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Analysis & Opinion: Sacrifice needs to be shared

MILLERSPORT – Time is running out for the Walnut Township Local Schools District to submit a plan to eliminate the general fund deficits projected for June 30, 2015 (approximately $100,000), and June 30, 2016, (approximately $1,000,000) in the district’s latest five year forecast.

A Dec. 10, 2014, letter from the Ohio Department of Education officially placed the district in “fiscal caution” as of Dec. 28, and set a Feb. 10, 2015, deadline for the deficit elimination plan.

Last month, school board members eliminated the June 30, 2015, projected deficit by cutting bussing effective Jan. 5 to one route for just K-8 students, leaving a central office secretarial position vacant and making a one-time transfer from the food service fund to the general revenue fund.

A 90-minute presentation on Dec. 8 from an Ohio Department of Education financial consultant starkly outlined the district’s options and addressed some local misconceptions.

• A school district can NOT close its doors for financial reasons. Districts must meet state minimum requirements. High school bussing and extra-curricular activities like sports, band and clubs are not required.

• Do NOT expect a state bailout; it is a local issue.

• The State can NOT force a district to consolidate with another; consolidation is a local issue 100 percent. BOTH districts must approve consolidation. In general, financially solvent districts don’t want to merge with a district in fiscal emergency due to inherited deficits and the addition of “no” voters. If a merger would occur, taxpayers will pay the new district’s taxes.

The consolidation hurdle is particularly high for Walnut Township. The funding formula for state aid makes the district a particularly unattractive merger partner. The formula considers the value of taxable property in the district; Walnut Township’s waterfront property carries high valuations. The formula also considers the number of students to calculate a valuation per student. Waterfront properties contribute few students, leaving the district with a severe shortage of students.

Based on its valuation per student, the State contributes just 20.7 percent of Walnut Township’s budget. Only adjacent districts are potential merger partners and each neighboring district receives far more in State aid on a percentage basis of its budget than Walnut Township. Their state contributions (percent of budget) are:

• Lakewood: 34.7 percent;

• Northern Local: 41.5 percent;

• Southwest Licking: 43.2 percent;

• Liberty Union-Thurston: 55.6 percent; and

• Fairfield Union: 56.0 percent.

Consequently, a merger with any of its neighbors would increase that district’s property valuation per student and REDUCE its aid from the state. The smaller the district in terms of students, the larger the impact on its state aid.

Walnut Township’s options are very basic:

• Increase revenue;

• Decrease expenses; or

• A combination of both.

Only two of the total of 41 districts that have been in fiscal emergency were able to balance their budgets by making only cuts. Right now, Walnut Township only has to come up with a plan and implement it to eliminate the projected June 30, 2016 deficit. However, if the district fails to do that and is placed in fiscal emergency, it must eliminate projected deficits for the entire fiveyear forecasting period. That is a much more difficult task as many districts often project deficits in the out years.

Walnut Township Schools clearly need more revenue. Its property tax millage or tax rate is one of the lowest in Fairfield County, particularly after the long-standing 1.8 mill emergency levy was rejected last November as part of the proposed 8.8 mill levy. At approximately 23.7 mills for residential property, Walnut Township has the fourth lowest property tax rate behind Berne Union at 20.33, Amanda Clearcreek at 22.41 and Fairfield Union at 23.67. Liberty Union is at 27.57 mills.

Walnut Township’s 1.75 percent school district income tax compares favorably with its Fairfield County neighbors. First, it is limited to earned income which exempts pensions, Social Security and disability income, interest and dividends and capital gains. Liberty Union’s 1.75 percent and Fairfield Union’s 2.00 percent income taxes are not limited to earned income. Berne Union’s 2.0 percent and Amanda Clearcreek’s 1.5 percent income taxes are limited to earned income.

On the expense side, Superintendent Randy Cotner presented a plan at Jan.12 school board meeting to cut expenses $951,957. It eliminates eight teaching positions. Four programs would be eliminated – family and consumer science, elementary physical education, elementary technology and instrumental music – as would be the elementary librarian. Two custodians would be eliminated. All extracurricular activities and trips would also be eliminated. Cotner’s plan was rejected by a 3-2 vote with board members Karen Keller, Carol King and Vince Popo voting “no.” Board president Tom Cumbow and former president Faye Whitaker voted “yes.”

The plan has sparked a civil war within the district and among its supporters. It fails to share the sacrifice. Just eight teachers out of a total of 49 educational professionals (teachers, librarians and counselors) are significantly affected. Seven will lose their jobs; the eighth is retiring and won’t be replaced. Perhaps another two dozen or so will lose a supplemental contract or two for an extracurricular activity. Supplemental contracts range from about $500 for a club to several thousand for a sport. The district’s four top administrators – superintendent, treasurer, and two building principals – are financially unaffected.

Shared sacrifice must be the basis for the district’s cost reduction plan. The proposed additional levy on the May ballot will raise taxes for all property owners – not just 20 – 25 percent. All students will be affected by the loss of school programs including field trips and many will be affected by the elimination of extracurricular activities and high school bussing.

Board member Vince Popo recently came up with some cost saving measures that share the sacrifice. Several will require discussions with the teachers’ union which Cotner didn’t do for his plan. He did say Jan. 12, that there will be some unspecified discussions with the teachers’ union. Popo’s plan is organized by immediate focus and then long-term focus.

Immediate Focus:

1. Freeze base and step wages;

2. Cut extended time contracts;

3. Cut all administrators by 10 days;

4. Stop paying any pick ups (employee’s required pension contribution);

5. End mileage reimbursements;

6. Stop reimbursing employees for completing additional coursework;

7. Ask the athletic and music boosters to pay bus costs for extracurricular activities; and

8. Eliminate comp time and/or overtime.

Long-term Focus:

1. Work to pass a new levy;

2. Solicit groups, businesses and individuals to sponsor an athlete, musician or club member;

3. Solicit groups, businesses and individuals to sponsor a bus trip to an event;

4. Solicit groups, businesses and individuals to sponsor a team, club or music group;

5. Build on elementary student Tyler Large’s contribution with a matching funds campaign;

6. Create a non-profit Laker Foundation; and

7. Consider starting bingo.

Popo’s suggestions probably won’t cut expenses by the $1 million target. Several positions may still be lost. An across-the -board salary cut will probably be needed rather than just a freeze to reach the $1 million target.

The key is the shared sacrifice. Property owners, students and their families and district employees will all take a hit. No one will get a free ride.

It’s going to be tough to avoid fiscal emergency and to pass an additional levy in May, but it can be done if everyone shares the sacrifice.

Letting the district fall into fiscal emergency is a very poor option. A Statedirected five-member board will make the cuts necessary to eliminate the deficits. The elimination of extracurricular activities and some academic programs will start an exodus of students to neighboring districts under open-enrollment or to private schools. The loss of students will push down State aid, putting even more financial pressure on district residents and property owners. The district’s financial turmoil will eventually push down property values and make it difficult to sell homes.

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