By Greg R. Lawson

Next Tuesday, there will be 194 schools with levies of varying sizes on the ballot.[1] Many supporters of increasing education taxes, including the Ohio Education Association (OEA), argue that the reason that so many school districts introduced levies is due primarily to funding cuts at the state level.[2] This is a disingenuous argument. Rather than too little revenue forcing districts to go hat-in-hand to voters, Ohio schools have a spending problem that long pre-dates any revenue reductions. This is what forces them to go to voters all too often.

What those arguing for increased taxes fail to mention is that Ohio’s school districts face a structural problem that has been deeply embedded into their budgets for years, namely that total compensation costs for employees are unsustainable on their current trajectory. Spending more without first tackling fundamental reform of how school employees are compensated is a band-aid fix that forces taxpayers onto a never ending hamster wheel of local levies.

As the Buckeye Institute noted earlier this year, state spending has dramatically outpaced inflation since the mid-90s.[3] Since 1975, Ohio has spent, on average, 5.5 percent more each year than the previous one. Average inflation over most of this time period was over one percent less around 4.2 percent.[4] Inconveniently for those accusing the present Administration and General Assembly of draconian cuts, state-only spending for schools is up in both Fiscal Years 2012 and 2013 at 2.8 and 4.0 percent respectively.[5]

State-only spending actually declined during the last biennium under former Governor Ted Strickland by a 6.6 percent in Fiscal Years 2010 and 1.6 percent in 2011. While it is true that Federal stimulus dollars back filled these reductions and added cushioning for many districts, that funding source was always intended to be temporary. School districts that expected to be made whole after the spigot in Washington, D.C. was turned off were always taking a gamble if they failed to adequately prepare for the loss of that revenue put into effect by the Strickland administration.

According to projections made to the Ohio Department of Education (ODE) by each of Ohio’s 613 school districts in October of 2010, the collective deficit at the end of five years (2015) was over $7.6 billion. This puts the lie to claims that current school district deficits are a result of the current state budget the deficits were baked into the system before the current budget was made. Consequently, despite years of above-inflation state spending and long before the current biennial budget was ever enacted, Ohio school districts were facing yawning budget chasms.

What was driving that sea of red ink? Runaway total compensation packages.

At that time, total compensation package costs were swallowing 96 percent of projected revenues across all school districts. On average, total compensation for district employees, which includes not only salaries but insurance and the mandatory 14 percent employer/taxpayer pension match, were leaving a mere 4 percent of projected revenues to pay for all other district expenses including (but not limited to) books, technology, utilities, maintenance. And there were numerous examples where over 100 percent of revenues were consumed by compensation costs.

As of May of this year the cumulative deficit by 2016 is a smaller, yet still unacceptable $2.7 billion and in all too many cases, compensation costs continue to eat up the entire projected revenue of districts.[6]

This storyline is repeated in communities statewide. The following are just five examples of districts that are seeking levies this November. Each example uses May 2012 projections submitted by the districts to ODE. They also utilize teacher salary data available from ODE for the 2010-2011 school year.[7] Finally each uses U.S. Census data to determine the median household incomes and values of owner occupied housing in each community. This was done in order to compare salary information and determine the impact of proposed levies on a representative sample of home-owning taxpayers within the affected communities.[8]

• In Lorain County, the median salary for a teacher in the Avon Lake district is $65,209. That is 19 percent more than the $54,797 median state salary of teachers in Ohio. Total compensation costs will consume over 108 percent of projected revenue by 2016. The school district requested a 9.04 mill levy that will cost the average local taxpayer $611 more per year.[9]
   
• In Cuyahoga County, South Euclid-Lyndhurt City Schools projected that by 2016, 95.5 percent of its total revenues will be spent on personnel costs, leaving only 4.5 percent for all other operations expenses. Meanwhile, ODE indicates that the median salary for a teacher in the district is $67,218 or 23 percent over the median state teacher salary. The district is seeking a 5.9 mill levy that will cost the median household in South Euclid $240 more per year.[10]
   
• In Summit County, Twinsburg City Schools projects 117.5 percent of its total revenues to be spent on personnel costs by 2016. The median teacher salary in the district is $67,940 or 24 percent over the median state teacher salary. The school district requested an 8.5 mill operating levy that will cost the median household in Alliance $223 more per year.[11]
   
• In Franklin County, the median salary for a teacher in Dublin City Schools is $70,728 or 29 percent over the me- dian state salary. Meanwhile, total compensation costs are projected to be over 108 percent of revenues by 2016. The district requested a combined 6.94 mill levy/bond that will cost the median household in Dublin $700 more per year.[12]
   
• In Richland County, Shelby City Schools projected 95.5 percent of its total revenues taken up by personnel costs by 2016. The median teacher salary in the district is $50,969. While that is below the state median salary for teachers, it is also 29 percent over the median household income of $39,451 for Shelby City. They are requesting a 7.5 mill levy that will cost the median household in Shelby $216 more per year.[13]

While everyone wants to see good teachers adequately and fairly compensated, it bears pointing out that such costs often outstrip the salaries of many of their neighbors, especially when looking at the total compensation. As the Buckeye Institute pointed out earlier in the year, when looking at the average salary of teachers in the “Big 8” urban school districts:

“the average teacher earned $21,828 more than the average city resident. This amounts to an almost 50 percent higher salary.”[14]

None of the above numbers should lead readers to conclude that every teacher in Ohio is grossly overcompensated. However, collective bargaining agreements typically mandate rigid, automatic pay increases that accrue equally to all teachers subject to the agreement regardless of the quality of job one is doing.

Given that the median salary in Ohio has declined nearly 16 percent in inflation-adjusted dollars over the past decade, from $53,083 in 2001 to $44,648 in 2011, every tax increase hurts.[15] To raise taxes in order to fulfill unrealistic collective bargaining agreements is the real 800-pound gorilla in the room.

Without changes to how Ohio’s collective bargaining law operates currently, local school boards are left with two unpalatable options for closing their deficits: raising taxes or dramatic cuts in staff and programs. If those school boards had greater flexibility, they would be able to consider better aligning compensation with contemporary fiscal realities in order to assure a more sustainable trend. Unfortunately, this option cannot even be placed on the table for consideration under the current collective bargaining law.

Simply providing more tax revenue is not going to solve the problem. If taxpayers in this state are ever to get a break from the hamster wheel of local levies, compensation reforms are essential. To accomplish this, collective bargaining reform cannot be swept under the rug indefinitely.

1. National Public Radio-State Impact, “List of November 2012 Ohio School Levies,” at http://stateimpact.npr.org/ohio/list-of-november-2012-ohio-school-levies/ (November 1, 2012).

2. Ohio Education Association, “OEA Talking Points on Governor’s Education Budget- as Signed,” at http://www.ohea.org/kasich-education-budget (accessed November 2, 2012).

3. Greg R. Lawson, “Myth of State Education Cuts,” The Buckeye Institute for Public Policy Solutions at http://buckeyeinstitute.org/the-liberty-wall/2012/07/11/the-myth-of-state-education-cuts/ (July 11, 2012); and Legislative Service Commission, “Historical Revenues and Expenditures,” at http://www.lsc.state.oh.us/fiscal/revenuehistory/staterevenue.htm (Accessed November 1, 2012).

4. Calculation based on the average of the yearly inflation rates found at “US Inflation Calculator” at http://www.usinflationcalculator.com/inflation/historical-inflation-rates/

5. Legislative Service Commission, “Historical Revenues and Expenditures,” at http://www.lsc.state.oh.us/fiscal/revenuehistory/staterevenue.htm (Accessed November 1, 2012).

6. Calculation based off of May 2012 school district Five-Year Projections that can be generated at the Ohio Department of Education (ODE) website at http://fyf.oecn.k12.oh.us/ViewForecast/

7. Ohio Department of Education, “ODE Power User Reports,” at http://ilrc.ode.state.oh.us/PublicDW/asp/Main.aspx (accessed November 1, 2012).

8. U.S. Census Bureau, “State and County Quick Facts-Ohio” at http://quickfacts.census.gov/qfd/states/39000.html (accessed November 1, 2012).

9. Lori E. Switaj, “School District Opts for 9.04 Mill November Levy,” Avon-Avon Lake Patch at http://avon-oh.patch.com/articles/school-district-opts-for-9-02-mill-november-levy (August 8, 2012).

10. Caitlin Fertal, “South Eclid-Lyndhurst School District Putting Levy on November Ballot,” News-Herald at http://www.news-herald.com/articles/2012/06/02/news/doc4fc900cd56ba4695894818.txt (June 2, 2012).

11. Emily Canning-Dean, “Twinsburg Schools Ask Voters to Pass 4.9 Mill Levy,” Twinsburg Bulletin at http://www.twinsburgbulletin.com/news/article/5225689 (November 1, 2012).

12. Collin Binkley, “Dublin Schools to Seek Levy in Fall; Two Other Districts Still Talking,” Columbus Dispatch at http://www.dispatch.com/content/stories/local/2012/06/26/dublin-schools-to-seek-fall-levy.html (June 26, 2012).

13. Editorial, “Shelby School Levy Too Much to Ask,” Mansfield News Journal at http://www.mansfieldnewsjournal.com/article/20121022/OPINION01/210220317/Shelby-school-levy-too-much-ask (October 22, 2012).

14. Jonathan Stupak, “Cleveland City Schools: Putting Teacher Compensation in Perspective,” The Buckeye Institute for Public Policy Solutions at http://buckeyeinstitute.org/the-liberty-wall/2012/08/03/cleveland-city-schools-putting-teacher-compensation-in-perspective/#more-1668 (August 3, 2012).

15. Dave Davis, “Ohio Income Down, Rates of Poverty and Uninsured Unchanged, 2011 Census Figures Show,” Cleveland Plain Dealer at http://www.cleveland.com/metro/index.ssf/2012/09/ohio_income_down_rates_of_pove.html (September 14, 2012).