Thursday, November 11, 2010

My Comments at the Board Meeting Regarding the Next Levy

The Columbus Dispatch chose to distill my comments at last night's School Board meeting down to a tiny sound bite that left the reader with no idea what I'm thinking.  Below is the full text of my comments.
I have spent the last two days at the annual Ohio School Boards Association annual conference attending every session I could that dealt with school economics. The primary question on everyone’s mind – from all across the State – was how much the Governor and General Assembly are going to cut the funding to schools. There was no question about if there would be significant cuts, and no one thought it would be less than 10% - the number Brian has used in the Five Year Forecast we just accepted. More than a few thought it would be more.

Assuming that we all agree that we desire to maintain the excellent quality and breadth of programming and services offered by our school system, it seems that we have two primary things to discuss.

First is whether we want to stick with this assumption of a 10% state funding cut, or perhaps increase it, and what kinds of contingencies we want to put in place in case we are wrong. A big part of this is deciding how aggressive to be in raising our cash reserve back to 10%, as is Board policy. That’s not free – it will take mills to achieve this.

Secondly, this has to be a conversation about the cost of compensation and benefits for our excellent team of teachers, staff, and administrators. Comp & benefits consumed 87% of our operating budget last year, and is projected to reach 89% of our budget by FY2015. We can and must continue to seek ways to save money in the other 12% of our budget, but there will be no way to work our way through these economic times without dealing strategically with comp & benefits.

It is a time when both sacrifice and investment are necessary. When we next put an operating levy on the ballot, we will be asking the already stressed homeowners and businesses of our district to increase their investment in our schools. It will be burden on them, and they will not be inclined to support a levy unless convinced that it is absolutely necessary – after we have taken steps to minimize spending.

And recognizing the base and step freezes the whole body of employees have agreed to for 2011, I believe we also need to ask the employees of our district to continue to share in the investment necessary to preserve all the great things they have achieved over the years. We can use all kinds of euphemisms in this discussion, but the question comes down to how many people will be employed, and what will be the collective cost of their compensation and benefits.

I reject the notion that the only tool available to us is the broad axe of layoffs and the attendant cutting of programs. I attended a discussion this week about Early Retirement Incentive Programs. I don’t know that such a program would make any sense for our district or for our employees, but it seems like we need to run the numbers and find out.

And there are no doubt many other options to explore if we can do so in the spirit of coming together to solve a shared problem in what is soon going to become a statewide climate of fiscal warfare. 

It can be done.

Thanks to all those who attended this session, and especially those who came forward during the time for public participation. I hope that many more attend the Breakfast with the Board on Saturday morning, November 20, at the Central Office Annex. Come any time between 9am and 10:30am and let both your school leaders and other community members know what you think about a levy on the ballot this coming May.


  1. Your teachers may all be great...but the fact that 87% of your expense is payroll, there are the obvious cuts right there. How much could you possibly squeeze from the other 13%? It absolutely stinks having to lay people off or cut salaries or decrease benefits. But, you have to think as a business and NOT like a gov't agency. Having A+ schools are nice, but think about what another levy will do to the incomes of those in the district...many who are already facing a foreclosure crisis. There are ways to deal with this other than levys and you better start thinking about them because the residents of Hilliard will NOT pass a levy in 2011, it just won't happen.

  2. I am somewhat resigned to a levy, but the amount
    is going to have to be a minimal one. Many are hurting financially, and the district must accept responsibility for growing the compensation module significantly over the last 10 to 12 years.

    One area that needs to be addressed is the supplemental contracts. We are paying premium dollars for coaches that have zero experience, and other areas that can be reduced.

    Additionally programs like the sports mgt curriculum should be mothballed , and really should never have even started given the known quantity of economic challenges coming.

    Lots of us not getting raises of any kind and even cuts in compensation, plus medical increases that have been double digits every year. The district employees have not had to deal with this.

    I can agree to a 4 to 5 mill levy, but at the same time we need hold on to a spending level freeze for two years.

    Once again, one ounce of you dont get it you dont care crap will be met with fierce opposition. FAIR WARNING

    Start adjusting the medical plan NOW stick to minimum raises 1 to 1.5% and eliminate the step raise.

    NO retribution against students and parents

  3. Curious Paul. Did you know the people who spoke during public participation prior to them speaking? Did you know prior to the meeting they were coming and what they were going to say? Did you help them prepare their comments? Are they actually concerned citizens or your puppets?

  4. Allow me to answer your questions directly:

    1. Yes. Mark Freeman and I were colleagues for many years at CompuServe, and we remain in contact, primarily to discuss school issues. I've not known Dave Frey for very long, but we do talk occasionally, again about school economics.

    In fact, I talk to all the people I possibly can about school economics, because we have important decisions to make in the next few weeks and months, and it will be infinitely harder to make good decisions when the people of our community are ignorant about the mechanics.

    2. I did not know Mark was coming to speak, and therefore did not know what he was going to say. But Mark comes to many school board meetings, something I wish more members of our community would take interest in doing. I did know that Dave would be coming to the meeting, but did not know specifically what he would say.

    3. No, I did not help either of them prepare their remarks. However, both are readers of this blog, and therefore have available to them all the information and opinion I publish. It's their choice whether to agree or disagree with me.

    I value the dialog above agreement, frankly because I learn more from people who respectfully disagree with me than I do folks who think much like me.

    4. You insult Mark, Dave and me by insituating that they are my puppets.

    If you call people who happen to agree with me puppets, then what do you call the thousand or so members of the HEA who take direction from their local, state and national leaders about which candidates and issues should get their votes during elections?

    And why do you choose to take your shots from behind the cover of anonymity? Are you not proud enough of what you have to say, and how you say it, to have your children read it?

  5. Thanks for the specific input, Rick and others who have weighed in. We're really past the time for generalities - we need to start talking specifics.

  6. You made an error in the date for the next Breakfast with the Board. It's 9 to 10:30 a.m. Nov. 20 in the Annex behind the District’s Central Office, 5323 Cemetery Road.

  7. Thanks for catching my error! Correction made.

  8. Anon, quite funny with the puppets thing. We are because you are obviously clueless, on a spending growth over the last 12 years. Had we given out more moderate increases, held the line on various compensation benefits like free health care, etc
    we would not be facing a levy increase during a time of very uncertain economic factors. As anon you apparently want an open checkbook, and fail to recognize that despite the clout of the HEA and its partners, this community has fully supported the schools, Just take a minute and look around the district.

    So guess what it is time to hold the fort for a while. How is that puppeteering.

    And guess what, this levy and all future levies can be defeated by your elistist crap that you partner with those who constantly tell the community you dont give a crap.

    Stand up and be counted and dont hide behind
    the anon moniker.

    Or are you one of those great teachers who screwed graduating seniors out of their proper paper work to get grants and scholarships, while working to YOUR contract. The hell with the kids and give me my Pay raise. Pathetic

    Apparently, only those who want an open checkbook and spend whatever you want are entitled to speak at board meetings.

    Perhaps indeed we should just freeze spending,
    and hold the fort on spending at 2011 levels until YOU get it !

  9. Paul,

    Let's assume that we reduce all costs to just Salary and Benefits (I know this is not possible). How long does our current revenue stream last us, and what levy projections would be needed to continue to support it?

  10. Paul,

    I am concerned that our Board and Administration will see the state level cuts as an impetus to increase local property taxes.

    The Tax Foundation ranks Ohio 46th in its State Business Tax Climate Index. Although their assessment does seem limited to the cost of goverment and the methods of taxation (it does not appear to factor in quality of services), much of the macroeconomic data I hear seems to suggest that Ohio is indeed struggling to retain and attract businesses and individuals.

    Who knows, maybe weather is playing just as big a role as taxes. But we only control one of those factors.

    Ultimately I think we will need to reduce aggregate governmental spending in order to regain our competitiveness.

    And since I do not envision any state tax reductions to offset their cuts, increasing local taxes is pushing us further in the wrong direction.

  11. I apologize for missing the meeting last night - I had a family medical situation that kept me away. I'm bummed, because I intended on saying a few words myself (and no one here helped me write them) Barring another such situation I will be at the breakfast meeting. Nice to read that others voices were heard. I'm looking forward to another opportunity.
    FYI - I'm thinking that "coming out of the closet" around here might be the right thing to do - maybe give posters such as Anonymous pause for thought, and I don't have anything to protect - my kids have both graduated Davidson and, hell, I've been published in the Letter to the Editors in past years anyway. And that was BEFORE I fond this blog.

  12. Thank you Paul for what you do. I live in another district but I pay attention to your blog and postings on other message boards because it is evident that you know what you are talking about and are being responsible by planning ahead.

    We're all in this together and it is best if we learn from each other.

    Galena Resident

  13. Mark:

    Not sure if I'm answering your question, but here goes:

    In FY05, our total funding was $123m, and the Comp+Benefits cost was $108m, making Comp+Benefits about 88% of funding.

    In the year we just closed, FY10, revenue was $158m and Comp+Benefits was $137m, or 87%.

    The crossover year is forecasted to be FY13, when revenue (sans a new levy) is projected to be $154m while Comp+Benefits is $156m. By FY15, revenue would be $153m and Comp+Benefits about $170m.

    We need to recognize that these numbers are all forecasts built on the assumptions Treasurer Brian Wilson includes with the forecast.

    It's only been a few weeks since the Board accepted this forecast, but after attending the OSBA conference this week, I'm convinced that this forecast is too optimistic.

    One of the questions raised by one of the conference speakers last week was whether this estimate that state funding would be cut 10% included all aspects of state funding, for example the reimbursements for the now-defunct Personal Property Tax, and for the 2.5% and 10% rollbacks.

    Brian assumed it would only be the Unrestricted Grants-in-Aid that would be cut. But it might be 10% of the whole pot.

    And it might be 15% of the whole pot. No one knows yet.

    The only thing we know for sure is that an attempt to spend money in our district as though it is business as usual will require the community to pass an enormous levy in May. I can't see that happening.

  14. Thomas:

    I couldn't agree more. Our state isn't the only one who is solving its budget crisis by transferring projected deficits to lower level government entities. They've been weaning us off state dollars for a while now by holding our state funding constant, forcing us to carry more and more of the burden locally.

    In FY2003, the State of Ohio provided 39% of our funding. Last year, it was 37%. Our latest forecast projects it to be 33% by FY2015.

    But I need to say again that this isn't just a funding problem. In FY2003, we operated our district with $101m, of which $93m was Comp+Benefits. Last year, our total cost was $157m, of which $137m was Comp+Benefits.

    By FY2015, our projected costs will be $191m, of which $170m will be Comp+Benefits.

    Here's the more telling story: between FY2003 and FY2010, Comp+Benefits costs have increased 47%, while the number of students has increased only 20%. From FY2003 to FY2015, Comp+Benefits spending will have increase 82%, while the number of students will have increased only 24%.

    That's where we have to concentrate our attention.

  15. In two years the casino will be built, so what does that do for the Ohio schools?? In these rough times of the economy you just can't keep asking for people for more and more money. You can't get blood from a turnip, if people don't have it they don't have it.. There is going to be millions and millions of dollars from four Ohio casinos, well enough to pay for a huge chuck for our school systems.

  16. I have no confidence that the casino will benefit any school district other than South Western. The Lottery profits are supposed to go to schools, and technically they do, but the General Assy just reduced school funding from other sources by an equal amount, so the net benefit to the schools is zero.

    Decades of community apathy has led us to this point where we have an unsustainable cost of running our schools. It's been our own local choice, enabled by our collective silence and our inattention to the decisions made by many school board members over many years.

    The only way to end that is not for folks like you to complain anonymously on blogs like this one, but rather for you to come to school board meetings and tell them what you think. Or to write letters. Get your neighbors fired up.

    And if at all possible, come to the Breakfast with the Board this Saturday morning and let the other Board members know what you think.

  17. The best the casinos might do in the long run is to reduce the amount that the state CUTS its funding to schools. As it is, if we don't find a way to actually reduce our local spending, we'll need a few mills of property taxes just to replace what the state is taking away. There will be no magic bullets, like casino revenue, to change that in the short term.

  18. As much as I hate to say it, if we want to maintain to be a top district, it's going to hurt. I'd like to see the teacherts agree to another pay freeze (no one I know has gotten a raise in SEVERAL years) and to contribute more to their health care costs (my premiums next year went up 100% and my deductible is up 25%) but if we push them too much, they will leave for a district that can treat them better.

  19. I think there is a paradigm that if we lose any teachers, the district goes to hell and we lose.
    We dont lose. There are hundreds and hundreds of teachers waiting to teach in this district.
    Number two, where are these teachers going to go.
    Olentangy? Big Walnut, New Albany, they too are going to face the same issues we do.

    We have increased our spending year after year after year. We have not made ANY cuts but
    utilize not spending to the forecast as a cut.

    No one has any clue about how much of cut we will get from the new governor. It is going to be a significant cut. So while he cuts taxes
    and spending IT IS JUST ANOTHER TAX SHIFT FOR THESE WORTHLESS HEROES> So pass 3 mills to keep some new money flowing, freeze spending to
    current year 2011 fiscal for two years and we can make it through.

    There are programs to be cut, Sports Mgt?
    Supplemental contracts that are very lucrative

    Besides get ready for another round from the district and the HEA of you dont care. Guess what foreclosures, job losses, pay cuts, double digit medical increases. A single teacher pays
    50.00 per month in premiums. No way this can continue, so

    87% plus of the budget is compensation . How does education hurt if we even reduced those expensed 2% Could save 3 million pretty easily and add a 3% millage increase we could hold on
    for two years

  20. Paul,

    I have a question that may be slightly off topic, but was inspired by your discussion of the percentage of our overall budget provided by the state being reduced each year.

    I recall at one time you, or Marc, discussed the amount of each tax dollar generated within our district that actually comes back to us from the state. Something like $0.40 per dollar sticks in my mind. Can you confirm?

    Second, Has the percentage of state funding decreased, the total dollar decreased, or both?

    My other question is when we approve a levy, does the same ratio entioned above apply or does 100% of that money stay in the district? With each levy we pass are we further supplementing other districts or do we actually get to keep that money locally?

    As with all political matters, I'm sure it is a convoluted answer, but one that I wish to understand better.

    The way I've always thought of it, and probably incorrectly so, is that the state provides "base funding" and we can choose, by levies, to offer programming above the state minimum (Ideal thinking I know). Therefore, that money generated from additional levies comes back to us without "tax" from the state.

    I'm sure I'm wrong, but can you help me understand this better?


  21. KJ:

    Yeah, that number was from a report that Larry Wolpert had generated back when he was a State Representative. The information is surely stale by now, but what you remember is the inverse - the report actually said we get back around 60% of what we pay in state income taxes as school funding. Other districts get less (Dublin, about 15%), and some get several times more than what they pay.

    The state funding has become smaller in both dollars and percentage of total spending. In other words, the number of dollars we spend has continued to increase at the same time the number of dollars we get from the State has decreased.

    That's a recent phenomenon - until the last two years, the State funding has generally increased in tiny amounts, but was still a decreasing percentage of our total funding.

    Yes, 100% of the levy dollars stays here. But I think it is a two-edged sword.

    You're close on your perspective on funding - the State is supposed to provide the foundation funding for all districts.

    But in both the current and previous funding algorithm, there is a notion that the State can reduce its aggregate funding burden by transfering a fraction of the funding burden back to local communities. The exact fraction is determined by property wealth (residential, commercial and agricultural), with wealthier districts being expected to provide more of the funding locally.

    Of course, there is also a farm subsidy program built into all this. In Ohio, agriculural land is appraised at a fraction of its true market value (CAUV if you want to look it up), meaning that the from the perspective of the State school funding formula, districts high in agricultural land appear always to be poorer than they really are. So they get lots more school funding dollars from the State than they would without CAUV.

    Again, I have no beef with this, but it's just another political tweak that affects how money flows from some districts to others. Hilliard is a 'net funder.' Going back to our getting only about 60% of our state tax dollars back, I tell folks that we fully fund our own district, plus one or two little ones around the State.

    I'm convinced that the State will continue to pull dollars away from Hilliard City Schools because we are felt to have the local capacity to spend far above what in takes to meet minimum requirements. And we've demonstrated that repeatedly.

    As they say, "no good deed goes unpunished..."

  22. Lots of talk about how much of the budget goes to salaries/benefits. Just wondering, seeing as how people are our business, what percentage of the budget should be devoted to salaries/benefits?

    Seems to be another case where people see a really high number and think it is too high, but don't have a rationale to back it up.

    Teachers ARE the schools. They SHOULD be the highest percentage of the budget; They teach the kids. There may be 100's of applicants for our positions, but that doesn't mean they are all quality teachers (I'm also not implying that HCSD is full of quality teachers).

    So, what's the number??

  23. MM: Of course comp&benefits is the greatest component of spending for a school district - it should be! But you'd be surprised how few realize that this is the case.

    I bring it up over and over simply to make the case that any effort to manage the spending trajectory of our school district has to give appropriate attention to comp & benefits. For years we've been tweaking the 12% or so that isn't comp & benefits, and there's not a lot of money left to be found there (although there's always some).

    As a community, we finally have to ask and answer the question: "What do we want to pay our teachers, administrators and staff?"

    That's all I'm saying. It's all I've ever said.

  24. 3 questions

    1) Based on the histogram Paul provided in his entry "Dealing with the Hard Stuff", it appears that a high percentage of teachers in our district are in the late stages of their career, and thus, receive salaries near the top of the pay range. One natural conclusion is that in near future many will retire and be replaced with younger, less expensive, teachers. Has anyone done an analysis of savings through attrition? While not exact, what if we assumed teachers retired after 30 years of service. I would like to see this analysis as I believe the savings could be considerable. While I am not advocating replacing experienced teachers with unexperienced teachers, as a mathematical exercise, I'd like to understand where that trend might take us. There IS a tipping point and we seem to be approaching it.

    2) Is there a comparable histogram available for administrators and staff?

    3) What is the breakout of staff that make up the 87%? Meaning, what percentage of compensation/benefits goes to classroom teachers, non-classified teachers, administrators, staff? That would be another interesting piece of data to have for review.

    I kind of understand Musicman's point that we shouldn't be surprised that 87% of expenses are staff related, as the school district is a service organization. Sometimes I think we act like that percentage should be lower. It's not the percentage but the COST that is of concern. He knows that and we know that, but sometimes it does come across negatively (not intentionally I understand, I'm just saying...)