Five Year Forecast: My Comments

At last night's meeting, I made the following statement regarding acceptance of the Five Year Forecast brought before the School Board for approval. See also my prior article on this matter.

Along with the 2020 Plan and the Continuous Improvement Plan, I consider the Five Year Forecast to be one of the most important strategic planning documents produced by our District.

I am very concerned about the proposed Five Year Forecast before us tonight.

It’s not that I think there are errors in the calculations. I have full faith in Mr. Wilson’s skills, and know that the numbers are an accurate representation of the assumptions which accompany the forecast.

Nor can I point to any one assumption and argue that it is incorrect. I am confident that Mr. McVey and his leadership team have seen to it that the spending plan in this forecast is consistent with the 2020 Plan and the CIP.

But the amount of new money required to fund this plan is too much to ask of our community, in my opinion. By 2017, this plan shows a $20 million gap between annual funding and annual spending, with an accumulated deficit of $28 million.

As a Board, we made the commitment to the community that if they passed the 5.9 mill that we placed on the ballot in November 2011, we would not ask them for more money until 2014.

I understand that as our expenses grow, the school funding system we have in Ohio requires us to periodically go before the voters and justify the need for more money. I believe this is a good thing – it holds us accountable to be good stewards of the taxpayers’ money.

And we need to help the taxpayers understand that costs do go up – in particular the 86% of our budget related to compensation and benefits go up – and with state funding flat, and having the potential of dropping further still, the only way to fund these increasing costs will be additional local taxes.

By my calculations – not confirmed by the Treasurer – a levy of 7.7 mills would need to pass in 2014 to fund this forecast. That’s about $235 more per year per $100,000 of valuation, or about $475 more per year for a typical homeowner.

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I very much doubt that our community has the appetite for a tax increase of that size. Maybe the economy will be in much better shape in 2014, and a levy of this size will sound reasonable. And maybe the State will come through with more funding if the economy recovers. But I doubt it.

I think the time has come to start having some tough conversations about the breadth of our academic offerings, and the services we provide. We need to think some more about the extent of our extracurricular programming, and how much is funded by taxes vs participation fees.

I believe that approving this Five Year Forecast implies that everything is just fine. But we have some very hard work to do, as a School Board, as an Administration, and as a community. We together need to recalibrate our expectations with what we are willing to invest, and we need to start doing that sooner rather than later.

Therefore, I believe it is appropriate to not approve this proposed Five Year Forecast, and that the Board should ask the Superintendent and Treasurer to come back to us with a new Forecast , or perhaps two or three new forecasts, with spending plans requiring a significantly lower level of additional local funding.

When the vote was taken, I voted against accepting this Five Year Forecast. The other members all voted in favor, and the resolution passed 4-1. 

Adding Meeting Material: Proposed Five Year Forecast

Also on tonight's agenda - Item F2 - will be a vote to approve a new Five Year Forecast, as the Board is required to do by law each year.

Here is what it looks like in the graphical format readers of this blog will be familiar with:

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The yellow region highlights the gap between proposed spending and expected revenue. This Forecast shows the difference in FY17 between proposed spending and expected revenue to be $20 million, and our cash balance to be $28 million in the hole.

Ohio law does not allow a public school district to have a negative cash balance, and so that situation will have to be fixed. We have to spend less money that this forecast proposes, generate more money with new local levies, or - more likely - do some of both.

If we want to fully fund the spending plan proposed by the Administration, and stay somewhere close to our 10% cash reserve policy, then I believe - and these are my calculations, not those of the Treasurer - we're going to need to pass a levy on the order of 7.7 mills in 2014. That would look like this:

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A 7.7 mill levy has a slim chance of getting approved by voters, in my opinion. The voters barely - just barely - passed a 5.9 mill levy last time, after shooting down the 6.9 levy issue on the prior ballot.

That means it's finally time to start having the tough conversations. Take a look at the assumptions that accompany the forecast. There's lots of detail, but as always - the lead story is compensation and benefits:

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The dotted line in this chart is where spending was expected to be when the Oct 2010 version of the Five Year Forecast was approved. You can see that total spending is this new forecast is projected to be $20m/yr less in FY15 than was the projection just two years ago. This is the impact of the pay freezes agreed to by the two unions, as well as the many retirements.

This forecast assumes that in the next few years, the compensation for teachers and staff will increase 1% per year in base pay, and that the current step schedule will resume (4.15% in years 0-15, 20 and 23). I recommend that you read this article if you're not familiar with the teachers' pay structure.

I am also concerned about the way our health insurance costs are increasing. Even with a just-approved design change to the benefit structure, our insurance costs look to be increasing 13% next year (it would have gone up 15% without these changes). Remember that we're self-insured, so these costs are equal to the actual claims, plus 9% for our stop-loss insurance and Third-Party-Administrator fee. Also note that the employees are now paying 15% of the cost, up from zero prior to 2008.

Our total compensation and benefits costs - 86% of our total spending - is the product of the number of people we employ, and what we pay them. We may have reached the time when we have to talk seriously about the first term of that equation - how many people we employ.

Please don't just say "chuck out all the administrators."  We run relatively lean at the administrative level, and I'm pretty concerned that all this clamor about more teacher evaluations and performance-based pay is going to significantly drive up the administrative burden as these policies are enacted.

I think we're finally going to have to talk about the breadth of programming and services we offer. I'm trying to gather enough information to start to frame the dialog. But I suspect one or both of these things are going to have to happen: a) we'll have to eliminate some academic offerings and support services, and, b) make our extracurricular programming be substantially supported with user fees.

Everything has to be on the table.

Supplemental Material for the Oct 22, 2012 School Board Meeting

Here is the supplemental material for Monday's School Board Meeting.

Item E1(a) is one that is rarely on our School Board agenda - approving the retirement of the Superintendent, effective June 30, 2013. There will be much to say about Mr. McVey in the coming months, and many opportunities to recognize his significant contributions to our community.

Item E1(a) allows the School Board to begin the process of recruiting a new Superintendent, and that work will begin immediately, starting with the School Board deciding how we want to proceed.

After Monday's meeting, we will have 250 days to complete the task. That may sound like a long time, but there is much to do, starting with building a list of candidates.

Role of a School Board, Part 2

This is a continuation of a series which began here.

I believe the role of a governing board - for any institution - is as follows:

• Represent the Owners of the Institution
• Determine the Mission of the Institution, and set the Boundaries within which the Mission is to be carried out
• Hire Executives to Execute the Mission - within the Boundaries
• Provide sufficient Resources to the Executives to enable Success
• Monitor the Performance of the Institution relative to the Mission and Boundaries, holding the Executives accountable

Each of those points merits a substantial discussion, and shelves of books have been written on these topics. We'll touch on only the first three in this article.

A rare and awesome responsibility has this week been placed upon the Hilliard School Board: The hiring of a new Superintendent, the Chief Executive Officer of our school district. This comes about with the announcement by Dale McVey that he would be retiring at the end of the school year, June 30, 2013.

In the 30 years my family has lived in the Hilliard Schools community, we've had just two Superintendents: Roger Nehls and Dale McVey. Roger was on board at the beginning of the exodus of families from Columbus City Schools to the suburbs, brought about in the late 70s in reaction to the order of Judge Robert Duncan in Penick vs. Columbus Board of Education to implement district-wide student busing to racially rebalance the Columbus City schools. Roger resigned in 1999 to become an Assistant State Superintendent with the Ohio Department of Education. Dale, who was then serving here as an Assistant Superintendent, was asked to serve as Interim Superintendent at that time, and was named Superintendent six months later. There is a good article about Dale's exemplary career on the district website.

It has been 13 years since a Hilliard Board of Education has had to hire a new Superintendent. If my records are correct, the members of the School Board at that time were Libby Gierach, Tom Calhoon, Doug Maggied, Linda Mirarchi, and Curt Bishop. So of the current School Board members, only Doug has been through this process before.

It is an interesting time to be searching for a Superintendent -- we're not the only district around here looking. With Dale's retirement, we now have the Canal Winchester, Columbus, Dublin, Upper Arlington, Westerville, and Whitehall School Boards all looking for a new chief executive at the same time as us.

So what should we look for in our new Superintendent?

The Upper Arlington community is tackling that question by running a series of focus group sessions, which happen to have been held this week at my church, Mountview.  With permission, I sat in on a couple of those sessions just to see what they were about. There was a group just for Principals, another for the teachers' union, and another for the staff union. The PTO Presidents had their own sessions, as did the UA Education Foundation. In all, there were more than a dozen separate focus group sessions, including several open to any resident of the community. The sessions were facilitated by consultants from the recruiting firm that has been retained by their School Board.

The couple of sessions I observed - one with the PTO Presidents and one with the Education Foundation - collected a lot of the same information: UA is an well-educated community of accomplished folks, most of whom moved there because of the reputation of the UA schools, and their expectations are very high. They told the consultants that there is a "UA Way" to get things done, and the new Superintendent needs to respect that. But I also heard a couple of folks remark that it's sometimes difficult for new people coming into the UA community to be accepted into positions of influence.

I'm not trying to defend or refute anything I heard in these sessions. UA and Hilliard each have their own character, so what is felt there may or may not have much in common with our community. I described their approach just to let you know what at least one other School Board is doing to carry out their search. Our Board will begin this discussion at our next meeting.

The occasion of hiring a new Superintendent presents the opportunity to recalibrate the relationship between the Board and the Superintendent. At our Retreat last week, I observed to the other Board members that the governance of our District is very much driven by a strong Superintendent in Dale McVey. Our Board takes a Follower role, as can be seen in the agenda of any of our regular meetings. With rare exception, the agenda is limited to those things which by law must come before the School Board, and each resolution starts with "Superintendent recommends...."

Other school boards handle things differently. I particularly like the structure employed by some, who use one meeting each month to deal with the routine items requiring board approval, and then use the other meeting to delve into key aspects of the operation of the school district. What is examined, and when the discussion is to occur is scheduled far in advance. For example, every February, the Board may focus its time on transportation issues. Curriculum may be addressed each October, and technology each April. This strikes me as more productive than trying to concentrate all those discussions into an annual Retreat lasting a total of ten hours each year.

But the real question is "Who is in charge?"

The Dispatch ran an editorial this week on this subject. While the particular point of this editorial was to criticize school boards who allowed their access to district employees to be limited by their administrators (not the case in Hilliard by the way), the broader issue is in regard to the built-in tension between a governing board and the executives they hire as to who gets to make the big decisions.

The really good leaders want to have as much autonomy as they can get away with. I'm reminded of a scene in the movie "MacArthur," where the General, in the midst of his struggle with President Truman over who would dictate strategy during the Korea War, remarked to an aide: "My job would be so much simpler if I didn't have to deal with these temporary residents of the White House."

I can understand Superintendents feeling this way as well. After spending decades gaining skills, understanding, and experience as to how to make a complex organization like a school district function effectively, along come these yahoos - most with no education background - who get elected to the School Board every couple of years and try to tell the Superintendent what to do, and how to do them.

During Dale McVey's tenure as Superintendent, we've had fifteen different people serve on the School Board. It could have been as many as 20 different folks, but a number have successfully run for re-election, including Doug Maggied who is now serving his fifth term.

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I find it interesting that in the years when three Board seats come up for election, the incumbants tend to run for re-election and retain their seats. Conversely in the years when only two seats are up for grabs, it seems that either the incumbent decides not to run again, or gets defeated in the bid for re-election. Doug Maggied is the anomaly, as he was defeated by Denise Bobbitt in 2001, but came back to win a seat again in 2003, which he has held ever since.

In my role as an executive in private industry, I had many occasions to be called before our Board of Directors to defend a program we had planned, especially when it had large dollar amounts attached to it. While being very smart and accomplished folks in their own realms, rarely did the Board members understand the technology involved, the complexity of the process, or the importance of the program to our mission. 

Nonetheless, they represented the owners of the company - the shareholders - and it was their money I was asking for. Consequently, the burden was on me to make the case for the program in terms they could understand. And yes, it was helpful when the Board membership was stable, and we didn't have to be teaching new folks about the business all the time.

So perhaps the question is not only what kind of Superintendent we want, but also what kind of School Board we want to be. Or more correctly, what kind of school board do you - the voters of the community - want us to be?  You are after all the 'owners' of the school district. It's not the Administration, or the teachers, or the staff. It's not even the kids. 

It's the voters.

Our job as a school board is to represent your wishes in the governance of the school district. What should we strive to keep the same?  What should we change?

Your respectful dialog is welcomed.

Role of A School Board, Part 1

On his blog, "10th Period,"  Stephen Dyer poses the question: "Should (a) Homeschooler Be On the State Board of Education?"

Mr. Dyer, an attorney and former State Representative from the Akron area, doesn't directly answer his own question, but the insinuation is that someone who does not send his own children to public school has no place on a public school board.

I believe this shows how much the role of a governing board is misunderstood, as well as who it is that those officeholders are supposed to be representing. Although having never met him, I trust that Mr. Dyer is an intelligent and well-educated person, but I sense he is one of those who believes that the role of a governing body, like a Board of Education, is to represent the interests of the institution.

That's exactly wrong.

The primary role of a governing board - and it doesn't matter whether we're talking about the US Congress or a local school board - is to represent the Voters in matters of the governance of the institution.

In the case of a public school district, it doesn't matter whether an elected member of the school board has kids in the public school, kids in a private school, kids who are home schooled, or no kids in school at all. The community of taxpayers who fund our schools spans all those groups, and all have a right to be represented on the school board.

According to the community survey performed in March of this year, 61% of the households in our community have no school age kids (Q23), and only 12% of those will be enrolling a kid in the next 5 years (Q24). Interestingly, three of the five current Hilliard School Board members - also 60% - have no school age kids in their household (Lisa Whiting, Doug Maggied and me). So in that dimension at least, our Board seems pretty representative of the community.

As the title of this article suggests, I have more to say regarding the role of a public school board, and will continue the conversation soon as part of my discussion of the recent School Board Retreat.

Supplemental Material for the Oct 8, 2012 School Board Meeting

Here are the supplemental documents for the meeting of the Hilliard Board of Education to be held at 7pm on Monday Oct 8, 2012 at Hilliard Station Sixth Grade Building.

The minutes from the School Board Retreat held 10/27-28 give little perspective on the hours of presentations and discussions which took place. I was both encouraged and disappointed by how this year's Retreat went, and will give you my thoughts in a future article.

From the Central Office: Hilliard City Schools invites residents to the first “Online Lunch with the Superintendent” this school year. This interactive community engagement opportunity allows residents to not only learn more about the district, but to ask questions from top-level decision makers in the Hilliard City School District. The October 10 session begins at noon and will focus on what innovation means for Hilliard City Schools. The session will begin at noon and last about an hour. Participants simply need to go to the district’s website, www.hilliardschools.org, and click on the link to join the online discussion.