Sunday, October 30, 2011

Unfunded Mandates

One often hears the phrase "unfunded mandates" when discussing the economics of public schools. This is a disparaging term, meant to criticize an action taken by the government - usually the State government - to impose new requirements on a school district, but not providing the funding for implementation.

When drawn into such a discussion, my suggestion to folks is that they're concentrating on the wrong word. Most folks think it's the unfunded part which is the problem. I think it's the mandate which is the root problem. Here's what I mean.

One of the most recent examples of this was the requirement enacted in 2009 by the Governor Ted Strickland and the 128th General Assembly that all public school districts implement all-day kindergarten.

This was a big deal. According to a story that ran in the Columbus Dispatch, Hilliard City Schools had 640 kids who were in half-day kindergarten (of about 1,000 total kids enrolled in kindergarten). Here's how the math comes out:

We can consider 640 kids in school for half-days to be the same as 320 kids in school all day. With an average classroom size of 23.43 for kindergarten (as of the Oct 2011 enrollment data), 320 kids would require 27 teachers. Those teachers would each have 23 kids for the morning, and a different set of 23 kids in the afternoon.

To have these same 640 kids in all-day kindergarten, we would have to double the number of teachers, from 27 to 54.

While our average classroom teacher salary is $69,369, according to the 2010 CUPP report from the Ohio Dept of Education (plus 34% for taxes and benefits, or $90,000/yr total cost), if we were to hire 27 new kindergarten teachers, most if not all of them would be at the low end of the pay scale, around $45,000/yr. With benefits, the cost would be about $60,000/yr for each new teacher, or $1.2 million/yr.

The Dispatch story says our cost would be about $1.7 million/yr. I can accept this number, as in addition to these new teachers, we would have the cost of 27 new classrooms, probably in the form of leased 'modulars' that we'd have to park at every elementary school.

And so the cost of this "unfunded mandate" was seen to be $1.7 million/yr, because the State was telling us we had to do it, but wasn't backing it up with any new money.

Turns out it's a bit more complex than that.

For decades, the State funding model has used the number of students in a school district as the primary basis for determining the amount of State funding that would be granted. Actually the number used is called "Average Daily Membership," or ADM, and it is close to the number of students, but with some adjustments. For example, kids with disabilities are counted as a little more than one student, depending on the severity of disability. In this way, the State helps underwrite the greater costs of serving students with special needs.

In the case of kindergarten, each kid is counted as one-half student, reflecting the assumption that these kids would be in school for only a half-day, therefore creating half the cost burden of an all-day kid.

So with the mandate that all school districts be required to offer all-day kindergarten to all kids, the State did indeed create a funding stream to help support the mandate by simply allowing school districts to count kindergarten kids as a whole kid, rather than a half. This doubles the amount of State funding granted to a district for kindergarten. Does that sound unfunded to you?

But here's the catch:  for districts like ours, as well as most suburban districts in Ohio, the funding models had a mechanism called the "Transitional Guarantee," which was created to ensure that in the transition from one funding model to the next, no school district would see a dramatic reduction in its State funding. This guarantee existed in Ted Strickland's Evidence Based Model, and it existed in the model before that (to smooth the transition from whatever was before that model). One could say that the funding model used by Gov. Kasich and the 129th General Assy was nothing but a transitional guarantee approach - allocating new funding based on prior funding and not worrying so much about all the components of the prior two funding models.

For districts 'on the guarantee,' this change in the counting of kindergarten kids wouldn't have much impact on State funding. So from a practical standpoint, the requirement to implement all-day kindergarten would be unfunded for us - meaning we would have to bear the full incremental cost locally. That's the reason the School Board has opted to request waivers from this mandate each year. Fortunately, subsequent to the passage of the last budget bill by the 129th General Assembly, all-day kindergarten is no longer a requirement.

However, this still isn't quite the full story.

We have to step back and ask "where does the State of Ohio get the money it passes out in the form of State funding to school districts?"  Of course the answer is that most of it comes from us. According the Budget submitted by Gov Kasich, 80% of all State revenue (excluding that associated with the pass-through of Federal subsidy for programs such as Medicaid) comes from individual income taxes and sales taxes.

According to the CUPP report, the our school system gets back 41 cents for each dollar of State income taxes paid by the people of our community. One could say that this means that to get back $1.7 million per year from the State to fund all-day kindergarten, our State income taxes would have increase by $4 million.

So if we were mandated to implement all-day kindergarten, wouldn't it be better to fund it with a local tax that raises $1.7 million/yr (about 0.7 mills), than to be taxed $4 million more by the State?

Of course I'm oversimplifying things. Funding new things doesn't always have to mean more taxes. In these tough times especially, spending has to be prioritized, and that often means that new programs have to be funded by discontinuing other programs.

But the purpose of this article is to point out that often the most efficient way for communities like ours to fund new mandates is with local taxes. The real fight needs to be over whether the mandate should be enacted in the first place.

If we want to have all-day kindergarten in Hilliard schools, let the people of our community make that choice, and back it up with local funding. Nor do we want the State to be telling other school districts that they must have all-day kindergarten, and then funding it with our income tax and sales tax dollars.


  1. Paul, I have spoken to the mandates over 10 years ago. It seems there is a disconnect at every local school district level however. The elected state representatives, and state senators get a free pass similar to current Rep
    Grossman. It has been some time since the Ohio Supreme Court declared the current funding method unconstitutional. At election time our boards, administration, across the state sit silent on how the candidates stand on school funding.

    Until we get focused and stop blaming the community, who have no lobbying power or funds like the special interest groups which do include school employees then we will have the same old same old.

    At the recent board meeting was it noted that the State REp would be there ? What about a similar email campaign that the schools are doing with all the same comments over and over promoting the levy so that every week the schools could spend some productive time promoting an onslaught against the current
    party in charge, instead of blaming the community for not anteing up.

  2. Unrelated, but I really don't get how voters can vote against the levy and yet not support anti-levy board candidate Justin Gardner. Go figure.

  3. And I thought the levy vote would have been the converse of the SB5 vote. Of course, we don't know the Issue 2 vote counts for just our school district yet, but it would appear that plenty of folks who voted to repeal SB5 also voted against the levy. That surprises me.

  4. Paul... So where do things stand now? There are still some provisional ballots and some absentee ballots literally that were "in the mail" to be counted yet, correct? By virtue of the razor-thin margin, an automatic recount would seem to be in order. Can you provide an update, when you get an opportunity, please?

  5. $69,000 (9 months a year) to babysit Kindergarten kids! Enough said.

  6. Anonymous: I think your comment shows how ignorant you are of what goes on in a kindergarten classroom. If done well, it takes no less skills and professionalism than teaching high school calculus or physics.

    STJ: Yep, still have have some ballots to count, and I understand the recount will be automatic. We may not know for several days...

  7. Why would you think the levy vote would be the converse of Issue 2? Are you assuming that those against Issue 2 would b for the levy, and vice versa? I think the opposite. People who voted for Issue 2 should have voted for the levy. Both votes would have strengthened the school system. Issue 2 gave school systems some tools to help deal with the rising costs, and obviously the levy provided revenue. Passage of both would have made the long term outlook for HCSD much sunnier.

    Someone who votes for the levy and against issue 2 is saying things should continue the way they are, and as you have so ably shown, the status quo is untenable.

  8. Both the YES/NO and NO/YES combinations seem philosophically consistent to me.

    YES/YES makes sense too: fund the schools where we are right now, but change the rules for future labor negotiations.

    But, as my friend Marc Schare pointed out a few days ago, NO/NO doesn't make sense. A pro-labor vote on SB5, but an anti-labor vote on the levy.

    I think NO/NO votes mean those people don't understand how things work yet, and are voting solely on emotion. That means we still have a significant public education challenge, in my opinion.

  9. How much do all the sports programs cost? It's nice to see where districts put their resources and priorities. I'm curious how much $ is spent on just Davidson football? (AmandaF)