Saturday, June 18, 2011

Retreat 2011

The Hilliard School Board will be holding its annual planning Retreat next week, starting with a 6pm session on Thursday June 23, and continuing into another session on Friday June 24, starting at 8am. Because of this meeting, the regular Board meeting scheduled for June 27 has been cancelled.

This will be my second Retreat as a Board member, although I observed the Retreats in 2008 and 2009 as a member of the public, making this the fourth in which I have been present (you are welcome to attend as well).

This Retreat has to be different than the prior three. When we were asked by President Doug Maggied for suggestions as to agenda items for this retreat, I asked that the focus of this retreat be on strategy, and in particular, the financial component of our strategic plan.

In past years, the bulk of the time has been allocated to briefings given by the department heads. It is good to know this information, but I look at it this way - our District is performing well in all aspects: academics, performing arts and athletics. That's an indication that our appointed leadership is doing a pretty good job delivering what we asked.

The critical questions this year have to do with funding and spending - in other words, the financial situation.

On the funding side, we've taken a whack from the State of Ohio. We knew it was coming, and it didn't matter who was elected as Governor, or who controls the General Assembly, the State has the same problem as every other government that has an revenue stream sensitive to personal and corporate income taxes - a sudden drop in revenue.

Some say that our State government does three things: educate, medicate and incarcerate. If the State government is going to balance its budget - and by law it must - the bulk of the cuts were going to come from public education, Medicaid and our prison system. And since the bulk of the State's funding of public education is via direct grants to local school districts, we shouldn't be surprised that this is where the cuts were made.

Nor should we be surprised that the funding cuts were disproportionately loaded onto the most affluent districts, which we are in the eyes of the State Board of Education. Not counting the one-time Federal stimulus money that was doled out via the States, our State funding will be $7.5m lower in FY12 than it was in FY09.

That's not an insignificant amount of money. Had it not been for the one-time Federal funding, and the decision to drain our piggy bank (our cash reserves), the impact of these cuts would have been felt a couple of years ago. Now, with the one-time Federal money running out, we finally have to face this State funding reality.

On the spending side the issue is, and will always be, the spending for compensation and benefits. As I wrote in the preceding article, the effect of the new contracts with the teachers and staff will be to take a good sized bite out of the projected spending on comp and benefits for the next three years...

click to enlarge
... but we still have a substantial gap to close (depicted as the yellow region). In order to legally sign the union contracts, we had to approve a Five Year Forecast which portrays a non-negative cash balance for the term of the contracts. That was done, and graphically it looks like this:

Click to enlarge

However, this new Five Year Forecast was constructed by portraying massive spending cuts in FY12-FY15,  totaling nearly $45 million dollars. Making cuts of that magnitude AFTER the teachers and staff have already made major concessions would be difficult, to say the least.

And so we're at the point I've always said we would get to. If we want to keep the programming and services which are most important to the people of the community, we're going to need more revenue. I support placing a levy on the November ballot. The only questions are the structure, the size and the desired interval to the next levy.  As I wrote back in April, these choices represent two of the four knobs we can turn.

Still, there's no way we're going to make up this budget gap with new taxes - it would take levies on the order of 5.5 mills every 3 years to produce the level of funding necessary keep our cash balance above zero through FY15.

We're also going to have to take a hard look at programming and services - the third of the four budget knobs. I'm just beginning my examination of data (thanks to Justin Gardner for sharing data he had requested from the District) regarding class offerings at the secondary level, but I suspect that we'll have to take a look at the breadth of subjects we offer, especially those which attract small numbers of students.

By the way, folks have frequently mentioned the "Global Gourmet" course offered in our high schools, citing it as an example of misspent resources. You might be interested to know that this is a very popular class, with 15 sections across the three high schools, serving 529 students, an average of 35 per class. We might debate as to whether we should be spending the money to offer such a class, but it is certainly in demand.

We also must use care when examining this kind of data. For example, "Photography 3" is offered in all three high schools, in a total of 6 sections with a total of 13 students enrolled. It would be easy to say "let's just drop Photography 3 from the curriculum," except that a closer examination of the data shows that Photography 3 is combined in the same classrooms, with the same teachers as Photography 2, making the average number of kids in each section more like 16.

The cost of labor is the product of the average compensation of the employees and the total number who are employed. The new labor agreements addressed the first component, and it is much appreciated. Now we're going to have to start looking at the second component: the total number who are employed.

But I think we should do that by first making a pass through the course offerings at the secondary level, and seeing if there are some things we can do without. Certainly every subject has its constituency, driven in part by the importance of the subject matter to our kid's education, and also by the respect and friendship which is developed in regard to the teachers. This is emotionally challenging stuff, but we need to take a look nonetheless.

There's no way the School Board has the training or time to look through all this data and make decisions, nor should it. It is the function of the Administration to execute policy created by the Board.

So we may need some new policies in regard to academic offerings. Perhaps those policies will sound something like "Elective Courses at the secondary level will be offered only when there are at least 20 students enrolled in each section."

Here's some back of the envelope noodling:
- We are projected to have about 4,600 total students enrolled in grade 9-12 next year
- Let's say that we want the size of each class to average 25. That says that at any given time, the 4,600 students would be distributed over 184 classes.
- Another way to look at it is that these 4,600 students have 7 academic periods each day. That means at least 32,200 "seats" have to be available.  If each section provides 25 seats, then we need 1,288 sections of classes to be offered, or 184 sections each period.
- So regardless of which calculation path one uses, we need at minimum of 62 teachers in each high school to lead classrooms of 25 kids each.

So how many do we actually have?  I don't know. And I won't try to go any further in this analysis without learning a lot more from our leadership team. All my calculations do is discover the absolute minimum number of high school teachers we need to operate with every classroom at 25 kids. I'm confident that it's not practically possible to operate with a teaching staff that small - there's always going to be some classes we'll generally agree are desirable to have in our curriculum, but few kids will take.

In the end, we as a community will need to decide how much more than the required basics we're going to offer, and how much we're willing to spend to offer them competently.

That will have to be balanced by what we think it does to our personal net worth, which I think is simply a function of the amount of cash we pay out in taxes versus the impact on the selling price of our homes.

Some of us will stay in our current homes until we die. The eventual selling price of our home is far less important than the affordability of our property taxes. I might be one of these people - retired and living off our savings. Every tax increase is painful.

But most of us will someday sell our home, and its selling price will be significantly influenced by the value a potential buyer puts on the school district.  That's the reason a home in Upper Arlington is generally valued at about 25% more than a comparable home in Hilliard.

Many things make a school district desirable. For some it is the academics, measured mostly in the success their kids have gaining admission to highly respected universities. For others it is the athletics, and even though few win athletic scholarships, the experience is felt to be very important for its character-building element. Other value the performing arts, which has both academic and team membership benefits. Others desire particular demographics - or rather to avoid diversity - a darker side of our nature.

Whatever the criteria, once the gleam is lost on a school district, it's hard to recover. There are a number of Central Ohio school districts which were once well regarded, but are not so much so any more. It's hard to say which came first, a change in demographics (e.g. Columbus during the 'White Flight' of the 80s) or a decline in resources (e.g. Groveport-Madison when Rickenbacker AFB was closed).

Our task is to keep our school district one of high regard, yet reasonably affordable. It won't be easy, and will require a lot of dialog and compromise.

Please engage in the process.


  1. Paul, I wish you and the fellow board members all the best in your deliberations next week. You bring a strong sense of reason and clarity to the complex issues ahead of us. Difficult decisions are to be made, but I trust you to help the board stay on track and to find a balance between reason, "pie in the sky" wishful thinking, and reality.

    I'm sure many look forward to your comments at the end of the sessions. And like many, I appreciate your dedication and commitment.

  2. Certainly communities have histories and reputations. And of course different people have different perceptions.

    But Hilliard is not a community that can command a premium. And our taxes are certainly that.

    I have lived my entire life within 5 miles of my home in Hilliard. And I will grow old here. I love it. But I am capable of an objective assessment.

    I understand how serious the next levy is. And I think it is totally within the realm of possibilities that a disinterested group of voters fails it again. Who is preparing for that?

  3. Paul,

    If I may, I would suggest you urge the board to consider the alternative to this statement you made:

    "However, this new Five Year Forecast was constructed by portraying massive spending cuts in FY12-FY15, totaling nearly $45 million dollars. Making cuts of that magnitude AFTER the teachers and staff have already made major concessions would be difficult, to say the least."

    And consider what happens if you cannot pass a levy. That's right, those cuts are forced.

    It therefore behooves everyone if the board figures this out, and starts drilling down into the kinds of numbers you've briefly touched upon, not just to see what we cut to reduce the deficit, but at the same time to better understand the things we need to keep in order to better sell potential tax increases.

    It works both ways, and I no longer have any confidence in the Administration to be honest with anyone -- us, or the board -- and present real choices.

    Therefore you guys have got to know how all these pieces are put together. No, we don't expect you to be able to recite numbers off the top of your heads, but we do expect you to be able to get the information when you need it.

    And I think you'll agree that right now, that information is not being made available to any of you.

  4. I think we're on the same wavelength. If compensation costs are the (arithmetic) product of labor rates x the number of employees, then - and I not saying this to minimize the huge importance of what the teachers/staff have agreed to - adjusting the labor rate is actually a simpler task than adjusting the number of employees.

    Adjusting the number of employees is much harder, because it takes program-by-program analysis and evaluation. Our rich curriculum and high level of services has evolved over decades, and it has a cost. We now have to decide what we can afford to keep, and what has to go.

    That's far more challenging, and drops the burden squarely on the Board and the Administration.

    And the community...

  5. And yes, as one who has been a decision-maker in a large organization for a long time, I'm not satisfied that our Board uses sufficient data when making crucial strategic decisions. The process is very alien to me.

    All these charts you see me post come from a spreadsheet I've developed to play with the numbers, using the Five Year Forecast as the basis. I've spent the day producing a package of scenarios that I'll be sharing with the other Board members as soon as I double-check the numbers. I'll post them here as well.

    I hope they are used in our conversations later this week.

  6. Either we keep passing levies or educational programs get cut- there has been no suggestion that passing levies leads to any improvement in the scope of the educational program - the educational program can only stay the same (pass levies) or get worse (fail levies).

    This is not the community's fault and it is not the staff's fault. The game is rigged so that we waste our time fighting each other while the state legislature has done nothing. Either we are truly free to design (and fund) our own system, or we administer the system the state requires and funds. The hybrid system we are operating in now can only fail. Tax cuts at the state level have only guaranteed the funding reductions that will require more and more levies (and tuition increases). State officials have sought to increase their own popularity through meager tax cuts on the backs of libraries, schools, fire departments, mental health boards, senior centers, etc. - so that each is left to make its own individual case to the voters. So long as we continue to confine our vitriol to the local level, and each other, we are behaving exactly as they would hope. I don't want a tax cut that puts $5 back in my check and costs me $600 a year in property tax increases.

    The community can't afford the program and our kids can't do without it - when is someone going to send the keys to the state and demand that they do what is expected? The lack of dialogue is a reflection of the understanding that it is no longer possible to reach a workable solution at the local level - no matter what happens, once we have all said the unfortunate things that will be said over the course of this campaign and the next campaign and the campaign after that, our kids will be left holding the bag.

  7. I agree with several of your points - it is a screwed up system. Thanks for weighing in.

  8. A copy of the scenarios I prepared and shared with the other Board members can be downloaded from here

  9. An earlier comment said in part:

    "it is totally within the realm of possibilities that a disinterested group of voters fails it again"

    Which echoes the constant sentiment on this blog that the electorate is not involved.

    I would say that folks are probably *more* engaged with the schools than they are for their choices of other portions of government. Measuring people's concern by how many attend school board meetings is like saying the electorate should butt out of judicial elections if they have not sat in a judge's courtroom.

    PLEASE stop implying that by absence from board meetings, etc., that the general population is out of touch, disinterested, unconcerned. The fact that a levy fails does not mean that all the people are knee-jerking a no vote. There are some folks who will always vote no; but there are others who will always vote yes. This constant 'get involved' mantra -- especially to people who are already reading this blog and its comments (whether we post comments or just read others' interestedly) is really tiring and, to a certain extent, insulting.

  10. I hope those who are regular readers of this blog know that it is not them I am imploring to get involved. It's the new readers to whom I'm saying that gathering information is not enough - it has to be followed by action.

    No, it doesn't have to be attendance at a school board meeting any more that participation in national politics is exemplified by observing sessions of Congress. I agree with your point re judicial elections.

    At the completion of our routine business Thursday, the Board will be spending the remainder of the evening delving into the 3-5 year economic picture of our school district. It should be the first of many discussions which lead us to the development of a plan for how to balance programming, costs and revenue requirements.

    If there was ever a time to engage, it is now. It can be by attending board meetings and making comments to the board, but it can also be letters to the board, discussions with neighbors, independent study of alternatives, or even running for a seat on the Board (there is an election this November).

    I didn't suggest that there is only one way to engage. But it's clear that sitting on the sidelines is unlikely to yield the solution one would desire.