Friday, October 11, 2013

Supplemental Materials for the October 14, 2013 School Board Meeting

Here are the supplemental materials provided in preparation for the regular meeting of the School Board, to be held Monday October 14, 2013 at 7pm, at Hilliard Bradley School.

Way down at the bottom of the agenda is item G1 - something pretty exciting for me: Dr. Marschhausen's self-evaluation of his own goals for his first 100 days as Superintendent of Hilliard City Schools. We're still working with Dr. Bill Rhymer of the Central Ohio ESC on the full performance plan for Dr. John and Treasurer Brian Wilson,  but I like the fact that Dr. John - on his own - laid out an initial set of goals, proceeded to work on accomplishing them, and then reported back.

I have the opportunity to mentor young leaders in my retirement years, and this is one of the first concepts I teach them. I call it the Trust Circle.  You make a commitment, fulfill the commitment, and then report back. Every time you complete that process successfully, the more trust you gain from others. That's what makes it a circle - you just keep going around and around, being entrusted with bigger and bigger things.

While it's critically important to actually fulfill your commitments, many folks miss on that important last step - confirming completion. That's when the trust enhancement happens. Dr. John gets it.

Item C2 on the agenda is the routine acceptance of the Treasurer's Monthly Financial Report. Other than to lament that the cash in our Treasury is generating 0.18% interest, I see nothing out of order.

Most of the real estate on the agenda is taken up by item F2, by which the Director of Business seeks the Board's authority to participate in the process to put our electrical power service up for bid through a consortium of school districts called the Metropolitan Education Council. We do a good deal of purchasing through the MEC, and have representation on its Executive Board.

October is also one of the two months - the other being May - that the School Board is presented with a new Five Year Forecast by the Treasurer - on the agenda as item F3.  As always, here is my graphical representation:
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Since FY13 has now closed, the Five Year Forecast now extends to FY18. The good news in this forecast is that the Ohio Biennial Budget seems to have reversed the trend of shifting funding away from suburban districts to the rural and urban districts, so this forecast reflects a bit more total revenue for next few years.

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At the same time, this new Forecast shows a decrease in the rate of spending growth:
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Net those two together, and we should see an increase in the projected year-end cash balance:
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So now the question is: What should we do with this additional cash?

It might be worth reviewing the article I wrote in 2011 about the four big Budget Knobs, those being: 1) our cash reserve balance; 2) our spending rate growth, 3) when we want the next levy to be on the ballot, and 4) how large we should plan for that levy to be.

The first thing to say is that the State giveth and the State taketh away. We can be pretty confident about the FY14 and FY15 numbers for state revenue. But in 2014, we'll be electing the Governor and a good chunk of the General Assembly, and history tells us that school funding is one of the things they like to tinker with. If anything, that would suggest that it might be wise to hold onto some extra cash in case the next budget isn't so kind.

Since 85% of our operating expenses go to compensation and benefits, there will be some dialog along those lines. As you can tell from item H1 of the agenda, negotiations with the two employee unions are underway. It's not appropriate for me to say much about this, but I will observe that it's a lot easier to make personnel spending go up than it is to bring it back down. The latter typically requires layoffs and cancellation of programs and services - never pleasant for anyone.

When we put the levy on the ballot on November 2011, the School Board promised the voters that we wouldn't be back with another levy before 2014 - a three year interval. This forecast suggests that we might be able to wait another year.

But that all depends on how large we want the next levy to be.

If we say the goal is to end FY18 with a cash balance equal to 10% of the FY18 spending, or about $19.2 million, then a levy passed in 2015 would need to be about 5.4 mills, or $189/yr for each $100,000 of market value.

Or we could go ahead and put a levy on the ballot in 2014, and it would need to be only 3.9 mills - $137/yr for each $100,000 of market value.

We could even potentially wait until 2016 for the next levy, but it would have to be a whopping 9 mills - or $315/yr per $100,000 of market value.

Any of the four knobs are subject to adjustment, and adjustments we make to one have an impact on the other three. We have some important decisions to make as a community.

I voted to not approve the last couple of Five Year Forecasts, with my reason being that I felt we as a Board had not yet done enough to prepare the community for the implications of a rather gloomy forecast of State revenue. I didn't think the knobs were set appropriately, and that we had some hard work to do to get things aligned. The new State Budget makes things look much better. We have some options now that we didn't have before. 

My preference is that we hold spending to the forecast, and plan to put the next levy on the ballot in 2015.

What do you think?


  1. I think it is too soon to ask this question. We have yet to see the approach you take with the two contracts. This is one of two items along with program offerings that drives the how many teachers at what pay rate = 85% spending.

    While it appears the Dr M gets it, the board should hang their heads in shame. This board of 3 multi term members with two one term and we need help with goals, objectives and evaluations. What did you do with McVey for 14 years? This same group talked about accountability, now you have a clear understanding of lack of trust and respect for the board by many in the community.

    When you talk about contracts please report all the facts of step and grade. I do not want to see agreed to 2% increase, when it is 2% plus step and grade.

    Remember the position we are in has nothing to do with any board action. It is just that the state gave you more money, so we do not want to hear how good the district is at spending.

  2. I have no intention of hanging my head in shame.

    I'm humbled and honored to have been given the opportunity to serve in this role, and I hope I've done a good enough job that the community will allow me to continue for another term. We're going to find that out in 24 days.

    At least two of the three incumbents will be returned to their seats. That doesn't sound like we have a community which lacks trust and respect for their School Board.

    Compare our situation to Westerville, where I believe they have seven or eight folks running for three seats.

    Your tone is not appreciated, especially when much of what you said above are points I've put into the public dialog via this blog.

    Yes, 85% of our spending is for comp and benefits. I wrote about that in December 2006. That doesn't make it a problem, it just means that the budget is most affected by decisions in that realm.

    Yes, the union contracts have steps. I wrote about this in June 2007. For the teachers, the existing contracts sets the steps to 4.15% each year up to 15 years, then also in years 20 and 23.

    Yes, the additional revenue in the forecast is almost entirely due to the state lawmakers deciding they've been taking too much from the suburban districts. That's what I said in this article.

    I respectfully disagree that it's too early to think about how we want to twist these budget knobs. It's never too early to seek input or to run a few scenarios to explore options.

  3. In the end it will be the same old process. We will do little to reduce number of teachers by using innovative teaching methods or technology.

    While Dr. M is a leader to have set goals with evaluation, you make it sound like it is a new concept to have measurable goals for the super and Brian. That is why I said hold heads in shame.

    1. Not true at all. I invite you to visit the ILC and observe how we're offering Chinese language. One teacher - three high schools.

      We're also taking a look at producing some of our textbooks inhouse in digital form, written and edited by our own faculty. One of the impediments to converting to e-textbooks is that the textbook publishers are still sorting out their business model in the digital world. So far, they have it wrong, charging as much for e-versions as printed versions. They'll eventually have to accept a new pricing model, just as the music industry did when iTunes came along.

      Our inhouse production costs wouldn't be zero - we'd want to compensate the teachers who do the content creation and editing. But when we're done, we would own the material and be able to make as many copies available as we want. We might even be able to sell e-books to other districts.

      This isn't a radical thought by the way. My brother-in-law is the Superintendent of a decent-sized school district in another state, and they're exploring the same option. Could be that a new marketplace develops - school districts who produce and sell their own e-books. Maybe we become known as one of the best publishers of Subject X e-textbooks, but choose to get our Subject Y e-textbooks from a district in Georgia.

      I agree that annual evaluations of the Superintendent and Treasurer should have been done in the past, but weren't. You were correct in pointing this out. An evaluation of Dale McVey was done by the Board for FY12.

      We're now developing a better performance plan for the Superintendent and Treasurer, with the assistance of the ESC.

      So can we quit beating that dead horse?

  4. While I agree the tone of the previous commenter is overly harsh, the points he makes are good ones. I, for one, hate to see new reports that say the teachers have agreed to no salary increases, when behind the scenes the step increases (at 4.15% per year!) are still going on. The way step increases are implemented, they are hidden from the public, which i am sure is the reason they are implemented that way. Steps should be eliminated completely. For transparency, if nothing else.

    I do thank you for this blog, because this is where I learned a lot about these things.

    I do disagree that reducing the percentage spent on compensation means layoffs or reducing programs. Simply reducing the rate of increase in compensation would do the same. That would show fiscal responsibility from both the board and the staff. I would also add that getting rid of the seniority rules would help as well.

    Long term we still have a problem as compensation costs are rising much faster the revenue. Going back to the voters over and over without addressing the rapid rise in compensation costs is really irresponsible. I hope the negotiations with the unions reflect that reality

    1. There is something we should keep in mind: The taxpayers got a big win in the 1970s when HB920 was passed by the General Assembly. This is the law which says that the dollar amount collected via property tax on a parcel stays constant for the life of that levy, regardless of what happens to the assessed valuation of that parcel.

      Wouldn't it be nice if income taxes worked that way; that the amount of tax we paid was locked into what our W-2 said decades ago? Maybe not for those of us who are retired, but you get my point.

      I think HB920 is a great law, and have been saying so since I first wrote about it in 2008.

      But with it goes a responsibility on the voters: to be willing to pass new levies when additional revenue is legitimately needed.

      Of course, therein lies the rub: what does legitimately needed mean?

      That's a matter of opinion. We have 57,526 registered voters in our school district, and at least that many opinions. Some think teachers are paid too much, some think they're not paid enough. Some think we have too many electives and extracurricular activities. Others want to continue to broaden our offerings and services.

      Congress is a disgrace right now because our clumsy elected officials can't figure out how to negotiate a deal without blowing up the economy. There is no single answer to the problem, and everyone has to accept that: a) a deal needs to happen eventually; and, b) no one is going to get everything they want.

      A wise boss once told me that the way you figure out if a negotiation is successful is if no one is smiling when it's over. The folks on both ends of Pennsylvania Ave need to grow up and bring this to a conclusion.

      We need to manage our school district in the same manner. Discuss and debate, but do so with acceptance that not everyone - maybe no one - will be completely thrilled with the outcome.

    2. One thing the district must bear in mind, but seems to ignore: Many, many, many people who think teachers are underpaid have no concept of what teachers actually make. We keep hearing about the low entry level pay for teachers, so people tend to assume it stays low whereas we know that isn't the case.

      I believe the average total package for teachers in Hilliard is around $100k a year; and despite their protestations, they don't work as many days as the rest of us do. That's a hell of a salary for a teacher.

      Is it justified? Maybe, maybe not, but I am not sure the community can really have a discussion on that when most don't know the dollar amount we're actually talking about.

    3. I don't disagree with what you are saying, but it's a little like the concept that ignorance of the law is not a valid defense when on breaks it.

      Anyone who wants to make the effort can get a copy of the HEA agreement from the school district. And I've had them available for a number of years here. All one has to do is click on Teachers' Union Contracts in the right margin above.

    4. I have to disagree. There is a concerted effort all around to mislead the residents of the district on this issue. We always hear how underpaid the teachers are, but no on (except you) stands up and says "well, wait a minute" and corrects the record.

      I'm not here to argue they're overpaid, although there are people that certainly do believe that, but they certainly are not underpaid, and the board does a disservice to the district when they intimate otherwise.

  5. >> At least two of the three incumbents will be returned to their seats. That doesn't sound like we have a community which lacks trust and respect for their School Board.

    Or we're all too busy working to pay property tax bills to be able to run for school board.... ;-)

  6. Paul,

    We have communicated many times over the past years. You have my trust and vote. When I decided not to run for the board after a talk with you. The pace of change would have been slow and I might have caused pain to others who would drag their feet.

    That being said, I do not know if the other comments are harsh or just the truth. I know Dr M will uncover many items Dale either put his own spin on or just ran over with his management style. In the words of Rev J Wright, these items are just the chickens coming home to roost.

    We have talked about the review process. In fact had I not addressed the issue at a board meeting, Dale would have been here and gone without a formal written review as required in board policy. The formal review I saw would not cut it in the non school world. If the public had seen the document I was provided, what do you think they would have said. With all respect to Taco Bell Managers, they are provided a more objective review, From your profesional life, how would you rate the review given Dale in Dec 2012?

    What profession (work requiring a degree) do you know of where the worker knows what they might be paid for life in year one. They would get a step and grade raise and a promotion by obtaining another degree. In 10 years they make at or above the average community income. By the end of their career than can make $100k, retire at $85,000 and have that grow over 8 years to what they were making when working.

    We have many great teachers in our district. The problem is that after 27 years the best and worst make the same. There comes a time where we need to say enough is enough. When we look at the last 10 years teachers have done better the community as a whole. If the next contract fails to reflect that, well you have provided the fuel for the fire of an anti levy movement.


    1. Thanks for your continued trust and support. We may differ as to what tone we feel is appropriate in public discourse, but it's better than no dialog at all!

      I do appreciate your raising the issue about the lack of performance reviews in the past. It's a valid criticism, and we responded. Dr. Marschhausen is even more proactive in this dimension - one of the reasons we hired him. And the process we'll use for him will be much better than that what we used for Dale's one review.

      So as I said in the other comment, let's quit beating a dead horse.

      What profession (work requiring a degree) do you know of where the worker knows what they might be paid for life in year one.

      Softball question. Answer: Officers in our military services.

      Performance pay is something I'm very much in favor of, once we figure out a valid mechanism for isolating and evaluating the effectiveness of an individual teacher.

      We also have to accept the fact that a more rigorous evaluation system puts a tremendous burden on our administrative team. I worry that the demands of the new Ohio Teacher Evaluation System (OTES) is consuming an unsustainable amount of time, and that if it stays in place as designed, our administrative costs will have to go up. And we all know how the public loves to criticize administrative costs.

      We have to get out of this one-dimensional perception of government. We want the spending on everything cut - except the stuff that we want. And we want more of those things, but lower taxes.

      We can't deadlock on this stuff, like Congress is doing these days. The democratic process culminates in a vote in which the majority wins -- which necessarily also means the minority loses. If the people don't like the outcome, they can vote the majority out of office and go at it again with new representatives.

  7. Paul,

    As far as HB920 goes I do not like it, as it has driven all our levy action that is non bond related to be permanent. Any time you want to move to a renewal levy for Hilliard you will have me on the team. In addition, once a levy fails you are required to wait at least one year, maybe two and tie it to board members being elected at the same time. That will get you some community action


    1. Our permanent levies were approved by the majority, albeit very narrowly at times. There is also a process to repeal permanent levies, if that is the will of the majority.