Tomorrow 19 school districts across the state will be asking taxpayers to raise taxes in the August Special Election. Before voters go to the polls, they need to ask tough questions of their school boards to assure themselves that their hard-earned dollars are being put to their best use. Serious questions must be asked about spending levels– specifically, whether current spending driven by bloated compensation will be brought into line.
With the question of spending in mind, it is worth considering that some districts are requesting levies not for expansion or improvements, but simply to prevent their current expenditures from running them into debt. For example, Franklin City Schools are calling for an additional 7.92 mills in property tax ($242.55 for a $100,000 home). Their five year forecast, reveals that this new revenue will be used largely to fund growth in payroll and pension funds. By 2017, spending on these programs is projected to increase by almost two million dollars. District officials tout the tax increase as needed simply to “maintain the current level of instruction.”
The “current level of instruction” at Franklin City Schools is an acceptable goal to strive for – the district scored 98.5 out of 120 on ODE performance metrics in 2011, placing them in the “effective” range. This is a marked improvement from 2000, when the district scored a paltry 82.6. But Franklin’s 19% increase in performance has been accompanied by massively disproportionate increases in spending: over the same eleven-year period, per-pupil expenditures grew by over 40 percent.
A major cost driver for the school district is compensation, with Franklin city teachers earning a median wage of nearly $57,800, which is 50 percent above the city median wage of $38,500. Taxpayers should carefully consider whether this rate of growth is sustainable, or whether they will just be asked for more levies in the future to support the increased spending.
Another example that fits the pattern is Tecumseh Local School District in New Carlisle. Tecumseh is putting a levy on the ballot for the tenth time since 2004. The past nine times the voters did not find it necessary to raise their taxes in order to bring the school district out of looming red ink—with some local residents speaking out about the need to reduce spending before increasing revenues. The school district is now asking the voters to vote yes on a very large 12.37 mills levy that would cost the owner of a $100,000 property an extra $433 each year in taxes.
The school district is using the fear tactic of the possibility of a state takeover in the absence of the levy passing. Under this scenario, the state will take over the fiscal oversight of the school district. However, despite the dire sound of this possibility, it may be necessary to address the rising cost in the district.
According to the latest five-year forecast from the Ohio Department of Education, Tecumseh’s school district will be putting 85 percent of its total revenues toward personnel costs in 2013; and it gets worse by 2017, when that total will equal 96 percent.
Taxpayers should know that the median salary of a teacher in the district is more than $61,000, while the median household income of those being asked to pay for the new levy in New Carlisle is 42 percent less at only $43,200.
As with Franklin City, there were academic achievement gains in the Tecumseh district, which are positive. However, financial stability is essential for school districts, and it is not clear that passing the new levy will resolve the larger, ongoing issue the district has with its long-term personnel costs.
Franklin City and Tecumseh Local School Districts represent a microcosm of a challenge that Ohio has yet to resolve—collective bargaining reform. As long as automatic pay increases are baked into the budgetary cake, many school districts will be hard pressed to act in a fiscally responsible manner.
Additionally, the problems cannot be laid at the feet of the Governor or the General Assembly. As The Buckeye Institute illustrated in a recent Policy Brief, since 1975, Ohio has spent on average 5.5 percent more each year on primary and secondary education than in the previous year. Average inflation over most of this time period was 4.2 percent. Despite claims to the contrary, state policy makers HAVE invested major sums of state taxpayer dollars into every single district in the state.
Many Ohio school districts are facing balance sheets that do or risk running into the red. But for far too many, this is a problem of their own making—the result of unsustainable spending. Taxpayers across the state tightened their belts during the Great Recession to make sure that ends met in their household budgets. Before taxpayers agree to another round of tax increases, they should look at the expenditures being made by their school districts, and make sure that those districts seeking the increases are likewise tightening up spending.