Teachers as Employers

We hear plenty from the community of teachers about how school funding is screwed up, how school districts are mismanaged, and how teachers are underpaid. It might be worth weighing those statements against the example teachers set as managers of their own affairs.
For example, the Nov 29, 2008 edition of The Columbus Dispatch ran a story titled "Teacher's union pay a surprise to many." When I first saw that headline, my assumption was that this story would be about the way teachers are paid, and was excited to have the Dispatch take some interest in this topic.
The subject was actually much more interesting: the pay given to the headquarters employees of the Ohio Education Association, the state-level organization of Ohio teacher's union (i.e. the Hilliard Education Association – the union representing Hilliard teachers – is an affiliate of the OEA). It seems that while average teacher pay in Ohio decreased last year, nearly half of the OEA staff is paid more than $100,000 per year. This was a surprise to the head of the Lima teachers' union - which signed a no-increase contract this year - who said "classroom teachers have a problem with any management person making six figures."
If that is so, how did it happen that so many OEA staffers are making six figures? Don't the teachers set the salaries for the employees of their own union? Why do they willingly pay nearly $500/yr in OEA dues, then turn around and complain about how much their own union leaders are paid?
Let's also take a look at the oversight of the State Teachers Retirement System (STRS).
STRS is an organization chartered by state law (ORC 3307) to collect, invest, and disburse retirement benefits to retired Ohio public school teachers. It is one of the largest pension funds in the country, having assets of $80 billion as of June 30, 2007.
Ohio law also gives some guidance as to the way the contributions to the retirement fund should be invested:
"The board shall have full power to invest the funds. The board and other fiduciaries shall discharge their duties with respect to the funds solely in the interest of the participants and beneficiaries; for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the system; with care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims; and by diversifying the investments of the system so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so.." (ORC 3307.15)
Nonetheless, the members of STRS – active and retired Ohio public school teachers – sat back and allowed their Board and investment managers to expose them to a level of risk which has reportedly led to a decline in value of the STRS pension fund by more than 20% in the last year alone (to $54.5 billion). But that's not all. In spite of this massive loss, the STRS investment managers are being paid substantial bonuses. STRS members like Kathy Bracy are shouting in outrage that this was allowed to happen (both the loss and the bonuses).
It's not the first time apparently. In 2003, the same situation occurred, although I suspect the losses were not so substantial.
At least one STRS member understands the root cause of all this: ignorance and apathy - and maybe a little greed - on the part of their membership. RHJones writes that "the indifference should cease" in regard to teachers involvement in oversight of the STRS.
I wonder how much the rank-and-file teachers themselves understand about school funding, investing, or how to carry out the leadership and management of a large enterprise. The evidence is that the answer is 'not much,' and they aren't all that interested in learning about it or being involved with it either. They have sure made a mess of both their own union and their own retirement system. This can't be blamed on school district administrators, the lawmakers or the general public.
Maybe it's time for all the parties involved in public education (teachers, administrators, school boards, politicians, private citizens) to quit blaming each other, and do a little introspection: 

• What are your true motivations? What is your hidden agenda?
• Who is supposed to be representing your interests?  How closely do you monitor their actions? 
• Is it really all about the kids, or all about you?

Dan Nichter

Back in January 2007, before the primary elections, I suggested to voters in the City of Hilliard that they pay attention to the fact that former Franklin County Development Director Dan Nichter had suddenly moved into Hilliard and put his name in nomination for a City Council seat. Because there were three seats open and only three candidates in the Republican primary, he was guaranteed to appear on the November 2007 ballot. In the General Election, there were four candidates for three Council seats, so all he had to do was not come in last to win a seat. I suspect he became aware of this situation in late 2006 and moved to Hilliard specifically for the purpose of running for City Council.

Mr. Nichter is no friend of Brown Township, and seems to have some kind of special relationship with Homewood Homes, who has been involved in their own brand of shenanigans relative to the placement and construction of Bradley High School.

Mr. Nichter had a bad week recently. On November 14, he was arrested for drunk driving – by Hilliard police no less – and refused a chemical test on the scene.

A few days later, his license as a real estate appraiser was revoked by the Ohio Real Estate Appraiser Board. Apparently he declared a piece of property in Columbus to be worth $185,000 when it had sold four months earlier for $27,500.

Mr. Nichter has not publicly disclosed that he is also a defendant in a lawsuit filed by IndyMAC Bank in US Federal Court (case 2:2007cv00483) in which it is claimed that Mr. Nichter and several other people worked together to execute a scam that went like this:

• Buy an inexpensive piece of property (e.g. 498 S. Ohio Ave purchased by co-defendant Christian Inyamah for $56,000 in Feb 2005)
  
• Sell the property for an inflated price (498 S. Ohio sold to co-defendant Kedric Glenn for $185,000 ten weeks later)
  
• Get an appraisal for the property for the inflated amount (the appraisal firm was owned by Nichter, who supervised the appraisal)
  
• Using the appraisal take out a loan for most of the inflated value ($166,500 in this case, borrowed from IndyMAC bank)
  
• Take the borrowed money, split it up amongst the conspirators, and run (no payments were ever made on this loan, and IndyMAC foreclosed, finding it was a substantially worthless piece of property)
  

At this time, the lawsuit is postponed for an indefinite time because of the collapse of IndyMAC bank – in large part to its participation in the subprime loan market. Mr. Nichter and his associates are accused of taking things one step further and using these market conditions to repeatedly commit fraud (this Ohio Ave property is only one of several named in the lawsuit).

While the courts have yet to rule on his guilt, the Ohio Real Estate Appraiser Board was apparently satisfied sufficiently with the evidence to revoke Mr. Nichter's license. Note that as of November 21, 2008, Mr. Nichter is listed on the website of National City Bank as a "Loan Consultant." I wonder if that arrangement will continue…

As a member of Hilliard City Council, Mr. Nichter will participate in the decisions controlling the development of the Homewood property just annexed by the City of Hilliard, as well as the imminent annexations of the acreage north of the Homewood property.

What do you think will drive his decisions - what he thinks is good for the Hilliard community, or what is good for Mr. Nichter?

First Meeting

Announcing the first Public Meeting of SaveHilliardSchools.org!
By Mark Morscher

On this blog, we have learned over the past months that our passionate online-community has so much to offer each other in experience, perspective and ideas regarding Hilliard City Schools and the educational processes and funding. While it was great that our students got a temporary reprieve with the passing of the last levy, many of us have recognized it is time to take our inertia and the collective power of this online community and do what we can to affect change in the future. In this spirit, SaveHilliardSchools.org will be having its first public gathering:

Monday, December 1
6:30PM
Iacano's, Cemetery Rd.

This will afford us a great opportunity to:

• Enjoy some pizza!
  
• Put faces to the names!
  
• Have Paul present an integrated view of school funding history, issues and outlook
  
• Open the floor to questions and answers to drive more thorough and collaborative discussion
  
• Discuss the future of SaveHilliardSchools.org and how we want to interface with the community and school district
  
• Next steps for moving forward
  

Feel free to pass the word onto friends and other interested parties. This is not a formal meeting, and is not being coordinated with school officials, although members of the Administration, Board and Staff are more than welcome to participate. We hope this presents an opportunity to gather and decide how we can address our individual concerns as a coordinated group.

No need to RSVP. Contact Mark Morscher (markmorscher@yahoo.com) if you have further questions.

Don’t Blame Charters

One of the accusations you'll hear our district leadership make is that charter schools are a drain on our school funding resources, and therefore one of the causes for additional operating levies.
This is a red herring. The truth is that the traditional education community just doesn't like charter schools because it rightly perceives them as competition. And they don't like competition.
Traditional public school districts, such as Hilliard City Schools, is funded from three sources: a) the property taxes (and sometimes income taxes) paid by the residents of the school district; b) the property taxes paid by the commercial entities in the school district; and, c) the pool of money redistributed by the State of Ohio.
The State's share is determined by a formula which can be observed via the SF-3 reports published by the Ohio Board of Education. Here is the most recent SF-3 for our district. The calculation goes like this:

• Start with the the "Average Daily Enrollment," which is 14,333.73 (line 3). Multiply that number by the standard per-pupil amount that the Governor and General Assembly have agreed to set as the "Foundation Amount." For this school year, that number is set to $5,732. So 14,333.73 times $5,732 is $82,160,940.36 (line 5A). The theory is that we should be able give our kids the "thorough and efficient" education required by the Ohio Constitution by spending only this amount (we spend 1.75 times this amount).
• The school funding laws require that each local district make a contribution to this cost via property taxes of at least 23 mills on our own local property owners. This amount, called the "Charge Off," is deducted from the first calculation. Our county auditor reports that the value of the property in the Hilliard School District is $2,419,400,820.86 (line 4C), making 23 mills be worth $55,646,218.66 (line 4E).
• That which remains after the Charge Off is deducted is called "Formula Aid." It works out to about $27 million after some other adjustments (Line 6).
• Then another set of adjustments are applied for things like transportation costs (line 16), Special Education (line 11), Gifted Students (line 14). We also currently have an adjustment associated with the elimination of Personal Property Taxes on businesses. It nets out to total State Aid of $37 million and change, or $2,628 per kid (out of our total per student spending of $10,665).

So how do charter schools fit into this?
The obvious effect is that our school district is required to send some of this state money to the charter school whenever a kid transfers. The SF-3 shows that this amount is about $1.6 million dollars for 233 kids (line 22B). That works out to $6,758 per kid. Here's the thing to remember: That's all the charter school gets - $6,758 per kid. From that, the charter school has to pay all of their costs, both operating and housing.
So what is the monetary effect on the public school district when kids transfer to a charter school?
Our district leaders want you to hear that the State gives us $2,628 per kid, and we have to turn around and give $6,758 per kid to the charter schools. They want to make it sound like the district is 'losing money' on the kids that go to charter schools.
But remember that we spend $10,665 per kid. The difference between the $2,628 we get from the state and that $10,665 is the revenue we collect locally via property taxes on residents and businesses. So when we send $6,758 to the charter schools, the district keeps the difference between that amount and $10,665, or $3,907.
"But wait," the school leaders will say, "you don't understand that when one kid transfers to a charter school, our costs don't really go down."
Indeed.
Actually, I understand this phenomenon very well, and have written about it before. Fixed Costs vs Variable Costs, or Marginal Cost vs Loaded Cost. The problem is that the school leaders want to use marginal cost analysis when talking to us about growth (i.e. more kids mean more cost), and fixed cost analysis when talking about a reduction in student population (i.e. costs don't go down just because there are fewer kids). Pick one or the other for both cases, please.
Whichever kind of analysis you use, the one thing that is clear is that the district is not harmed financially when a kid chooses to transfer to a charter school. I'd argue that the district is actually better off.
That is unless a lot of kids decide to transfer to charter schools. Then the district ends up with teachers with no kids and empty buildings. That would be a problem.
But the question you have to ask is why would that happen?
When Dick Hammond ran for re-election to the school board in 2008, the Hilliard teachers' union refused to endorse him because he sat on the Board of Directors of a charter school. Dick was unseated by Dave Lundregan, who did have the HEA's endorsement. During the candidate's night, we four candidates were asked if we supported charter schools. Mr. Hammond's answer was spot-on: If the public school district was doing its job for those 233 kids, there would be no need for the charter schools.
Administrators and teachers think charter schools are bad because they're bad for teachers and administrators, not the kids who attend the charters.
But it's all about the kids…
This article was motivated by a recent report published by the Buckeye Institute

Affordable Growth

I have long been mystified about why Hilliard Mayor Don Schonhardt seems so intent to push the Hilliard city limits westward into Brown Township. His own Master Plan (page 163-164) says this:

A review of the Land Use Plan concluded that the City's existing and future employment areas are appropriately planned but there is little potential for a significant amount of additional revenue producing property to be incorporated into the plan. This raises a concern that there may not be a fiscal balance between residential and commercial development over the long term. The lack of additional revenue producing property may require the municipality to increase the employment densities of the designated commercial sites or, on the other hand, slow the rate of residential growth and development.

Exactly.

The October 28, 2008 edition of the Hilliard Northwest News ran a story titled "City Struggles to establish balanced 2009 Budget," in which it was said:

Some of the additional expenses in the street construction, maintenance and repair budget is because of additional land and roads for which the city is responsible as it annexes and grows, officials said.

So don't grow. Don't grow!! It is entirely optional. There is no benefit whatsoever to the City of Hilliard to annex additional land for residential development.

When it harms both your City and our school district, why are you so eager to help the developers Mr. Mayor?

The Work Begins

I've been a poll worker since the Nov 2004 Presidential Election, and yesterday was once again a member of the excellent team in Brown Twp. We had a steady flow of voters from the time we opened the polls at 6:30am until late afternoon. Until then, at no time was there a voting machine idle, other than a brief interlude about 4pm when they all ran out of paper. It was good to see lots of young folks participating for the first time (we cheered for all the newbie voters and rewarded them with a donut!).

In addition to all the folks who showed up in person to vote yesterday, about 30% of the registered voters in our township cast their ballots absentee. This has become a powerful mechanism for encouraging voter participation, and has permanently changed the dynamics of the election process – for the better I believe.

In the case of Issue 78, the Hilliard Schools 6.9 mill operating levy, the vote in our township was FOR: 279 to AGAINST: 481. School levies don't often pass in Brown Twp, or the other townships for that matter. I'm not sure of the reasons, but I think there's perhaps something we folks who live out in the rural areas share in terms of frugality. And it may have been a mistake to rename our school district from "Scioto Darby Local Schools" to "Hilliard City Schools," because goodness knows that many of us out in our township don't consider the City of Hilliard government our friend.

District-wide, 14,714 votes were cast absentee – 41%. Somewhat surprisingly, the absentee vote was 7,023 – 7,691 Against the levy. Again, it will be interesting to see the precinct breakdown of the absentee vote, and note what patterns emerge.

Another interesting statistic is that district-wide, there were 604 ballots completed on the voting machines in which no vote was cast on Issue 78 at all. I wonder how much of that had to do with the fact that the school levy was on the last page of the ballot.

The Board of Elections website reports that district-wide the levy passed by a margin of 19,246 to 16,771, meaning a total of 36,017 votes were cast. While many would say that the margin of victory was 2,475 votes, I think the more accurate view is that it passed by 1,239. Had only 1,239 voters said AGAINST rather than FOR, the levy would have been defeated. In other words, the margin of victory was only 3.4%, and that can hardly be called overwhelming support.

This is not to diminish the hard work of Bobbi Mueller and the levy committee. In an election this close, their efforts certainly contributed to the passage of Issue 78. As I reported in September, these folks had a substantial challenge before them, given the vote outcome in March. There were 26,180 votes cast in March, compared to 36,017 yesterday, an increase of 9,207. Those additional votes were nearly 5 to 1 in favor of the levy – an incredible result. I said this would be all but impossible. But a number of all-but-impossible things happened in America yesterday.

And hopefully, many of the over 5,000+ unique visitors of this blog agreed with our call to pass this levy in order to give our movement the opportunity to enact change in the way our district is led.

Now is the time to honor the commitment many of us made to support the levy, yet demand change. Our support of this levy was in no way an endorsement of the current mode of operations, but our words are empty unless we now act.

The first meeting of our team is now being planned. If you want to be a participant in change, and not just a Monday morning quarterback, send me an email and you'll be added to our distribution list.

Why We Need to Vote FOR the Levy

Please also read this proposal I've made to the school leadership.
>> NEW: KJ says 'Make you voice heard!'
The reason is simply this:
The cuts that will take place if the levy fails – the cuts which the Administration recommended and the School Board unanimously approved – will severely wound the school district yet do nothing to solve the fundamental problems.

Those problems are:

Funding:

For school districts in Ohio, funding comes from three sources: a) taxes on residents (always real estate taxes and sometimes also income taxes); b) taxes on businesses (real estate and personal property); and, c) the State of Ohio. In order to keep our property taxes reasonable, all three of these must grow in a constant proportion to each other as the student population grows, but they have not:

1. Prior to the collapse of the housing market nationwide, thousands of new residences were built in our schools, generating on average 0.8 school age kids for each new residence. At our current spending level of $10,000 per kid per year, 100 new houses means 80 new kids, or $800,000 in new annual expense. However, those 100 new houses will pay on average about $3,500 per year in school tax, yielding $350,000 in new revenue. Where will the other $450,000 come from?
   
   
2. The State of Ohio has been holding its funding to our school district at constant dollars for a couple of years, and the indication is that this will be case going forward as well, especially with the phase out of the Tangible Personal Property Tax revenue stream, begun during the Taft administration. In other words, the State of Ohio is funding none of the growth of students in our district. Instead our state tax dollars (income taxes, sales taxes, lottery proceeds, etc) are be diverted to urban and rural districts on the theory that suburban districts like ours are wealthy and don't need the money.
   
   
3. Commercial development within our school district has not kept pace with residential development. Remember that there are three municipalities – Hilliard, Dublin and Columbus – each controlling development in their portion of our common school district.
   
   While Columbus has allowed a large number of multi-family apartment developments to be constructed within their city limits, there has also been substantial development of commercial property, generating at least $2.4 million/yr of new school funding in the past decade - enough to balance the development of 700 new homes.
   
   Dublin allowed the development of Ballantrae and other single-family housing, but included little commercial development in the process (e.g. the Mall at Tuttle Crossing and the surrounding commercial development is in the Columbus and Dublin school districts).
   
   The City of Hilliard has had some recent success in commercial development, but has also had to make up for the loss of businesses such as Dana Manufacturing (bare lot now), Sutherlands (became a church), and the Evergreen restaurant (now an intersection).
   

The consequence of these three simultaneous currents is that nearly all of the $10,000/kid annual cost of student growth is being borne by the current residents and existing businesses of our school district.

What needs to be fixed on the funding side?

Answer: Slow down residential development to a pace no greater than that of net commercial development, and demand that the State of Ohio not fall further behind in what is due our District.

Spending:

Whatever else we might believe drives spending in our school district, the truth is that 85% of the money is spent on salaries and benefits for the 1,600+ full-time equivalent employees on our payroll, and this proportion is growing.
About 95% of the employees are members of one of two unions, either the Hilliard Education Association (teachers and other positions requiring certificates or licenses) or the Ohio Association of Public School Employees (the rest of the 95%). The collective bargaining agreements negotiated at the beginning of 2008 call for about 70% of those members to receive 7% raises each of the next three years, while the other 30% - the most senior and most highly paid members – receive 3% raises. The cost of these increases is moderated somewhat by the new requirement that the union members pay a portion of the cost of their healthcare insurance coverage – 6% in 2008, 8% in 2009, and 10% in 2010. Prior to this contract, union members paid none of their healthcare insurance premiums.

The deal these unions got from our School Board is out of whack with the general economy, and was a mistake in my opinion. However, rather than calling the unions back to the bargaining table, our school leadership – including the union leaders – has decided it is better to lay off young, promising teachers and staff members than to ask all employees to accept a small rollback in their raises.

Our spending trajectory is getting further out of whack each year, meaning this most certainly won't be the last levy request we see. In fact, School Board members signaled that the next levy request might be in only two years, and I think that it very likely will be for more than 10 mills unless both the growth of student population and the growth in spending are brought under control.

Our Responsibility

These aren't new issues – they've been building for a number of years. Few of us – me included – have been paying any attention to the fiscal operations of our school district. We've been asleep at the switch. The mess that has taken years to develop can't be fixed simply by voting NO on the levy and letting these cuts take place. They're the wrong cuts being made for the wrong reason.

The better solution is to pass this levy (Issue 78), then all get to work taking back control of community and our school district. The more successful we are, the longer it will be until the next levy needs to appear on the ballot.
Actual Posting Date: Monday, Sept 29, 2008 - 35 days before the General Election and the day before Early In-Person voting begins. By post-dating this article, it will remain at the head of the blog until the election. I don't think there's anything more important to be said before then. But please scan down for articles published between 9/29 and 11/4 .... pl