OAPSE Contract Extension

At tonight's meeting of the Hilliard Board of Education, the Board voted unanimously to accept an agreement with the members of OAPSE* that will freeze their base pay and step increases for calendar year 2011. During the discussion of the motion, I thanked the OAPSE members for joining the HEA in taking a 'time out' while we all wait to see how our state leaders - whomever they turn out to be - figure out how to deal with the state budget disaster looming before us.

 

Well done to Superintendent Dale McVey and his team for leading this process.



* Ohio Association of Public School Employees, which in our district represents:

• Transportation workers: Bus drivers, mechanics, dispatchers and Bus Aides
• Secretaries
• Building maintenance workers
• Custodians
• Nurse Assistants and Licensed Occupational or Physical Therapy Assistants
• Various other kinds of assistants
• Accounting clerks
• Print shop operators
• Technicians, including the webmasters, software developers and project managers, systems analysts and database administrators, help desk agents, network techs

Teacher Contract Extension

If you have not already done so, I recommend reading an earlier article I posted titled "Teacher Salary History," to help understand some of the terms and concepts used in this article.

At the Board of Education meeting held Monday, September 27, 2010, the Board passed unanimously a resolution authorizing President Andy Teater and Superintendent Dale McVey to sign an extension to the Master Agreement between the Board of Education and the teachers' union, the Hilliard Education Foundation (HEA). The terms of this extension are straightforward:

1. The current base salary of $38,362 will remain in effect through December 31, 2011, an extension of one year.
2. While HEA members have already received their step increases for the 2010-2011 school year, the step increases for the 2011-2012 school year will be delayed six months – until December 31, 2011.
3. All other provisions of the 2008-2010 Master Agreement remain in effect.

As is obvious with the vote being unanimous, I voted in favor of this contract extension, reading the following into the record:

I would like to say thanks to the members of the Hilliard Education Association for agreeing to this one year contract extension at no base pay increase and a delay in the next step increase.

It has taken many years of hard work and community support to build one of the finest school systems in our State. Hard work on the part of the teachers, students, parents, staff and administrators, and financial support from all those – homeowners and businesses alike – who have continued to generously fund the mission of this district.

This is a time of great uncertainty for our school district, our community, our State and our Country. I suspect that nearly all of us know a neighbor who has lost their job and is struggling to avoid losing their home as well, often at the expense of their already-battered retirement savings. Many more have seen their pay reduced – enough to force unpleasant changes to their lifestyle.

And we have a state government that is seemingly clueless as to how they will deal with a mismatch between revenue and spending that is reportedly on the order of $8 BILLION over the next two years. Balancing the state budget will require spending cuts of a magnitude that are not easily comprehensible.

Without question, the State will solve some of its problems by decreasing its funding to districts like ours – districts which most members of the General Assembly view as having more than enough local financial resources to cover any reduction in state funding. I'm sure we all took note when at the dedication of Bradley High School, Governor Strickland thanked us for constructing that building without benefit of state money. The people who run our State think there is more money where that came from.

The state budget situation is going to hurt us in the wallet – we just don't know how badly yet. While we wait to see what happens after the November elections, I appreciate that the HEA understands the situation, and is willing to stand by until the funding picture becomes clearer.

A year from now, we'll be right back at the table with the HEA, trying to decide whether to tack on another year of extension to the 2008-2010 contract, or whether it is time to dig deeper into the relationship and negotiate a new master agreement. What will we know then that we don't know now?

For one thing, we'll know the outcome of this November's elections. Will Governor Strickland be reelected, or will John Kasich be our new Governor? Regardless of who is elected, they'll have the same immediate budget crisis to fix. No matter what strategy the next Governor might have for generating new revenue, I have little doubt that the Governor and General Assembly will have to implement drastic spending cuts. Forecasting revenue gains is an exercise in speculation; spending cuts are definite and immediate.

What will happen at the Federal level?

Hilliard City School is slated to receive a one-time shot of $1,856,748 from the Education Jobs Fund legislation passed by Congress in August 2010. If the Democrats hold power in Washington, will there be more of this kind of funding coming down the pike? If the Republicans take the majority in either or both of the houses, will it be the end of such Federal largess?

I'm assuming what some will call the worst case – that neither the State nor Federal governments will be sending any money our way in excess of our current funding. In fact, I'm relatively confident that our State funding will continue to decrease in the next few years.

This will bring great financial pressure to our school district, and will force us to strip away all the ancillary conversations and deal with the central equation:

The amount we must pay in local property taxes is directly determined by the compensation and benefits negotiated into the contracts with our teachers, staff and administrators.

The next big issue we all must deal with is balancing our own budget for the school district. While FY2011 looks to be generally okay, the Five Year Forecast paints a picture every bit as scary as of the State's budget. As it stands, the Forecast shows an accumulated deficit of $55 million by the end of FY2014 (the year ending June 30, 2014).

To cover that solely with new local taxes, and with no reductions in forecasted spending, would require a levy on the order of 7.6 mills to be passed in May 2011 in order to end FY2014 with zero money in the bank. To restore a 10% cash reserve, as is Board policy, the levy would need to be 10 mills.

Even if we held spending to FY2011 levels (the year we're in right now), we would still need approximately 1.75 mills just to run out of money at the end of FY2014. To end FY2014 with a 10% cash reserve requires a 4 mill levy this May – if we were to hold spending at FY2011 levels for the next three years. This is because we are already spending more than we take in – to the tune of $5 million this year.

The implications of that statement are clear: for there not to be a levy on the ballot in May, we would have to cut annual spending by at least $5 million – more if we think funding from the State is going to diminish, and I do.

I accept that there will be a levy on the May ballot. The question is how large it will be.

This is where you come in. You have to participate in the discussion of what this school district is going to look like in the coming years, and how much we are collectively willing to pay to make it so. Central to this will be the parameters of the collective bargain agreements with the unions representing the teachers and staff of the district, as well as the administrative contracts.

Sitting at home fuming over newspaper and blog articles won't help. Bitching about things with your neighbors doesn't cut it. Comments made on this blog article are helpful, but we frankly don't hear from enough folks – a small fraction of the total number of readers.

You need to come to Board meetings and speak during the time for public participation, write letters to the Board, submit letters to the editors of our weekly newspapers, and rally your neighbors to do the same. Your elected representatives serve you best when we understand what you want.

Democracy is not a spectator sport...

Issue 4 – Levy for the Columbus Metropolitan Library

Item F2 on last night's Board of Education agenda was a resolution "that the Board of Education support Issue 4 for the Columbus Metropolitan Library." I voted NO on this resolution, which passed by a 3-1 vote (Board member Dave Lundregan was out of town on business). During the time for discussion on this item, I read the following statement into the record:

While I am both a user and fan of the Columbus Metropolitan Library System, I cannot support the levy they are bringing to the voters this November as Issue 4, which would triple the amount of property taxes collected from Franklin County property owners. My reasons are as follows:

1. The forecast provided by Mr. Losinski indicates that the intention is to grow the spending for Salaries and Benefits at a rate of 4.7% per year - for the next 10 years. Of the $90m of new spending planned over the next 10 years if this levy passes, $85m or 95% will be applied to salaries and benefits.
   
   While I believe that it is appropriate to raise enough money via additional property taxes so that the employees of the library system could be awarded increases in salaries and benefits over the next 2-3 years that are in alignment with the general condition of the economy in our region, a CAGR of 4.7% for ten years for salaries and benefits is not in alignment with our current general economic conditions.
   
2. Mr. Losinki's forecast also shows their reserve balance rising from $5 million in 2011 to a peak of $37 million in 2016. I understand how levy funding works, building a surplus in the early years which is drawn down in later years as spending continues to increase.
   
   But in this case, the library system management is asking the taxpayers to trust the library system to hold tens of millions of dollars of taxpayer money, and consume it at the pace and for the purposes they are committing to right now. As honorable as I believe the library system's leadership to be, things change, and future leaders could easily decide to spend the money differently, or more quickly, and would not need voter approval to do so. It will very hard to not spend that $30 million reserve when it's just sitting there, which would leave future years underfunded and generating the cry for still more tax money.
   
   As challenging as levy campaigns may be, I believe that it is better to ask the taxpayers to fund a maximum of the next 3-4 years, and then see what things look like when we get there. I feel this is especially the case when the public entity is asking for a permanent levy, as is the case here, rather than one which will automatically come up for renewal at some point in the future.

So I reiterate that I am a fan and supporter of the Columbus Metropolitan Library System, and would support a levy that funds a lower rate of growth for personnel costs, and fewer years of operation. The future is too uncertain to make this kind of commitment right now, in my opinion.

 So if the Library is asking simply to replace a 2.2 mill levy we're already paying, why do I say that this vote would result in a tripling of the amount of property taxes we pay to the Library?

It has to do with a state law – ORC 319.301 – commonly referred to by the education community as "HB920," which says that once a levy is passed, the amount of tax it collects on pieces of property that existed at the point in time when the levy was passed will never go up. It is enacted by adjusting the "effective millage" of a levy downward when the County Auditor increases the assessed value of a piece of property (owners of property constructed after the levy passes also pay this effective rate).

That has happened with this levy. When it was originally passed in 1986, it collected $67.37 for each $100,000 of property value. In 2010, that same levy is collecting $22.97 for each $100,000 of property value.

But that doesn't mean the amount of money being collected has gone down!

If you had a home valued by the County Auditor at $100,000 in 1986, you paid $67.37 in property taxes to the Library due to this levy. And in 2010, you will still be paying $67.37/yr to the Library. However, your property will have increased in value (in the eyes of the County Auditor) to $295,000. Without the protection of ORC 319.301 (HB920), the amount you would be paying to the Library annually would have increased to nearly $200/yr without you having any say in the matter.

When an expiring levy is replaced, as is the case with Issue 4, the prior adjustments are wiped out, and the millage rate is restored to full value. Therefore passage of this levy will increase your property taxes from $22.97/yr per $100,000 of current value to $67.37/yr per $100,000 of current value.

The library is also asking for an additional 0.6 mills, bring the total new tax rate to $85.75/yr per $100,000 of current value. So I was understating the situation by saying it would triple the amount of money going to the Library system. It's actually 3.7 times the current rate.

The Library system also wants to end the practice of asking for levies which have to be renewed every so often. This request is for a "permanent levy," which means that, if it passes, it will collect $85.75/yr per $100,000 of 2010 property values forever.

Here is the source data I used to make my analysis. It was provided by Patrick Losinski, the Executive Director of the Columbus Metropolitan Library.

Any questions or comments about my vote?

How much money did we get?

Here's a cool website that came to my attention via Colleen Grady over at the State of Ohio Education blog:

Edmoney.org

I've not spent any time looking at it yet, but will include it on my list of favorite links to the right.

Anderson Meadows TIF – What I Really Said

The Board of Education and Administration of Hilliard City Schools has been paying a great deal of attention to a residential development in the City of Hilliard called Anderson Meadows, which is being planned for the northeast corner of Roberts Rd and Alton-Darby Rd. Part of this development would be single family homes and the rest would be multi-family housing, similar to the Tremont Club on Davidson Rd.

The Hilliard Northwest News covered the City Council meeting this week during which this development was discussed. However, their story didn't adequately describe the situation, in my opinion.

It's not that the development itself is of particular concern; it's that the City of Hilliard is asking the developer to front the cost of the realignment of the Roberts/Alton-Darby intersection, with the promise that the developer will be reimbursed through the redirection of property taxes that will be collected on this property.

Such an arrangement is called Tax Increment Financing, or a "TIF."

That may sound like a reasonable way to finance this road project, until one takes note that the property tax revenue the City would be redirecting is not the City's revenue in the first place. While the City of Hilliard does collect a small amount of property taxes – about $50 per year for each $100,000 in market value – the City's primary revenue source is the income taxes paid by people who work in the city limits.

However, property taxes are the key source of income for the school district, which receives about 64% of our property tax dollars. The townships and county agencies, who collectively receive about 30% of our property tax dollars, also receive most of their funding from property taxes.

So if this piece of property were appraised at a market value of $10 million (I don't know exactly what the post-development value will be – this is a guess for illustration purposes only), if 75% of its property taxes are redirected via a TIF, the City loses $5,000/yr of property tax revenue, but gets a significant new piece of infrastructure (the road realignment) for free.

However, the school district would lose out on $150,000/yr in property taxes – money that should go towards the operation of the school district, but would instead be applied to the cost of this road construction project.

The first draft I saw of the proposed TIF for Anderson Meadows would have redirected 75% of the property taxes to the TIF. This 75% is a magic number. The Ohio Revised Code 5709.40(B) requires a municipality to gain approval of the School Board if the TIF is for a residential development and the amount is more than 75%. But up to that limit, the City is allowed to redirect however much it wants regardless of the wishes of the School Board.

After hearing objections from both the Norwich Township trustees and the Hilliard School Board, a second version of the TIF was drafted: one that would keep the school district whole – a so-called "Non-School TIF," but which still would have redirected funding away from the township and county agencies.

But at its recent retreat, the City Council members came up with other variations. One that seems to be of interest to them is to create two TIFs, one for the single-family home portion of the development, and one for the multi-family home portion. The single-family portion would get a non-school TIF (no redirection of school taxes), while the multi-family portion would have a TIF applied that redirects 75% the funding for the schools, the township and other agencies.

The logic of this is that the single-family homes are likely to house school age kids, so the property taxes should be allowed to flow to the school district to help fund the cost of educating those kids. And since there will not likely be any school age kids in the multi-family section, a redirection of school taxes for this section is apparently seen by the Council members to cause no harm.

But this is flawed logic.

 It doesn't matter whether or not a new piece of real estate generates school age kids. The point is that it generates revenue that should be used to ease the property tax burden on the rest of us. In fact, the best kind of new real estate development is the kind that generates property taxes but no kids – such as commercial developments or retirement communities.

Let's make it clear: This road realignment project, if it goes forward, is going to be paid for with taxpayer money. The only question is which elected officials are going to get the blame for raising your taxes. The use of a TIF allows the Mayor and City Council to shift the burden to the School Board and the Township Trustees.

Norwich Township Trustee Chuck Buck told the City Council that he and the other Norwich Township Trustees feel that TIFs are bad public policy, and don't think they should be used in this way. Instead, he suggested that if the City wants this road project, they should put a bond levy on the ballot and let the Hilliard taxpayers decide if they were willing to pay for it.

I think this is a wise suggestion, and I completely agree with Mr. Buck.

Council President Brett Sciotto replied that it was the Ohio General Assembly which granted municipalities the right to use TIFs. Mr. Sciotto is technically correct, but that doesn't mean the City should use one in this manner.

So, bottom line:

1. Do I personally oppose the development of Anderson Meadows? No.
   
   I am a real estate investor myself, and do not wish to impede the ability of a developer to make an honest buck in this horrible economy. But that development project cannot profit the developer at the expense of the taxpayers of this community, at least not without their consent.
2. Do I think this road alignment project is a good thing? Yes.
   
   I've lived west of this intersection for more than 20 years. It will be nice to see the 'jog' finally taken out. Too bad it won't be a roundabout – it's a great place for one.
3. Do I think it should be paid for by redirecting money away from the school district, the township, and other county agencies, forcing those political entities to be the 'bad guys' by asking voters for more tax money? Absolutely not.
   
   Each of these political entities has its role in our community, and depends on the funding sources created by law to carry them out. It is not the role of the school district to fund road improvements.

If you agree with me, please let Mayor Schonhardt and the City Council know as soon as possible, as they will bringing this resolution back before the council at their meeting next Monday, August 23 at 7pm. Better yet, come to their committee meeting at 5:30pm, prior to the full Council meeting, and let them know in person how you feel.

Fee or Tax?

This article was prompted by a recent posting by Colleen Grady of the State of Ohio Education blog.

It won't be long now before school opens for the 2010-2011 school year. Of the many traditions which will be carried out in the first few days, one troubles me: the imposition of fees on our students and their families.

At the May 24, 2010 Regular Meeting of the Board of Education, resolution 64-10 was passed unanimously, authorizing the Administration to collect a long list of fees for various academic courses. I voted in favor of this resolution not because I think these fees are a good thing, but rather because I couldn't see any way before the start of the school year to replace the approximately $1 million that is collected through the fee program. However, during the discussion time for this resolution, I made the comment that I wish such fees didn't exist, and that I would like to see the Board and Administration explore a budget that does not require such fees.

No student in our school district escapes fees. The PreSchoolers each pay $15/yr, and Kindergarten through 6^th grade kids pay $30/yr. At 7^th grade it bumps up quite a bit, to $73, adding on fees for Arts, Social Studies and Physical Education uniforms. The 8^th grade fees aren't so much, but kid have to pay to take foreign languages (from $14 for French to $22 for German).

At the high school level, the fees a student pays are directly related to the courses scheduled. The fee amounts range from $4 for Astronomy to $120 for a course called "Liberal Democracy in America" (see High School Program of Studies, page 58, and the Kenyon College syllabus for the course).

Across a population of 15,000+ students, to collect $1 million/yr in fees means about $60/kid. But about 70% of our students are in kindergarten to 8^th grade, where the fees are $30-40/yr. This means the high schoolers are each paying on the average somewhere around $140/yr in fees.

Here's my problem with these fees: We're either a public school system, or we're not.

I'm not so sure our current system of organizing and funding public schools is the best we can do, but it's the system we have right now. It goes pretty much like this:

• Public school districts are granted an exclusive service territory by the State government. Every square inch of Ohio is part of some public school district. Where you live determines which school district you are a part of. The only way you can change your assigned public school district is to move.
  
  This is my first point of concern. Elizabeth Warren once said that one of the reasons Americans have pushed themselves so much into debt is that the price of admission to a good school district is an expensive house. I think this is a profound observation, and more people need to hear and understand it.
  
  It is no longer legal in America to segregate or discriminate based on race, creed, color, age or gender, but we can and do certainly discriminate based on wealth. By the way, before you hang any particular pejorative labels on me because of that statement, please understand that I believe that appropriately regulated free market capitalism is the best way to address most economic questions. Less government, not more.
• If you have a child of compulsory school age, you are required by law to send that child to the public school or a chartered nonpublic school (e.g. parochial schools).
• However, only the public school districts have the authority to levy taxes to fund their operations. Public charter schools are eligible to receive State funding. Chartered nonpublic schools receive no tax-originated funding.
  
  If you own property, you pay property taxes to the public school district. If you are a renter, your landlord pays property taxes on the property you live in and passes the cost on to you. A number of public school districts also levy income taxes on its residences. You can't opt out of these taxes by claiming you don't have kids, or that your kids attend a chartered nonpublic school.
• The State of Ohio collects income taxes, sales taxes, commercial activity taxes, etc a redistributes some of that money to all the public school districts in Ohio.
  
  This topic is substantial by itself. For the purposes of this article, let's leave it that this money is redistributed from districts with high recognized land values to districts with low recognized land values.

The net of this is that everyone lives in a public school district and everyone pays taxes to operate them. Like it or not, that's what we've got right now.

So I don't understand the purpose of these fees which are levied on students. It seems to me that they are just an additional tax levied on only those with kids. So which is it: everyone chips to operate our public schools, or only folks with kids? Seems like we have a little of each. We collectively allowed this tax to sneak into the system, misdirected perhaps by having them labeled as "fees" instead of "usage taxes."

Here's my point: if a primary argument for having a public school system is to ensure that all kids get an equal opportunity based on ability, then doesn't the levying of these fees/taxes violate that objective? It seems that if there is just one case of a kid being denied the opportunity to take a class or participate in an activity because of inability to pay the fee/tax, then we have failed to live up to this core principle. This must be an actual – not hypothetical – concern: in the December 2009 issue of the Hilliard Bradley Bulletin, the Bradley PTO announces the creation of a "Benevolent Fund" with the following mission:

"The Benevolent Fund has been put in place to offer financial assistance to Bradley students in need. These funds will be made available when no other community resources are obtainable. Our goal is to help our students whose needs have fallen through the crack." Specifically, it says that money from the Fund may be used to: "help pay other fees that may prevent a student from an opportunity for success here at Bradley High School."

The bottom line is that I think we should end the practice of collecting academic, athletic and activity fees, and instead fold these expenses into those which are paid via our normal tax-supported revenue sources. If the current fees total $1 million per year, we would have to raise our taxes by four tenths of a mill to cover the amount ($13/yr per $100,000 of home value). Or we could reduce other expenses by $1 million (remember that 88% of our expenses are compensation and benefits).

What are your thoughts? You can let me know via comments here, or you are welcome to send an email.

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