Saturday, July 21, 2012

Back from the Brink

The Cincinnati Enquirer recently ran a story about the Little Miami Local School District down in Warren County, describing how that school district seems to have hit bottom, and is now on the path to recovery.

The Little Miami school district almost ceased to exist. It has been in Fiscal Emergency for two years, meaning that a panel appointed by the State is running their school district, not the local School Board. They had closed down buildings, eliminated arts, music, physical education, AP classes, and busing. Parents were pulling kids from the district and enrolling them elsewhere. There was talk of dissolving the district and parceling out the territory to the surrounding school districts.

It's a tale we should learn from.  Little Miami isn't a school district in an impoverished rural area. Rather it's an affluent bedroom community of the Cincinnati/Dayton metro area. Like Hilliard, it had been mostly farmland until the last twenty years, when it was rapidly developed and covered with upscale houses. According to the Ohio Dept of Education's Cupp Report, the average property valuation per student in Little Miami is $178,000, which is 15% more than ours here in Hilliard. Average income is almost identical to ours.

Their schools perform very well, achieving an Excellent rating on their State Report Card, with a Performance Index of 102.9.

So how did they get into so much trouble?

One problem seems to be that they didn't pay attention to the balance between residential and commercial development. The Little Miami local property tax base is 94% residential/agricultural, compared to 75% for Hilliard. And because their per-pupil property valuations are high, they don't get much state funding - $2,900 per pupil in FY11, and that has gone down slightly in recent years (our state funding was $3,600/pupil in the same year).

That means the burden of funding their school district falls substantially on the back of their local homeowners. While their cost of operations rose due to both growth in the number of students, as well as growth in the compensation of their teachers, staff and administrators, they had no other place to go for additional funding than the homeowners, and the voters refused - repeatedly.

The effective operating millage (ie not including bond levies) paid by Little Miami homeowners was 24.39 in FY11, compared to 42.03 for those of us in the Hilliard school district. At their millage rate, the average Little Miami homeowner was paying $4,300/yr $1,336 to fund operations. Had they been paying our operating millage rate (effective), it would have  been $7,500 $4,785.

As a district in Fiscal Emergency, what solutions did the state-appointed oversight Board come up with?  They said an operating levy issue had to be put on the ballot - a whopper this time - and it had to pass. They didn't say what would happen if it didn't pass, but the implication was that the district would be dissolved. I'm not sure that would be an easy, or politically acceptable solution either.

After all, why would the surrounding districts want to take on that mess? Absorbing Little Miami would just screw up the residential/commercial funding mix of the 'acquiring districts,' forcing them to raise their taxes (or cut programs/services) to underwrite the cost of the new kids from Little Miami, who would not be bringing enough funding with them - even after being lifted to the tax rate of the acquiring district.

That scenario was avoided. The Little Miami district put a whopping 13.95 mill operating levy on the ballot, and it passed, raising the property taxes of the average homeowner by $2,500 $765 per year.

The Little Miami situation was entirely predictable, and avoidable. But the general ignorance of the public in regard to school economics allowed them to be led like lambs to the slaughter.

Who was doing the leading?  The land owners, land developers and home builders of course - same as always. I have confidence that during the housing boom, potential buyers were being enticed to come to the bucolic setting of Maineville OH, where their kids could attend the high-performing and safe Little Miami Schools, which by the way also has the lowest property tax rate in Warren County.

The problem is that with every house built, the school economics got more screwed up: the incremental taxes generated by a new home do not cover the fully-loaded costs of the school age kids who will live there. If there is not commensurate commercial development to help pay the bill, the cost of new kids has to be underwritten by the rest of the community.

Meanwhile the land owners, land developers and home builders ride off into the sunset with their pockets stuffed with all the money the new homeowners borrowed to get into a great school district (see also "How Should Our Public School System Be Organized").

Why should we in Hilliard care about what happened in Little Miami?

Because those same dangers lie ahead for us. The Hilliard City School District grew from a little village operation into one of the ten largest school districts in Ohio in the span of twenty years. The student population exploded, we constructed new school buildings at the rate of one per year, and our taxes took off.
click to enlarge
The recession slammed the brakes on residential growth in our district, but it's showing signs of picking up again. The City of Hilliard has for a couple of years been accepting annexation requests from the various developers who own the thousands of acres of land on the west side of Alton-Darby Rd. One of them, Planned Development, the developer of Heritage Lakes, has submitted a plan to the Big Darby Accord Advisory Panel - with the support of the City of Hilliard - for a large new single-family and multi-family development near the corner of Alton-Darby and Davis Rds. In March, the Hilliard City Council, at the request of Dominion Homes, rezoned 57 acres north of Homestead Park for development.

We' re in a kind of quiet time right now. No levy on the ballot, and another year to run on the teachers' contract. We have some room to grow in our school buildings, and enrollment has been stable for several years.

I think this makes it an excellent time to embark on a community education program with the goal of equipping folks to engage in the dialog about where we should go next. In a way, we're fortunate that the recession came along and stopped what could easily have become a runaway train - putting us in the situation of Little Miami.

We have the opportunity to go forward in a well-managed manner if we use this interlude to get our strategic plan together, taking input from all the stakeholder groups. I hope we will begin this process at the annual Board Retreat, coming up in September.

Your thoughts are appreciated.

Friday, July 13, 2012

How Should our Public School System be Organized?

In Ohio, a public school district is "political subdivision" which governs itself via an elected School Board, and is funded with public money raised through its authority to levy taxes. Except for the case of a municipal school district - and Cleveland Municipal Schools is the only case I know of - a school district is a separate and distinct entity from township, village, city and county governments.

A school district's boundaries may or may not coincide with those of a municipality. The Hilliard City School District encompasses all of the City of Hilliard, parts of the Cities of Columbus and Dublin, and all or part of several townships. In terms of registered voters, the largest political subdivision in Franklin County is, well, Franklin County. After that, it's the City of Columbus, Columbus City Schools, South Western City Schools, then Hilliard City Schools.

This is the way we've choosen to organize public schools in Ohio, but it's not the only option. In my home state of West Virginia, school districts are organized by county, so the entire state has only 55 school districts compared to the 600+ here in Ohio. Would the people of Ohio be better served if we had only 88 school districts?  Are there economies of scale, e.g. in regard to administration? By the way, Columbus City Schools has by far the highest per-pupil spending on administration in Franklin County (Hilliard has the lowest).

Or why not just go to a statewide school system?  In reality, the State of Ohio controls a great deal of what goes on in a local school district. Even though we have our own set of policies governing our district, the language of many of our policies is dictated by the Ohio Revised Code.

While we are thinking in these terms, why not just have a national education system? Isn't the primary goal of the Common Core effort to standardize curriculum across the nation?  While not a program run by the Federal government, the Common Core standard has been adopted by 45 states, including Ohio in 2010.

The primary argument for the preservation of local school districts seems to be the belief that local school boards are more responsive to the unique cultures of their communities, which residents fear would be lost if governance were turned over to county, state or national authorities. Others argue simply that smaller government is better than bigger government, and I tend to agree.

But I think the motivation for wanting to preserve the system of local school districts is much less philosophical. I think local school districts are America's way of implementing an economic caste system - a way to make it feel safe to commit a large fraction of a family's economic resources to buy a house in a particular location, while simultaneously erecting a virtual fence to keep out those felt to be of lesser economic status, who might somehow diminish property values.

Here is how I heard Elizabeth Warren, a Harvard Law professor and now candidate for the US Senate in Massachusetts, describe the situation five years ago in an interview at UC/Berkeley:
Interviewer: You point out in this book and in your writings that little pieces of this story, for example, the focus on the family, the concern about education of one's children, the need to get in the right neighborhood to get the right school, the commitment to a mortgage that puts you even more on the edge -- these things impact this very vulnerable situation even to a greater extent over time, and it's all about "I want my kids to have the best education."
Warren: "I want my kids to have a shot of making it in the middle class." This is what it's about for parents. And so, what does that mean in America today, because of our peculiar way of financing higher education? It means you've got to get to the right zip code, because the right zip code will determine the school assignment for your child. And what's happened is prices have shifted on those zip codes.
Here's [another example]. On this one the government doesn't have data going back quite so far, so the numbers are a little bit off, but starting in 1983 they've got data. When you compare the rise in housing costs for families with no children, households with no children, singles, anyone who doesn't have children at home, minor children, and households that have minor children, households without children from 1983 to 2005 saw a 50% increase in what it cost to buy their housing, their three-bedroom, one-bath. Families with children saw a 100% increase in that same time period. Why? Not because families with children have a bigger need for granite countertops or spa bathrooms, but because housing is the substitute way to buy into a decent school system. We pulled out the studies in this that show that housing prices will reflect things like a five-point difference in third grade reading scores. [This difference] will translate into thousands of dollars of difference in the price of houses in neighborhoods that are otherwise matched for all their amenities and sidewalks and police service, and everything else.
And I want to be clear here. This is white families, African-American families, Hispanic families, Asian families, it's across every spectrum. Families with children are tightening the belt one more notch, are working extra hours, are sending both people into the workforce, to try to get into the best possible school district they can get their children into. Families are in financial trouble, not because they're irresponsible but because they're too responsible. They're trying to do it for the kids.
You can listen to the entire interview on YouTube, or read it here. I thought it was fascinating.

But here's the point. We like to say that America's public school system is the great equalizer. That's an illusion. More than perhaps any other American institution, our public school system as currently organized is the perhaps the most effective mechanism for economic segregation we've created to date. Indeed, every kid in America gets to - is forced to attend school and be given the opportunity to learn to a certain level. 

But those opportunities aren't equal. If we really believed they were, we'd be glad to allow the sixteen local school districts in Franklin County be merged into one massive metropolitan district, governed by a single school board and led by a single administration. Of course, the loudest voice in that consolidation would be of the former Columbus City School community, which serves one out of three kids in the county, and 60% of all Franklin County children living below the poverty level. Think that might change the allocation of resources around town?

Funding is a perpetual source of conflict in regard to our current organization of public schools. The Columbus Dispatch recently ran this story suggesting that the inequalities in commercial funding bases around the state be resolved by dumping all commercial property taxes into a common State pool, and redistributing it by some formula meant to level the playing field. After all, it is the lack of local commercial revenue sources which make the rural schools poor, right?

I guess the folks at the Dispatch don't understand that Ohio's school funding systems have long done exactly this, by making State funding inversely proportional to local property values, as seen in this chart (yellow dot is Hilliard):
click to enlarge
You might reasonably conclude that I'm about to propose the elimination of local school districts in favor of larger - massive - school districts, organized at the county if not state or federal level.

But I'm not. My belief is that we should disassociate school systems from geography altogether, and I first wrote about it over five years ago, in a piece titled "Food Stamps."

Some would call this a "100% voucher system," or perhaps even a "100% charter school system." Unfortunately, both "voucher" and "charter school" have become pejorative terms, evoking all kinds of emotion and preventing rational discussion.

Instead, I would say simply that I'm looking for a mechanism by which we can achieve both the national goal of making a basic education (which is a moving target) available for all our children, and bring the forces of a competitive market to bear in terms of consumer choices as to where to send their kids to school, without regard to one's address.

Tuesday, July 3, 2012

Supplemental Material for July 9, 2012 School Board Meeting

... can be found here.

Note the report from the Audit & Accountability Committee. They are formally recommending that the School Board and Administration augment the 2020 Strategic Plan with a financial component, and I wholeheartedly agree with this.