Jan 24, in order to meet the deadline for filing with the Board of Elections.

I've recommended to my fellow School Board members that we schedule a working session soon for the sole purpose of having an in-depth examination and discussion of various funding and spending scenarios, leading to the selection of the millage rate that will be on the ballot. I have also recommended that the Audit & Accountability Committee be invited to participate in this discussion, allowing the School Board to benefit from their talent and wisdom, especially since they have spent the last two years working hard to understand the economic underpinnings of public schools.

My last article included a chart that I constructed to help me understand the implications of various levy sizes. I've enhanced that chart a bit, and make it available to you - with the disclaimer that it is accurate to the best of my knowledge, but is NOT an official publication of Hilliard City Schools. Before making your decision about how to vote on the levy - whatever size it may be - read the official ballot language, and ask Treasurer Brian Wilson to clarify any questions you might have.

That being said, you may find the chart here. Directions for use:

  1. Pick a levy amount between 4 and 10 mills from the first column
  2. The second column shows the amount the annual property tax will increase for each $100,000 of market value (as determined by the Franklin County Auditor). For a 6 mill levy, this number is $184/yr. So if your home is appraised at $250,000, a 6 mill levy would cause your property taxes to increase $460 ($184 x 2.5).

    By the way, this calculation would be the same for every school district in the State. In other words, a 6 mill levy would increase the annual property tax by $184/yr per $100,000 regardless of whether the levy is in Hilliard, Dublin, Toledo or Chillicothe.
  3. The third column shows the total amount of new revenue the District would receive should the levy pass. Looking again at the row for 6 mills, this shows that a 6 mill levy would raise approximately $14.6 million per year of new money for the District.

    This number does vary from district to district, depending on the aggregate property value. Again, the math isn't mysterious.  The total value of all real estate in our District is about $2.4 billion, and 1 mill is a tax equivalent to 1/1000th of the value of a piece of property. So a 1 mill levy raises approximately $2.4 million per year in our District.
  4. The next columns attempt to create a sense as to what various millage amounts equate to in terms of annual rates of increase. In actuality, when a levy passes our tax bill increases in one step, and remains at that level until additional levies are voted in, or existing levies expire.

    So if the School Board said to the community, "we recommend that you approve a 6 mill permanent levy, and estimate that, given our assumptions as to funding and spending, we will not need to ask you for another levy for 3 years"  -  you would scan across to the columns for 3 years, and note that this is equivalent to a 2.6% 3.6% annual increase in just the school portion of your property tax, and to a 1.6% 2.6% annual increase in your overall property taxes (The school tax is approximately 64% of your total property tax bill. The actual fraction depends on which city or township you live in).

    Of course, if our assumptions are off, and the Board has to come back to your for more money in 2 years instead, it would be like raising the effective annual rate of increase to 3.9% 5.5% on the school portion of your tax bill, or 2.5% 3.6% overall.
So how much does the District need, and how many mills will you be asked to pay?

There is simply no mathematically correct answer to that question - it's a matter of opinion. You are welcome to look at the current Five Year Forecast, as well as a bunch of scenarios I've constructed for examining various configurations of levies vs a couple of spending rates.

Very soon, the period of theory, opinion, analysis and discussion will end, and the School Board will reach a decision as to the levy amount.

If you have not expressed your views on this matter, please do so right away. We would love to have you come to the next Board meeting and speak to us directly, but if you cannot, send a letter, or an email and make your voice heard.

6 comments:

  1. Paul, first of all the community should be very appreciative for all the data that you have put forth to allow for a thorough look in a condensed fashion our school funding budgets and future scenarios. Thank you for all of your time and effort in this matter.

    Reflecting on Saturday's meeting I see some curious and outright puzzling issues and stick your head in the sand paradigms.

    1. The foreclosure issue is not just relegated to those who are in the lower middle and middle class area. People have taken pay cuts, medical insurance double digit increases year after year, layoffs etc, and I am not sure that our district really gets that.

    2. There seeems to be this unfounded panic about employees leaving, and everything will go to hell in a hand basket. We have hundreds of people applying here for open positions. I know I would like one, and in todays economic
    challenge, I dont see anyone flocking in huge numbers to other areas. I also got the impression that we are way too worried about a strike, job actions etc. So guess what, where was that concern by the district when job actions were hurting our students ?

    I spent some time looking at this budget
    and a freeze in the 2012 budget, and only a 4 million dollar increase in 2013 would carry us another year without a levy. If we want a short cushion againt the state budget cut a 2.5mill levy would raise almost 6 million dollars.

    SO WHAT WOULD WE HAVE TO CUT ? NOT MUCH

    1. Assess the supplemental contract issue NOW !
    and eliminate some support positions. We are not a university or a college program. And open these positions to members of the community, not just former athletes and children of current employees.
    2. Place on hold the Sports Mgt new program along with some of the elective art music programs that require an instructor that can be accessed by the small number of participants through private instruction.
    3. Increase pay to play rates that are very low
    compared to many districts. By offsetting this with reduced supplementals, this would not have to be a significant amount.

    We have significantly increased our school budget EVERY year for many years now. The community has consistently supported our district with some of the finest facilites in the state, good curriculum, great employee salary and benefits, and a good learning environment.

    But saying we cannot deliver the same product and success unless we continually spend significant monies on contribution to 87% of our total budget is simply either naivete about the financial challenges and struggles of the current economic situation, or simply a failure to be willing to lead through tough times.

    If we aren't willing to put every item on the table then those in charge need to step away and let us search for some new leadership.

    Cutting the 13% of the budget isnt going to get us anywhere to the cost containment and the unsustainability of our current and future 5 year forecasts.

    A 6 mill levy or above will simply go to increase significantly the 87% part of the budget that we cannot sustain.

    Not sure how the district can put forth any type of accurate levy scenario short term as has been talked about given the uncertainty of the next two year state budget. So spend to
    2011 numbers or less, and lets see what washes out.

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  2. It was somewhat disappointing not to hear more dialogue about the upcoming levy at last nights board meeting. I expected some indepth discussion but what was heard was more of the same

    I am glad that Paul brought up the supplemental
    compensation. over $400,000 at last nights meeting alone. I think we can save some $$$$ here

    Just a thought if we passed 3 to 4 mills, held the fort I very much believe we can hold on for another 3 years.

    The other option is to pass 7 or 8 mills, add
    16 million in increased revenue and guess where that leads us.

    I see the need for a small levy given our state funding cuts that might be much deeper than anyone can really get their hands around.

    The district has this ridiculous notion that if we lose anyone to another district the bottom is going to fall out. There are hundreds of well qualified people who would absolutely be an asset who can fill positions that might be open.

    However before a levy is passed the district needs to commit to
    1. A major overhaul of the compensation system
    including supplementals, medical contributions
    ($50.00 ) per month and $125.00 for families ??????????? a major deal breaker unless addressed.
    2. Negotiate specific clauses to keep negotiations out of the classroom
    3. Negotiate penalties and disciplinary actions
    to any District employee who adversly affects students ability to secure proper paperwork,
    for college grants and loans, college admissions. Its about the kids after all ....
    right!
    4. Get a commitment that we will not return to
    giving away levy $$$$ similarly previous contracts that gave 5 to 7% raises in a time where community members are struggling.
    5. Take a hard look at elective curriculum and place programs like Sports Mgt on hold.
    6. Revise the application and interview process
    for positions in the district so that ALL community members have access to supplemental and regular postions.

    It seems the board members, supported during campaigns by the way by the HEA are extremely testy when questions are asked. It would seem the community needs additional representation on the board so that the economic challenges they face are not overshadowed by our penchant to give away the store over fear of strikes, job actions etc.

    Someone still needs to explain how it hurts the kids if we give 2% raises and no step raises
    until our economy gets rolling again.

    There is a lot of economic pain in the community which I am not sure our District is willing to understand.

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  3. Rick - it is not the District that has to understand, it is the voters. Well, maybe it is both - the District needs to state their case and the voters need to decide if the District has made their case. It is a bit like a jury trial - except that the preponderance of evidence is going to be presented by the District if history is any indication. Your Point 4. is the one that really matters, although the others are important too. I only hope that the District is transparent in that regard, and that there is no "prosecutorial" misconduct. I'll be honest - I'm not holding my breath. Those who feel strongly on the matter need to be as vocal as necessary to get those points out there. I haven't had the opportunity to come to the Board meetings recently as there has been a lot going on in my life so I appreciate your update; and I'll be honest - I think that speaking to the Board is not all that effective - I would rather speak to the voters as I think they are getting wiser, as long as they are presented with all sides.

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  4. The fundamental question that should be asked, in my opinion, is what's the logic behind the numbers? What changes between 5 mills and 7 mills? If 5 mills generates $12m of new money every year, and 7 mills generates $17m, how would that $5m difference be spent?

    Or looking from the reverse perspective, if 7 mills preserves current programming and services, what happens if there is $5m less than that available?

    The Board apparently has no desire to have that discussion, despite me making the recommendation the last two Board meetings that we do so.

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  5. Paul, after viewing Mondays meeting, I really dont think they care what the public thinks. For some reason our employee unions pay increases are more important than the communities economic challenges that are occuring in a large amount of households

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  6. Paul - if the Board is not willing to have that discussion, then how can they possibly come up with a figure? Mr Teater seems to think that the voters will support whatever they come up with since the "recent poll" (??????) rated the district an A or B, yet he goes on to say "we will have to make our case to the public". Seems to me they can't even come up with a case! Apparently they are still ignoring the resources of the Audit and Accountability Committee which seems to have more financial expertise than the Board but, as has been publicly pointed out, also appears to want to focus on the 88% of the budget that is compensation. I can't wait until I hear the Boards case as I will be looking more for what it doesn't say than what it does. Their case had better state where the funds are going to go and if they don't even mention compensation, it will come back to haunt the entire district.
    Rick - I think you have hit the nail directly on the head - the Board is going to dance right around the largest item in the budget. If they do that, they are making a huge mistake - I have been fairly civil over the years in my criticisms but my kids are not in a position to be affected any longer and I'll be dropping the gloves to gather opposition to any levy. I hope it doesn't come to that, but I am not in the least bit optimistic.

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