Friday, November 25, 2011

School Choice and HB136

HB136 is currently working its way through the Ohio General Assembly.  This Bill creates the "Parental Choice and Taxpayer Savings Scholarship Program," also known as PACT. The core purpose of this legislation is to allow parents to redirect the money the State of Ohio sends to the local public school districts to properly approved private schools.

Some school boards have recently chosen to pass resolutions in opposition to HB136.  The Ohio School Boards Association, of which our School Board is a member, is lobbying in opposition to HB136.

I recently read through the Bill Analysis, prepared by the Ohio Legislative Services Commission, a body appointed by the General Assembly to render non-partisan, independent views on proposed legislation. The general notion of this legislation seems pretty good to me. And I can't believe what I believe about the importance of free markets and competition, or write what I have written about school choice, and be opposed to the principles of this Bill.

But it still needs some work. My friend Marc Schare, who is also current President of the Worthington School Board, submitted written testimony to the House back in April. I agree with much of what he said.

The Bill in its current form specifies that parents could apply to have up to $4,563* subtracted from the funding their local school district gets from the State and redirected to a scholarship account which could in turn be used to pay tuition and other expenses to an approved non-public school. The intention is that the school district would retain all the funds it raises from local sources - primarily homeowners and businesses - but that the money provided by the State could be used to pay tuition at a private school.

The problem, as Mr. Schare points out in his testimony, is that not all school districts receive $4,563 per student from the State. The amount of funding a school district receives from the State is determined to a large degree by the affluence of a community, as measured in terms of property value. By this measure, we are a fairly affluent community, and consequently our State funding was reduced to $3,741 per student in FY2010 (see CUPP Report produced by the Ohio Dept of Education).

This means that if a student were to take $4,563 with him to a private school, we would have to send along the $3,741 of State funding we receive, plus $822 that we have raised locally through tax levies.

Mr. Schare says this is inappropriate because the people of the community voted to be taxed that amount of money in order to fund their public school district, not to have it diverted to a private school.

I see his point, and agree somewhat. But here's where one's perspective is important.

From the perspective of folks with kids in the public school system, this sounds like their money is being taken away to subsidize kids in the non-public schools. From a practical standpoint, one of the more significant challenges with HB136 is that it allows PACT money to be withdrawn for students already attending non-public schools. So if we have 1,000 kids in our community currently attending non-public schools (I don't know the real number), it means we aren't currently allocating any resources to educate those kids, but we could still have as much as $4.6 million of our State funding diverted. Same number of kids, $4.6 million less funding. That's equivalent to about 50 teachers.

But from the perspective of the folks with kids in non-public schools, it means an end to having their tax dollars being taken to fund the public schools their kids don't attend. This has always been an issue with the families who send their kids to the Catholic schools for example - they feel like they're paying for both the public schools and their parochial schools. For these folks, HB136 seems pretty fair.

We also have to remember that it's unlikely that any of the votes taken to approve public school levies were unanimous. There might have been a fair number of people in the community who voted to NOT send additional funds to the public school district, but are required to do so anyway because the majority dictates to the minority when it comes to levies.

I recognize that this argument stands on shaky ground. The rule of our democracy is that the majority wins, even when the margin of victory is only one vote. This is one of the challenges of democratic capitalism - knowing when to let individual choices and appropriately regulated markets determine how resources are allocated, and when we should allow majority-wins elections to decide the outcome for all.

I prefer the former whenever practical.

That's my core reason for saying what I did in Food Stamps - that we should operate our schools like we do our food distribution system. Our society has set up a food production and distribution system which is the envy of the world, and one of the key drivers is the ability for any shopper to buy whatever food they want, wherever they want, and at whatever price they find acceptable. The competition for customers drives producers and retailers to create fantastic choices at prices the market will bear.

But instead we fund our schools like the Soviets ran their food distribution network - government control of what was produced and in what quantity, and where it was distributed. Their food may have been free or nearly free, but there were massive shortages and the food was generally of poor quality (no, I'm not saying our school district is of poor quality - we all know it's quite the opposite). And of course the black market thrived, but only for those with the means. The majority of the population just had to suffer.

We think food is a pretty important component of life, so for those who can't afford to buy sufficient food, we provide a taxpayer-funded public assistance program we call "food stamps," even through the little books of coupons haven't existed for a number of years.

We could organize our education system in the same way - most people would pay tuition to the institution in which they wish to enroll their kids during the years they were in school, and otherwise be off the hook. For those who can't afford a "thorough and efficient" education, as required by the Ohio Constitution, we would have a tax-funded scholarship program, akin to food stamps. No one who wants it would go without an education.

I recognize that such a radical shift in thinking is not in the cards, at least not for the near future. HB136 has some good ideas, but has not been sufficiently thought through, as was the case with SB5. It will further stress the public school districts without having practical, workable solutions to the real problems it will create.

* The actual amount of the scholarship available to a student is reduced as family income increases. The full $4,563 is available only to families whose combined income is less than 278% of the Federal Poverty Level,. For a family of four, this means the full scholarship amount is available only if the combined family income is less than $62,000.  No scholarship money is available when the combined family income is more than $95,000, so this isn't a way to help pay the tuition for rich kids at expensive private schools.

Thursday, November 24, 2011

Levy Passed, What's Next?

I'm happy that our community passed the levy issue, albeit by an extremely slim margin.

I've come to view levies as the mechanism which the School Board uses to facilitate a negotiation within the community. There is not now, nor will there ever be a time when every single voter in our community agrees on exactly how our schools should be run, or what it should cost. It will vary depending on whether the voter has kids in school, on the voter's financial status, on the voter's political philosophy, and a myriad of other personal factors.

So I look at a levy issue as more of a proposition, explaining what will be offered if the levy passes, and what will happen if it fails. If a majority of the voters accept the proposition, the levy passes. If not, it fails.

What should happen if a levy issue fails?  I think that when that happens, the School Board should adjust the proposition and ask again by putting a new levy proposition before the voters. I think this because not putting a levy on the ballot denies folks a chance to accept a different proposition.

That doesn't mean that if a levy fails I advocate running a levy at every single opportunity following until one finally passes. I think that would annoy the community, and unreasonably burden the emotional, physical and financial resources of the levy campaign team. I think there's a better way to go about this - more later.

In this case, the community rejected the proposition offered in May, but accepted the proposition offered in November, which included the commitment to not ask for more money until 2014 at the soonest (but we have to be realistic and say that we might have to revisit that if the State of Ohio makes further significant cuts to our funding).

As a result of the levy passing, here's what our Five Year Forecast looks like in graphical form:
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As has been the case for years, 88% of our spending is on comp and benefits, which is as it should be. It's also the only part of the budget which is growing materially. That's good too - it indicates that the 'overhead' part of spending is being held constant.

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Notice that the projected spending for Compensation and Benefits for future years is well less than it was projected to be just a year ago - by about $18 million in FY15. This reflects the terms of the new agreement with the unions for 2011-2013 - including the projected impact of the early retirement incentive program for the teachers and additional contribution toward the health insurance premium.

It also assumes a resumption of annual 4.15% step increases in 2013 (which is effectively 2.3% given the mix of teachers on and off the step years), but with only 1% base pay increases starting 2014.

Since the most significant of the budget, and the only part that's growing is comp and benefits, that's where we need to focus our attention. So what drives up the cost of compensation and benefits?

Clearly, the most significant driver is whatever gets negotiated into the teachers' contract in terms of the salary grid. If you're not familiar with how this works, I recommend that you read an article I wrote titled Teacher Salary History. Their current contract runs through 2013, and I don't anticipate engaging in negotiations again until then.

So in regard to teachers and staff, the labor rate is set, but that's only half of the equation. The other half is the number of teachers and staff we choose to employ. At the end of FY11, our district employed the equivalent of 1,716 full time employees, 1,117 of whom were teachers. The remainder includes 202 pupil and teacher support staff, 131 building and grounds maintenance personnel, 125 bus drivers and other transportation staff, and 108 administrators (source: 2011 CAFR, page 110).

So what determines the number of teachers we employ? It depends on the grade level. At the K-5 level, it's mostly about the number of students we want to have in each classroom. As you can see from the monthly Enrollment Report, the overall K-5 ratio is 23.6 students per classroom.

When you get to the high schools, the variety of course offerings also becomes a driver. Our high school catalog offers over 300 courses, although not every course is offered every semester. Some classes are pretty large, with 30+ kids, and some - such as our new Chinese foreign language offering - have single digit enrollment.

Overall in our district, the student-teacher ratio is 22.5/1, while the average for our region is 25/1, and that ranges from 18/1 in Upper Arlington and Bexley to 35/1 at Groveport-Madison.

If we increased our student-teacher ratio to 25/1, our need for teachers would diminish by 70, which could reduce our spending by about $3.5 million per year (assuming junior teachers averaging $40K+benefits). We have a unique opportunity to do such a thing in the coming year, with potentially a large number of teachers retiring to take advantage of the early retirement incentive program. It's an opportunity to adjust staffing levels without layoffs, and that must not be ignored.

In addition to their normal pay, many employees of our district also receive stipends and supplemental salaries. Once again, these rates are set in the union agreements, but there is a choice as to how many of these roles will be funded each year.

As is shown on the agenda for Monday's School Board meeting, we will be considering a resolution to authorize stipends for the 2011/12 school year for about 1,000 roles, ranging from $350 each for the 182 participants on the School Improvement Teams ($64,000 total cost), to $1,200 per semester for supervising the high school weight rooms (12 person-semesters/yr for Davidson, 3 each for Darby and Bradley), adding up to about $22,000 each year. The total outlay for all stipends will be more than $600,000 next year.

The resolutions to approve supplemental salaries are dealt with a couple of times during the year. A complete list of these are included in Appendix L of the teachers' contract, starting on page 94 of the Master Agreement. These are expressed as a percentage of the base salary for each teacher, ranging from 15% for the head football, basketball and wrestling coaches, as well as the head instrumental music directors, to 5% for an assistant drama director or an assistant middle school tennis coach.

Administrative contracts have terms of varying terms and expiration dates. You'll see these come before the Board for action at the appropriate times.

My opening statement was to describe levy issues as the way the School Board facilitates a negotiation within the community. I also think it's an extraordinarily inefficient way of accomplishing this task.

We have lots of things to talk about in regard to our community and our schools, and with the passage of this levy, we've bought some time to figure out a better way to get this done.

My suggestion is that we use a process that has worked pretty well for us over the past few years - a large committee (~100 members) of diverse viewpoints called together to deal with a challenging question. It has been used for adjusting attendance boundaries when Bradley and Washington were built, for looking at student housing alternatives, and most recently for developing an approach for Pay-to-Participate fees.

What do you think of that? Would you participate?

Wednesday, November 9, 2011

Election 2011 Comments

I'll write about my thoughts on the election when I've had a chance to digest the numbers, and we have a final tally on the levy. Meanwhile, feel free to post thoughtful comments here, but be forewarned that I'll not publish comments I find to be hateful, which make personal attacks, etc.