Is High School Football a Public Good?

It's that time of year again ... time to consider who should pay for private goods ... because the community doesn't pay, your neighbors do ... Jim


Article published at Mises.org

Is High School Football a Public Good?
By Jim Fedako

Most of us would never think of asking our neighbors to foot a personal bill. We accept responsibility for car and roof repairs as ours alone. In addition, we don't bang on the door across the street in order to demand a contribution towards our children's figure skating lessons, taekwondo classes, etc. That which is consumed or used by our families is to be paid from our pockets — the definition of personal responsibility.


Now let's change the situation slightly. Instead of a figure skating lesson — the realm of the private good, consider the local public high school football team — the realm of the supposed public good.[1] The technical definition of a public good — a good that is nonexcludable, nonrivalrous, subject to free riders, and hence will only be provided by government through coerced tax dollars — has been corrupted in the modern lexicon to mean anything that is perceived to benefit society in general, no matter how specious the benefit argument.

Based on the technical definition, football is not a public good as teams are excludable and rivalrous since each team is limited to 11 players on the field without penalty. But no one really applies the technical definition to derive public goods. For if they did, the concept of public goods would disappear from economic textbooks and from debates over the need for government interventions in the market.

Instead, the collectivist definition — the vacuous, yet now standard, definition — applies the general welfare argument to elevate football from a private activity to that of a public good. The argument goes something along these lines: football is beneficial because it prepares boys for adulthood, keeps them off the streets after school, and provides them with a place where they can excel.

continue reading ...

When the workers become management

This post of mine is almost two years old, but it is timely given the current union negotiations.

When the workers become management

You just have to love it: The contract talks between the Ohio Education Association and its professional staffers appear to have stalled. Could a strike be imminent?

"What," you say, "one union suing another? How could that be possible?"

Picture this situation: A union which constantly complains about wages and working conditions being struck by another union over similar issues? What happened to the worker’s paradise and the evils of management?

The OEA and Ohio Professional Staff Union have an acrimonious history with law suits, strikes, and grievances marring what should be a marriage of worker bliss. It appears that scarcity is even recognized by unions when it’s their bottom line taking the hit.

Regardless of who wins or loses, this is quite an enjoyable situation. I hope that public educators make this into a real teaching moment. Each union seeks to enrich itself at the expense of all others; other unions included. Fair wages, huh!

Ludwig von Mises was correct, union logic collapses whenever and wherever the divergent views of individual unions are confronted by the realities we all face everyday. One can only dream that these negotiations end up as the next reality show.

Overreliance on property taxes? Always!

William Phillis of the Ohio Coalition for Equity and Adequacy of School Funding -- the group of over 500 Ohio school districts fighting for more state tax revenue -- loves to bring up the "overreliance on property taxes" issue. Yet, given the insatiable appetite for spending of public school districts, increases in the reliance on local property taxes will always exceed increases in state formula aid. Why is that so?

Consider this: Even if the state resets its funding formula so that the split between state and local revenue becomes 60%/40%, the state share would quickly reduce over time. You see, the state increases its share at a rate that is close to inflation while local districts tend to increase their costs at a rate that is close to twice inflation.

So, in five years, the split becomes 52%/48% since school districts refuse to address rising costs. And, because local districts would likely, given an influx of new state dollars, allow their costs to increase by an even higher rate, the split would tilt closer to the current 50%/50%.

The only means to slow the rise of public education in Ohio is at levy time. Giving districts more state aid will lead to quickly rising local costs. This will result in the need for new local tax dollars as costs quickly exceed the additional state aid.

So, you get stuck twice: from the state through increased statewide taxes; and, from the district through increased local property taxes. Not much of a solution, is it?

To: Superintendents, Principals and Treasurers & others
From: William L. Phillis
Re: No change in reliance on property tax


In DeRolph I (1997), the Ohio Supreme Court stated, “Emphasis of Ohio’s school funding system on property tax is a factor that contributes to the unworkability of the system and must be eliminated”. Three years after the first DeRolph decision, the Ohio Supreme Court opined, “The most glaring weakness in the state’s attempt to put in place a thorough and efficient system of education is the failure to specifically address the overreliance on property taxes. If this problem is not rectified, it will be virtually impossible for the revised school-funding system to be characterized as thorough and efficient.”

Reliance on property tax has not diminished since 1997. In fact, from FY 1997 to FY 2007 total state revenue for public K-12 schools increased 158% while local revenue increased 166%; thus, there has been no appreciable change. Therefore, the “glaring weakness” continues.

With the State GRF Budget shortfall looming in FY 2009, the overreliance on property taxes will worsen. The school funding amendment crafted by the major education organizations is the solution to the school-funding problem. Send completed petitions to E & A Coalition, 100 S. 3rd Street, Columbus, OH 43215 or OSBA, 8050 N. High Street, Columbus, OH 43235.

The Useful Idiots

Supporters of the levy can be divided into two groups: those looking for a financial gain over their neighbors; and, those wanting to believe that school officials are looking out for the taxpayer. Let's take a look at the latter group.

The district loves to state that its building cost less than the Ohio School Facilities Commission standards. This certainly implies that the OSFC standards are the benchmark of efficient school buildings. Not even close.

During my service on the board, I attended one of the OSFC design review meetings -- meetings where the commission seeks public input regarding the Ohio School Design Manual. The Design Manual contains the state-recognized set of standards for new school construction. According to OSFC, "OSFC’s Ohio School Design Manual provides schools with standards of design and construction that assure a statewide standard of quality."

The key is this: If a feature (building size, technology component, etc.) is in the manual, the feature will be allowed in buildings funded through OSFC programs. And, if the feature is in the manual, it becomes part of the cost standard used by OSFC -- the same cost standard that the district quotes before each bond issue.

The meeting I attended was more "Name that Tune" than "protect my wallet." Those in attendance had a stake in the outcome. District representatives, vendors, and contractors, sat around one-upping each other. There was no one -- certainly no one on the commission -- saying, "What about the cost?" Instead, the commission employees were excitedly nodding their heads and noting recommendations.

The Design Manual is not a document listing efficient, tax-wise standards. No, it is simply the wish list of those looking to build school buildings at taxpayer expense. A form a taxation without representation.

I bring this up since the useful idiots of the district want to believe in their local officials. Of course, this desire to believe suits the district just fine.

Keep in mind that the state cost standard is not a mark of efficiency, it's the hallmark of inefficiency and waste. So, reviewing the expense of district schools and concluding that the district is cost-efficient simply because it beat the state standard of inefficiency and waste is a fool's errand, or idiot's errand, indeed.

To those who say, "Enough is enough!"

The time to act is now.

As the base grows, so grows the next levy. The actions that the board takes in the next few months decide the timing and amount of the next levy. If the board controls costs, this levy can stretch and the millage remain relatively low. If the board negotiates away its new cash balance, the base grows, and the next levy is set in stone.

To cut the base is to cut programs. Under this scenario, the board and administration win due to the way folks in the district tremble at any threat of cuts. So, the solution is to stop the base from growing; and that time is now.

You can expect that the next contracts will be for three years, and that they will include large increases since the unions will demand raises commensurate with the supposed support of the voters. If the board negotiates away its cash balance now, the community can do nothing later.

Either a recall campaign is started soon, or pressure is put on the board to negotiate in the interest of the taxpayer; pressure at board meetings, via emails, phone calls, letters, etc.

The future is today!


Note:

The reality is this: Boards use residual negotiations. They look at what they have as far as cash over the levy cycle, and negotiate it away.

Olentangy Levy: Parents Blinked

Frightened by your own board.

It certainly appears that threats work. But, to be threatened by your own elected officials and paid bureaucrats. Well ...

A little push and the board wouldn't have cut your busing -- it had no reason to cut that or any program. In your hearts, you knew it. Yet, you cowed under pressure of your own elected officials. Democracy at work, I assume.

Really, 10 parents in the boardroom are enough for any board to question its decisions. Make that 50 parents, and busing would have stayed, along with everything else.

Keep in mind that accountability is a two-way street. The community must be willing to stare down the board and administration every now and again. Otherwise, in their own minds, the board and administration grow more and more conceited. Olentangy saw that in the 90's, and I expect that we will see it again.

So, as the board and superintendent stared, the parents blinked. The result is this: Parents gave the board and superintendent a mandate to do whatever they choose. Whether the next issue is likely high salary increases, perverse books, or something else -- parents, do not complain. Your blink allowed whatever power you once held to pass from community to board and superintendent.

Transportation for control -- a Faustian bargain of sorts.

It was as simple as that.

Ouch! The Springer Stinger

You got to love this -- OFK is sending out an email refuting the issues and facts I've posted on this blog. As you read, ask yourself this: Why does OFK feel that their supposed $80,000 levy campaign (partially paid by district contractors) is threatened by this blog and its facts?

Let me start with my favorite.

Springer quotes a blog post over at SaveTheHilliardSchools.blogspot.com by some unverified poster named Dave. She does not provide Dave's complete comment. Here is a little more wisdom from Dave: "I think our Olentangy levy will not pass. I think they have asked for too much and threatened the voters. I'll be in favor of a trimmed down honest version." Unlike Springer, I've provided the link.

Then there are these whoppers:

-- Springer states that I was instrumental in developing the Davis contract. True. But the issue is not the original one. The issue is the amended contract approved last June, when I was no longer on the board. The board amended Davis's contract and changed his performance bonus to a guaranteed bonus. In fact, the board approved his bonus for this fiscal year last June. Did you get that? The board stated in June, 2007, that Davis already satisfied his performance for 07-08. In addition, the board added close to $400,000 in potential post-employment liabilities. Shameful for the board. Shameful for Springer. By the way, I posted his contract here.

-- Springer quotes Stacy Overly as some unbiased expert on school district cash management. Overly works for Baird, a company that will make hundreds of thousands from the bond portion of the levy. Unbiased? Huh.

But, read the Overly comment, he never states the next claim that Springer makes regarding bond ratings and cash balances. Why not? Because it's not true. The Overly comment is found here, click on Opinion on Cash Balances.

-- Springer disputes my claim that school-related local property taxes are rising at double inflation. She wants to know which time frame I used in making that claim. Look back 10 years. Or, look out 3 years. This levy is close to a 25% increase in your local school district property tax, and it will only last 3 years. That is almost an 8% annualized increase. More than double inflation.

-- Springer never refutes my claim that teacher salaries are rising by 6.5%. She only states that I never voted against such raises. Sure, I held my nose many times while serving on the board, but my past errors are no reason to continue down a faulty path. What you learn on the board is that the majority will spend whatever it can. The best the minority can do is fight for lower increases.

-- Closing schools. Yes, Springer and OFT love that threat. But the attorney only opined on the information provide by Davis. I tried to get clarification from the attorney and a copy of the Davis information from the district. Alas, no one is talking. You can read this sordid affair here.

Of course, there are the expected ad hominem. While such attacks make good politics, they are light on substance.

Really, just go back to the Dave comment to see the games being played over at OFK. Whatever happened to truth? Times change I suppose.

Olentangy Levy -- Voter Check-List

Here's a final check list as you prepare to vote. I encourage you to read all my other postings so you can understand that there is no need for the March levy.

Let's focus on just five of the things we know:

1. The $10.5 million in cuts is not required.
2. Bond investment is available and can be used.
3. The administration and board have no intent on negotiating tighter contracts.
4. Schools cannot be closed to the public, churches are safe.
5. The last year(s) of all district levies have deficit spending.

Additional explanation:

1. The cuts list is a threat; plain and simple.
2. The fact that there is bond investment income means that the district is not selling bonds only when bond money is needed. I don't think anyone wants the district to sit on a pile of bond money -- funded by tax dollars -- so that investment income can be earned. The board will consider this option after the levy fails.
3. The negative balance in FY09 is cleared by tighter negotiations. It's that simple. The district is not currently proposing this as a solution, but it will after the levy fails.
4. The district can't close schools to the public. Never could. State laws will not allow it.
5. Deficit spending in the out-years of a levy is normal, in fact all district levies are structured that way -- including the one on the ballot.

Kicking Churches Out of Schools

Pass or fail, I learned a lot during this levy campaign. One aspect of the campaign that troubles me most is desire of the superintendent and board to close school buildings to churches, should the levy fail. Why is this so troubling?

Many Christians lament the fact that God is no longer welcome in public education. They believe that a faceless government has done this, against their will, and against their beliefs. Yet, come levy time, some of these very same folks play God as a bargaining chip: "If we can't have our levy, you can't have your church!"

Think about that for a minute. The superintendent and board is looking to use God and His Church as a means to pass a levy. In this instance, need has no meaning. Such a stand is pure arrogance and disobedience. Christians threatening churches is an action to mourned. But they've done it, and they are doing it.

I noted the lilt and glee coming from the board during the discussion of the threatened cuts.[1] Not one defense of taxpayer, community, parent, or church. It was as if closing the schools to churches is a good thing -- or, at least a good threat. Shouldn't someone have protested? Alas, there was no voice in the wilderness.

There is no need for the proposed cuts, pass or fail. This district faced a situation that was much worse in FY03.[2] Yet, no cuts were made in FY04. Different board, different superintendent.

Instead of taking the high road and negotiating contracts in favor of the taxpayer, the district is claiming that it will kick churches out of its buildings should the levy fail.[3] That really troubles me. It should trouble you.

The next time that someone laments the removal of God from public education, remember that it's not always some faceless government doing this, it may just be our friends and neighbors doing it for some worldly reason.

Something to think about.

notes:
[1] The audio is available on the district web site.
[2] The deficit for FY05 was greater than the current deficit, and, the district's valuation was much lower. Greater deficit with less resources.
[3] As I have posted many times, the district cannot close its buildings to churches, or any organization for that matter, should the levy pass and the cuts enacted.

What Olentangy for Kids is not saying

1. Local school district property taxes have been rising at an annualized rate of over 7%.

Is this rate of increase -- double inflation -- due to something special about education in Olentangy? Yes. The average employee has been reaping yearly salary increases of close to 6.5%, plus projected increases for health insurance of 12%; far, far above the private sector.

2. The levy on the ballot will increase operating millage by almost 30%.

That's a huge increase, isn't it? But, as I have previously written, the money is not for the kids, it's for salaries and benefits. The district is facing a $2 million deficit -- which can be covered by reduced salary increases and controlled insurance costs -- yet the superintendent plans to cut $10.5 million. Why such large cuts? To supposedly punish parents should the levy fail. All about the kids? Huh. It's all about the ego of the superintendent. Oh, and your hard-earned tax dollars.

3. The district does not need to cut $10.5 million.

Olentangy for Kids is supposed to be separate from the administration, yet they have appear to take marching orders from district officials. The district simply needs to balance its books for FY09. Since the treasurer just reported that revenue is up and expenditures are down, the district will likely show a positive cash balance for FY09 when it files its updated Five-Year Financial Forecast in May (read this previous post for more details). In addition, the district can also reduce expenditures by controlling costs as it negotiates with its unions. FY09 is safe: there is no need for this levy.

Olentangy Levy: hiding money under the mattress

The Olentengy School District claims that it is in dire need of another property tax levy. Things are bad, and the district is running on a shoestring. Yet ...

The Comprehensive Annual Financial Report (CAFR) is the audited document that details the financial position of the Olentangy School District. It's lengthy and a little esoteric for average readers, but it is a wealth of information.

The CAFR -- available on the district and state auditor websites -- is addressed to the board and community. In a representative form of government, the community gives the power and responsibility of governance to its elected officials. So, board members need to read the CAFR and understand all of its nuances, yet I would bet that all but a few of past and current board members have ever taken the time to read this important report. The nonreading board members simply allow the administration to run the schools. These board members take their pay but do no work. Shameful.

In addition to the CAFR, the district is required by state law to create a Five-Year Forecast every October, with an update every May. In addition, the district is supposed to update the forecast whenever a significant change occurs to its financial position.

The board approves the Five-Year Forecast and any subsequent updates, after which the forecast is sent to the state department of education (ODE). The latest version of the forecast is available on both the district and ODE websites.

A momentary diversion. The district earns investment income from surplus operating funds -- cash -- invested in a number of investment vehicles. The income from these investments is deposited back to the operating fund. The district also earns investment income from the cash received from the sale of bonds; cash that has not yet been used to pay construction costs. The income from these investments is initially deposited into the building funds.

School districts cannot use revenue generated from the sale of construction bonds for operating expenses, but districts can use the investment income resulting from these bonds for any purpose, subject to board approval.

OK, we have a CAFR and a Five-Year Forecast, as well as investment income from operating surpluses and bond sales.

The Five-Year Forecast is reporting an approximate $2 million shortage for FY 2009. This is the reason for the dire need for a March 2008 levy. However, the 2006 CAFR reports over $3 million in investment income resulting from construction bonds. They more than wash.

Keep in mind that additional investment income was generated in FY07, with more being generated this fiscal year.

It is prudent for the district to hold onto some money as a contingency should something occur during construction. However, since the majority of construction will be completed by the start of FY09, the majority of the investment income will be freed from contingency planning and available to be moved to the operating fund.

The administration will certainly recognise this money once the levy passes. That's what they did when I served on the board. The investment income simply appears when the superintendent has a pet project to fund. This year will be the same.

So, the questions to be answered in just a few weeks are these: Why has the district refused to recognize its stash of bond investment income as operating funds in order to wipe away the FY09 negative balance on the October Five-Year Forecast? Why are the superintendent, board, and now Olentangy for Kids, pushing an issue that is not needed? Don't they respect the community anymore?

Olentangy levy: The Taxpayer Summary

There's really nothing more to say about the Olentangy levy. I am reposting my executive summary -- actually taxpayer summary. I encourage you to read all my other postings so you can understand that there is no need for the March levy.

Let's focus on just five of the things we know:

1. The $10.5 million in cuts is not required.
2. Bond investment is available and can be used.
3. The administration and board have no intent on negotiating tighter contracts.
4. Schools cannot be closed to the public, churches are safe.
5. The last year(s) of all district levies have deficit spending.

Additional explanation:

1. The cuts list is a threat; plain and simple.
2. The fact that there is bond investment income means that the district is not selling bonds only when bond money is needed. I don't think anyone wants the district to sit on a pile of bond money -- funded by tax dollars -- so that investment income can be earned. The board will consider this option after the levy fails.
3. The negative balance in FY09 is cleared by tighter negotiations. It's that simple. The district is not currently proposing this as a solution, but it will after the levy fails.
4. The district can't close schools to the public. Never could. State laws will not allow it.
5. Deficit spending in the out-years of a levy are normal, in fact all district levies are structured that way -- including the one on the ballot.

Olentangy Levy: Most inane comment from a board member

Olentangy board member Julie Feasel posted this comment on another blog:

I just want to point out that Olentangy did make $6 million in cuts to future spending BEFORE even going on the ballot and we continue to look at how we can trim costs. (emphasis added)

Did you get that? They made cuts to future spending when the issue is this fiscal year and next fiscal year. Is this her idea of cutting costs?

Really, why do I care that they cut projected costs, effective FY2010, when it's FY2009 that has the supposed negative balance (I say supposed as there is no real deficit -- read my previous post)?

Inane!

Just think about it: There are costs that can be cut, yet Feasel and company are waiting until 2010. And, they want to raise your taxes for such nonsense.

This is the logic which guides the district. Amazing!


note: According to Feaselian logic, I am a financial genius and a good steward of my money since I decided not to buy an aircraft carrier in 2010. I cut $1 billion is costs. Wow!

Olentangy Levy -- Breaking News: A District Flush with Cash

Important news ... Please read carefully.


Two recent reports show that Olentangy is a district flush with cash.

As always, I have provided either the document or its link. Take some time to read these financial statements in order to understand the district's financial condition. I encourage you to research, ask questions, and learn.

By the way: You won't find this analysis at the Olentangy for Kids website. They just stick to the district spin. And, when I was involved with the committee (even chaired it), my numbers and analysis were consider the end; the final answer. Now that I don't like their levy, they don't like my numbers and analysis. Oh, well. Such is life.


First -- The monthly Comparative Statement of Receipts and Expenditures

The statement below -- reported to the board last night -- shows that revenue is up and expenses are down. Likely, though it's too early to be certain, the ending negative balance for next fiscal year -- the reason for the levy -- will be gone when the district updates its Five-Year Financial Forecast in May.

The deficit is gone! No need for a levy.

(note: Click on the document to enlarge. Also, the second analysis follows this document.)

Second -- Investment Income

The district's latest Comprehensive Annual Financial Report (CAFR) is now available on the state auditor's website. This CAFR reports financial activities within the district for the fiscal year ending June 30, 2007 (FY07).

Once again, the district is reporting bond investment income -- $4.7 million worth. Over the past three fiscal years, the district has reported $9.6 million in investment income. And, more is being generated this fiscal year.

This money is available to be used for operating expenses. There is no need for the levy.

While it is true that money generated through bond sales cannot be used for operating expenses -- in fact such money must be used in the manner specified on the ballot, the investment earnings can be used for operating expenses. And, most likely, they will be used for expenses that are typically funded through the general fund.

There is no need for this new levy. There is more than enough available through the investment income alone to offset any negative year ending balance for FY09.

Oh, sure, the administration and levy committee will state that the investment income was approved by voters for future capital expenses. But, that contradicts the claim that the district only sells bonds when needed. In order to earn investment income, the district must have excess bond funds to invest. Therefore, bonds were sold before they were needed; if they are even needed at all.

The district typically puts more debt on the ballot than will be needed to fund the capital projects listed. There is a reason for that: to protect against rising and hidden costs. It is a contingency plan. Makes sense, but this pot of money is not supposed to continually grow.

The voters never approved a large bond fund to be used as a means to generate investment income. That money -- your tax dollars -- should be in your account generating investment income for you.

So, the district sells more bonds than needed, before they are needed, builds up a pot on bond funds as an investment tool, all the while claiming it is out of cash. Hmmm. Doesn't sound too honest to me.

See if the levy committee addresses either of these documents. Likely, they won't as these truths don't match their story. But, ask them anyway.

Olentangy Levy: the truth using district data

Given all the nonsense, threats, and lies coming out of the district, I decided to once again provide a simple explanation regarding the supposed need for a levy in March. And, I am going to use the district's own numbers so that you can easily verify what I am saying.

By law, the district must file a Five-Year Financial Forecast every October. Here it is: http://www.olentangy.k12.oh.us/pdf/finance/5YrFcst29Oct2007.pdf

Please note line 10.010 for FY09. That entry shows the ending deficit as $2,059,854 -- not the $10.5 million that the superintendent is claiming.

State laws requires districts to show no deficit in the first projected fiscal year; the fiscal year ending on June 30, 2009 (FY09). To remove the deficit, a district can make cuts, avoid new costs, find other funding, etc.

On page 7, you will note that base salary increases account for $1,929,246 million of new expenditures in FY09 (this does not include an additional approximately $270,000 that the district pays into state retirement systems due to these salary increases - page 7).

Also note that step and education increases provide $2.6 million for teachers, even without any base salary increase. So, teachers will still receive salary increases even with a zero percent increase in base pay. In fact, they will receive almost the 4% increase that is standard in the private sector.

By way of comparison: When the state was going through a period of fiscal problems, they negotiated a zero increase for all state workers. Zero; no step increase, no education increase, nothing.

In addition, health insurance increases account for another $2.4 million -- the district is assuming a 12% increase in its contribution per employee covered (page 8) -- note: taxpayers contribute $1005 per month for family coverage.

So, salary increases (base salary plus state contributions) and health insurance are the root cause of the deficit. It's not growth or any other factor. It's simply salaries and benefits.

To protect salaries and benefits, the superintendent is proposing cuts to programs. On top of that, he has created the illusion that he must cut $10.5 million in order to right the deficit.

Look for yourself, the deficit is only $2 million. The $10.5 million is a threatened punishment for not supporting the superintendent.

The district's financial situation is an expense issue, not a "district on the edge" issue.

It's all there in the district's Five-Year Forecast. The truth is easy to discern despite the district's spin and lies. A really convenient truth at that.

Olentangy Levy: Cutting services while costs rise

Last year (FY07), the district cut transportation for elementary students within one mile of school, based on sidewalks, speed limits, etc. So, you would expect that there would have been huge costs savings. Yet ...

District transportation costs rose between fiscal years 2006 and 2007, plus the district purchased additional buses; a $1 million worth. So, the district cut services, increased expenditures, and purchased buses. Doesn't say much for cost savings, does it?

Wouldn't it make sense for the district to reduce transportation expenditures under the current level of service, reaping the benefits of the updated walk policy? Such efforts would allow the levy to last another year. But, alas, the district just wants to continue spending your tax dollars; business as usual I suppose.

note: It's all reported in the district's Comprehensive Annual Financial Report (CAFR) for FY06 and FY07, available here for FY06 and here for FY07. (Search for "transportation.")

Olentangy for Kids: taking the low road

As I reported in an earlier post, the district cannot legally close buildings should the levy fail and the cuts be enacted. Yet, Olentangy for Kids still uses that threat. I guess that if you have a levy to sell, ethics goes out the window.

So, committee members threaten residents -- their own friends and neighbors. What are they teaching the children of the district? That it's OK to do and say anything as long as the supposed benefits outweigh the costs. The ends justify the means I suppose.

But, such behavior is neither right nor is it ethical.

Olentangy Levy: True costs

Annually, school districts in Ohio create a Comprehensive Annual Financial Report (CAFR), an audited document that provides different views of costs, expenditures, and revenue. Olentangy's latest CAFR -- found here on the state auditor website -- provides a simply way to get beyond the spin and into true district expenses.

The administration and Olentangy for Kids have been touting the district's costs per pupil as if their number details the total cost of running district operations. But, the Ohio Deparment of Education figure being used does not include real costs that any business would consider in its financial reports; namely interest, depreciation, etc.

Using accrual-based accounting, district costs per pupil soar from the advertised $8,507 per pupil to the true cost of $11,111. Shocked?

Well, you shouldn't be. Note that, despite the spin coming out of the district and levy committee, you are taxed for both operating and capital expenses. [1]

Consider this contrived example: Ask the manager of the local Burger King what the cost is to produce one hamburger. He thinks, and then states (say) 50 cents. You question him on that number and he says that salaries, benefits, beef, bun, etc, total only 50 cents, as if there are no capital costs associated with his store. The manager has understated his costs, just as the district understates its costs.

Read the CAFR and learn the true cost of education in Olentangy, your taxes paid for it.

note:
[1] The district is ranked 31st highest for bond millage rate out of the 614 districts in Ohio.

Olentangy Levy: the simple solution

Public school districts in Ohio must file a Five-Year Financial Forecast [1]with the state department of education each October, with an update in May. This forecast lists revenue and expenditures for the current fiscal year, as well as the next four fiscal years. In addition, the district must list the assumptions used to create the forecast.

Fair enough.

So, the district files its forecast in October 2007 stating that it will have a $2 million deficit at the end of FY09. The assumptions show that the assumed increase in base salaries is $1.93 million. On top of that, the district pays an additional 14% of employee salaries to the state retirement systems. This means that the increased salaries also increase the district's employee retirement contribution by $270,000. Therefore, the total cost for FY09 salary increases is more than the FY09 deficit. Got that?

So, negotiating a zero percent salary increase clears the deficit. [2]

Isn't that onerous? Not really. Keep in mind that teachers will still see an average increase for next year of 3.7%, based on step and education increases. Given that an average salary increase of 3.7% is above the standard for the private sector, and given that the district assumes it will fund an additional 12% of employee insurance costs -- well above the private sector, it's obvious that a levy failure and the implementation of this simply plan will keep things business as usual; not the catastrophe that the superintendent claims it is.

A simple solution.

note:

[1] The district's Five-Year Financial Forecast is here.
[2] Or, the district could control healthcare costs and still provide a salary increase, in addition to the step and education increases.

Olentangy Levy: Short of repetition, there's nothing more to say

There's really nothing more to say about the Olentangy levy. I am reposting my executive summary -- actually taxpayer summary. I encourage you to read all my other postings so you can understand that there is no need for the March levy.

Let's focus on just four of the things we know:

1. The $10.5 million in cuts is not required.
2. Bond investment is available and can be used.
3. The administration and board have no intent on negotiating tighter contracts.
4. Schools cannot be closed to the public, churches are safe.
5. The last year(s) of all district levies have deficit spending.

Additional explanation:

1. The cuts list is a threat; plain and simple.
2. The fact that there is bond investment income means that the district is not selling bonds only when bond money is needed. I don't think anyone wants the district to sit on a pile of bond money -- funded by tax dollars -- so that investment income can be earned. The board will consider this option after the levy fails.
3. The negative balance in FY09 is cleared by tighter negotiations. It's that simple. The district is not currently proposing this as a solution, but it will after the levy fails.
4. The district can't close schools to the public. Never could. State laws will not allow it.
5. Deficit spending in the out-years of a levy are normal, in fact all district levies are structured that way -- including the one on the ballot.