Number of New School Operating Levies Lower than Past Highs

Some big government advocates claim that reductions in state education funds have caused an increase in the number of local levies for new school operational funds over the past four years. Janetta King, president of left-leaning Innovation Ohio, has argued that such reductions have “pushed the need for tax increases down to the local level where middle and low income Ohioans are being asked to hike their own property taxes in order to make up the shortfall.” But a broader view of Ohio’s recent history with school levies suggests that taxpayers should look for a different culprit.

Innovation Ohio recently reported a 14 percent increase in the number of new school operating levies between May 2007-May 2010 and May 2011-May 2014, leading to a 34% increase in approved school operating revenue. Unfortunately, these numbers don’t tell us much without further context.

First, the Innovation Ohio report neglects to note that approximately half of the increase in approved school operating revenue flows from a massive levy passed in 2012 as part of the Cleveland schools reform plan.  Second, Innovation Ohio fails to account for Ohio’s Great Recession, which dominated the first period of study. To be sure, the understandable (and wise) reluctance to enact new tax increases during a prolonged recession predictably led to fewer proposed levies in the first period.  The latter period of the study, however, from 2011 to 2014, shows a slow, but steady recovery.  Third, the study’s limited time period does not tell us if a 14 percent increase is shocking or expected.  Indeed, the Buckeye Institute’s own analysis demonstrates, for example, that a 14 percent increase in school operating levies pales in comparison to the 140 percent increase seen between 1999-2002 and 2003-2006.

A more complete pictureon the number of levies was provided by the Education Tax Policy Institute (ETPI) in 2007, and offers a fuller context for understanding Ohio’s current levies.  The ETPI report compiled and analyzed every school operating levy in Ohio from 1994-2006, and found that the number of levies decreased each year from 1994 to 1998, but then increased each year from 2001 to 2004. The chart below, showing only new operating levies, illustrates the trend.

Source: Education Tax Policy Institute

As shown here, considered in the context of the past twenty years, the reduction in new operating levies from 2007-2010 identified by Innovation Ohio merely continues the trend that began in 2004 and should not be particularly surprising.  Furthermore, if we include data from the August and November 2010 elections, the 4 year period from 2007-2010 saw an average of 135.25 new school operating levies per year, far below the 230.25 average found from 2003-2006 in the ETPI report.

Finally, according to the Innovation Ohio report, there have been 498 new school operating levies from May 2011 through the most recent election, and Governor Kasich’s term is likely to see more new operating levies than Governor Strickland’s.  But even these numbers can be deceiving when taken out of the broader historical context.  For example, there would have to be over 200 new levies in the upcoming August and November elections for the average number of new levies during the first Kasich term to hit the average seen during the second term of Governor Voinovich, and nearly double the previous three years for the Kasich average to hit the high seen during the second term of Governor Bob Taft. Thus, barring a catastrophic event, the 14 percent increase in levies seen between the Strickland years and the Kasich years, won’t come close to the 140 percent increase seen between the two Taft terms.

The available data does not allow for grand conclusions, but it is safe to say that the 14 percent increase in new operating levies over the past four years is not particularly surprising when taken in context. And although new tax burdens are never to be ignored or taken lightly, this recent rise is still well within the scope of Ohio’s new-levy average over the past 15 to 20 years.

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California Case Sheds Light on Why Teacher Tenure is Bad for Students

“Evidence has been elicited in this trial of the specific effect of grossly ineffective teachers on students. The evidence is compelling. Indeed, it shocks the conscience.” 

So said California state judge Rolf Treu in deciding Vergara v. California. The decision, issued in June, held that California’s teacher tenure, dismissal, and lay-off procedure laws were unconstitutional under the state’s constitution.  Although California boasts some of the worst tenure laws in the nation, the fundamental issues of teacher tenure, dismissals, and “last in first out” lay-off policies transcend state lines.

Like California, Ohio has laws that establish tenure for public school teachers and provide procedures for dismissing teachers and reducing staff.  Unfortunately, these procedures often mean that teacher quality takes a back seat to teacher seniority under Ohio law.

In Ohio, a teacher may qualify for tenure, known as a “continuing contract,” seven years after obtaining a teaching license. Once an Ohio teacher holds a continuing contract he may not be permanently removed from the classroom unless he voluntarily resigns or is “terminated.”  Termination, however, may only occur for “good and just cause,” or for extreme behavior as specified by statute (e.g., “willfully retain[ing] membership in an organization that advocates the overthrow of the government . . . by force, violence or other unlawful means.”).  In either case, the school board trying to remove a tenured teacher must follow procedures set out in state law, which include a formal hearing in front of a referee and a potential appeal to a court of common pleas.  Not surprisingly, cases involving termination for “just cause” typically trigger a string of legal challenges, arbitration hearings, and court battles—making termination a costly and onerous step for school boards to take.

Furthermore, Ohio’s tenured public school teachers also receive preferential treatment during staff layoffs.  Although not a strict requirement for a “last in, first out” system, Ohio law effectively ensures that the youngest and newest teachers will be furloughed first, and any tenured teachers will be reinstated before any non-tenured teachers return if the layoffs are rescinded.

Only Cleveland enjoys reprieve and exemption from some of these failed tenure policies.  Under H.B. 525, known more commonly as the “Cleveland Plan,” the Cleveland Municipal School District may legally “terminate” or remove tenured teachers for “poor performance.”  Fortunately for parents and children in Cleveland, the law considers “poor performance,” defined as two consecutive ratings of “ineffective,” to be “good and just cause” for removal. Imagine that—a school board able to fire a teacher for being ineffective.

Similarly, under the Cleveland Plan, the Cleveland school district may layoff ineffective tenured teachers before laying-off effective, high-performing non-tenured teachers.  Regrettably, students in the rest of the state are not as lucky and must continue to languish under sub-par tutelage because of the state’s backward tenure and dismissal provisions.

But the Cleveland Plan and the decision in Vergara offer hope.  Teacher tenure laws too often protect “grossly ineffective teachers.” The time has come to acknowledge that students and teachers would be better served by public school systems that elevate teacher quality over teacher seniority.

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The Buckeye Institute Announces Rea S. Hederman, Jr. as New EVP/COO

The Buckeye Institute for Public Policy Solutions announced on Tuesday its hiring of Rea S. Hederman, Jr., as Executive Vice President and Chief Operating Officer.

Rea (pronounced “Ray”) Hederman brings more than 20 years of experience to his new position, having most recently served as the Director of The Heritage Foundation’s Center for Data Analysis in Washington, D.C.  In his capacity at Heritage, Hederman oversaw one of the premier econometric modeling shops in the think-tank world, and managed a seven-figure budget as well as a significant staff of economists, mathematicians, and public policy experts.

Robert Alt–President and CEO of The Buckeye Institute–says, “Having worked directly with Rea at Heritage, I could not be happier to have him join Buckeye.  He has that rare combination of deep knowledge of public policy along with well-honed skill as a manager and leader that will serve Buckeye well in the years to come.  The Buckeye Institute has embarked on a phenomenal upward trajectory unseen in its 25 year history, and Rea’s addition to our team will compound our success, growth, and capacity.”

Hederman remarked that “Washington is, of course, a great place to work on economic policy firsthand, as I’ve been fortunate to do over the past two decades, but the real opportunity to make an impact is found in the states–and nowhere more so than the ultimate swing state of Ohio.  I am excited to get to work formulating and promoting sound economic policies to help Buckeye achieve its goal of a freer and more prosperous Ohio.”

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An Idea Whose Time Has Come: ShareOhio

Ohioans owe Auditor of State Dave Yost and his staff a round of applause for a new online innovation.  The Auditor of State (AOS) staff is going to implement an innovative web-based system to facilitate the sharing of equipment, personnel and facilities among local governments.  Using “ShareOhio” to facilitate the sharing of assets could start saving private citizens on their tax bills.  In 2012, the auditor’s Ohio Performance Team studied the utilization rates for capital equipment (think air compressors and backhoes) in Lake County.  They found that while some equipment was utilized heavily in each taxing jurisdiction within the county, other items were only used as little as once per month.  Local governments could save big money by sharing under-used equipment rather than each owning and maintaining an expensive machine themselves.  Other states such as Oregon and Rhode Island have successfully used these techniques.

However, problems existed:  some usage records were poorly maintained, and actually implementing a fluid sharing system could be tricky.  To that end, AOS drafted sample shared services contracts along with their study and built many useful capabilities into the website, www.shareohio.gov.  Now equipment can be tracked and inventoried and usage reports calculated online with a few clicks.

We encourage taxpayers to get onboard and make sure their local governments use this resource to the fullest extent.  As we have shown in our Joining Forces report, shared services have the potential for massive savings across the state and should be the first place local officials look instead of tax increases.

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First School Consolidation in Quarter of a Century Moves Forward

After flirting with the idea for decades and having recently arranged to share services, two Ohio school districts—Bettsville and Old Fort—have finally decided to tie the knot and consolidate.

Both districts are located in rural Seneca County and educate far fewer students than the state average of 2,640.  While Old Fort enrolled only 483 students in fiscal year 2014, Bettsville is the smallest district in Ohio, serving 156 students in grades K-12.  Further, while for Old Fort this represents a 14 percent decline over the past decade—not much worse than the state average of 8 percent—Bettsville has lost a crippling 34 percent of its student enrollment over the same period.  Such large declines obviously make running an entire school district for so few students an inefficient practice.

Along with major enrollment declines, Bettsville was struggling with severe budgetary problems.  In fiscal year 2013, their $600,000 deficit equaled approximately one third of their total revenues.  The district was placed under fiscal emergency on February 6, 2014, and a state audit estimated a $775,000 deficit for fiscal year 2014.  This forced Bettsville to take out a large loan from the state to remain solvent.

At this point talks of a merger with neighboring district Old Fort intensified, and the recently enacted section 3311.241 of the education MBR (House Bill 487) provided a saving grace.  Under the newly signed law, their debt to the School Solvency Assistance Fund would be forgiven if they were to voluntarily consolidate.  After talks with the community, the Bettsville Board of Education made the decision to do so for the coming 2014-2015 school year.

Although community members may be sad to see Bettsville Local Schools go, the consolidation is projected to save close to $400,000 per year and free up money for better course offerings and extracurricular activities.  Old Fort benefits because they will no longer have to renovate their old elementary school, as the old Bettsville elementary will now house grades K-6.

According to the Ohio School Boards Association, this is the first voluntary school consolidation Ohio has seen since 1989.  With several other districts facing enrollment decline and budget squeezes, expect HB 487 to spur more districts to follow suit in the near future.  In this instance, it seems they really are doing it for the children.

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Buckeye Institute Talks Current Tax Reforms and Need for More

Our Greg R. Lawson was on the past episode of the State of Ohio with host Karen Kasler and guest Dale Butland from Innovation Ohio discussing recent Ohio tax reforms.   The full video is below.

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Unemployment Rate at its Lowest in Seven Years, But Labor Force Sees Large Declines

The May 2014 Ohio By the Numbers report continues to show private sector job gains as well as a continuing drop in the unemployment rate.  Ohio’s unemployment rate of 5.5 percent is the lowest since April of 2007, before the beginning of the Great Recession. Ohio added 3,000 private sector jobs while dropping 100 government jobs in May.

Although the unemployment rate continues a significant downward trend, this change is largely the result of a large decline in Ohio’s labor force. In May, Ohio’s labor force declined by 14,293 people.  As The Buckeye Institute’s Labor Force report indicates, Ohio’s labor force has declined by over 10,000 for three straight months and lost nearly 31,000 people since January.

In line with the shrinking labor force, Ohio’s labor force participation rate also continues to slip. The participation rate was 63.8 percent in May 2013, but is 63.0 percent this May.  This reduction was caused by a 44,000 May-to-May loss of people participating in the labor force, despite the working age population growing by 45,000 people over the same time period.

It should be pointed out that a low labor force participation rate is a national phenomenon.  In fact, Ohio’s May labor force participation rate is slightly above a 36 year low national rate of 62.8 percent.

For a full Labor Force update, click here.

Overall highlights from the report:

  • Ohio gained 3,000 private sector and lost 100 government jobs in May;
  • Ohio ranked 26th nationally in private sector job growth since January 2010, growing at a 7.6 percent rate;
  • Ohio currently ranks 47th nationally for private sector job growth since January of 1990, growing at 10.1 percent (top-ranked Nevada grew 98.7 percent over the same time span).

Within individual industry sectors, Professional and Business Services, Education and Health Services, and Leisure and Hospitality continue to employ more people today than in either 1990 or 2000.  Meanwhile, Mining and Logging, Construction, Manufacturing, and Information sectors have fewer jobs today than in 1990 or 2000.

Between 1990 and January 2012, Worker Freedom states’ private sector jobs grew at a 38 percent rate vs. only 14 percent for Forced Union states (11.8 million vs. 8 million).  Since Indiana became a Worker Freedom state in February 2012, Worker Freedom states’ private sector jobs grew at a rate of 5.4 percent vs. 4.2 percent for Forced Union states.

For the full report, please click here.

 

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