Different Districts, Different Finances

Problem-Based Learning School Leader Assessment

MIAMI UNIVERSITY DEPARTMENT OF EDUCATIONAL LEADERSHIP DR. STEVEN HINSHAW April 18, 2012 Authored by: Erikamarie Burk

Erikamarie Burk Different Districts, Different Finances| 4/18/2012 Upon being asked to examine the financial status of three districts in Ohio and other empirical

data thereabout, I have prepared analysis and recommendations fitting to each school district. The three districts requesting assistance are Cuyahoga Heights Local School District, Toledo City School District, and Vinton County School District. Three very different districts, these schools are facing similar financial struggles in the coming years as are most public school districts in Ohio. Cuyahoga Heights Local School District (CHLSD hereafter) is a property wealthy district. The total assessed valuation per pupil is nearly $212,000. Toledo City School District (TCSD hereafter) has an assessed valuation per pupil of just over $115,000. Vinton County Local School District (VCLSD hereafter) has a per pupil assessed valuation of just $86,000. This means that one mill in CHLSD gives the school $211 per pupil, whereas one mill in VCLSD only generates $86 per pupil. TCSD raises $115 per pupil with one mill. On a per pupil basis, VCLSD and TCSD must levy more millage to generate the same amount of money per pupil as CHLSD. (Education, 2011) According to the five year forecast, CHLSD and TCSD are experiencing higher expenses than income and are dipping into cash reserves; these districts will be at large negative cash balances by 2013 and 2014, respectively. VCLSD is still showing a positive cash balance for the next five years, although it will be nearly 2/3 depleted. All three districts should consider raising the local tax rate. CHLSD makes more money per mill because the property valuation is highest; however, the median income is higher than VCLSD and TCSD and may be able to handle an income tax. TCSD has very low valuation, but the highest ADM. TCSD should consider an income tax as opposed to increased property tax because the property values are low and have dropped (and are projected to drop further) in the past few years. An income tax in addition to current levied millage may help TCSD confront dropping property values and assist in the schools dismal financial future. (Education, 2011) (Education, Five Year Forecast, 2011) VCLSD has the most stable income projection, according to the five year forecasts. The operating revenue is not going to change more than a normal, property update amount over the next five years. The expenses that seem to be the culprit in cash depletion are employees retirement/ insurance benefits, increases in cost of personnel, and increased cost of materials, supplies, and purchased services. These expenses will increase nearly $1,000,000. With revenues remaining the same, but the personnel and services expenses increasing, VCLSD will dip deeply into its cash reserves. VCLSD has the lowest revenue per pupil raised by levying taxes of all three districts, but has a higher median income than TCSD. VCLSD would only gain $86.09 per pupil for one mill levied. For these reasons, VCLSD

Erikamarie Burk Different Districts, Different Finances| 4/18/2012

should levy and income tax in addition to current property taxes to help combat rising expenses. (Education, 2011) (Education, Five Year Forecast, 2011) Given student population, state and federal funding for impoverished students should be given to all three school districts. In CHLSD, 33% of the student population is in poverty. In TCSD, this number is 80%. VCLSD falls in the middle at 56% of students in poverty. Although these districts could levy additional property or income taxes, this money may not truly enter the school because the levels of poverty are so high. State and Federal monies assigned to low income and impoverished students should be utilized, especially in Toledo, where 80% of students are poor and expenditure per student is $13,600 to combat social deficiencies (i.e. feeding students the only hot meals they may get). VCLSD receives 3 times more money from state and federal sources than it does from the local revenue. (Education, 2011)Clearly, this district relies heavily on outside aid. CHLSD receives little from state and federal sources because of its property wealth and ability to raise money. TCSD receives more than 3 times as much from state and federal sources than at home, where local income is dropping every year. Because the state and federal government already contributes so much to TCSD and VCLSD, the ability to increase outside contribution may be small. The state and federal education budgets may not be able to increase aid to these districts. (Education, 2011) (Education, FY11 District Profile Report (Cupp Report), 2011) When speaking of the wise use of money (Leadership, 2012), all of these districts would be hard-pressed to re-evaluate spending based on waste. The largest portion of expenses in all three districts is people. Education is a people business. The increased cost of educators and educator benefits are the majority of all increases in expense. In all three districts, the percentage of teachers with over ten years experience is over 56%. In TCSD, that number is nearly 67%! The cost of an experienced educator, salary and benefits, is always more than that of a new teacher. With this in mind, these districts are only facing more expense in the coming years. A possible solution is incentive retirement or replacement. For example, giving incentives for teachers with a lot of experience to retire and replacing these teachers with those with less years will decrease personnel costs. This should be attempted at balance; however, for every school needs teachers with experience and new teachers to learn from them. (Education, FY11 District Profile Report (Cupp Report), 2011) (Education, Five Year Forecast, 2011) As for following the Coalition for Equity and Adequacy, which advocates for higher level in state spending (Leadership, 2012), TCSD and VCLSD would benefit from this Robin Hood idea. CHLSD would

Erikamarie Burk Different Districts, Different Finances| 4/18/2012

benefit far better from levying property taxes in its property wealthy district. CHLSD may benefit from joining an opposite advocate group. All of these three districts are facing challenges in the next five years. As analyzed, the districts are all going into (or are in already) the red. Without serious conversations about cutting costs (which translates directly to personnel or personnel benefits), these districts cannot continue. Toledo is currently operating in the red despite huge cuts in personnel/benefits. We are living in hard times where property tax is not as stable as it once was. These revenue dips are no fault of the school districts, but they must adapt and make cuts accordingly. Without relief in some area or cuts to expenses, these schools will not be able to pay their employees or educate children. I have no shining star, no one solution. The suggestions in this report may help, but there is no easy answer or solution to public school district problems.

Erikamarie Burk Different Districts, Different Finances| 4/18/2012

Works Cited
Education, O. D. (2011). Five Year Forecast. Columbus: Ohio Department of Education. Education, O. D. (2011). FY11 District Profile Report (Cupp Report). Columbus: Ohio Department of Education. Leadership, M. U. (2012, April). Different Districts, Different Finances - School Leader Assessment 3. Oxford, Ohio, United States of America: Miami University Department of Educational Leadership.

Erikamarie Burk Different Districts, Different Finances| 4/18/2012