2012 levy questions

This page is dedicated to answering your questions about the November, 2012 Milford schools operating levy.  Please send me your questions at andrea@andreabrady.net or post them on this page.  I will answer them here by adding them to the list.  If you would like more detail on any of these, please just let me know.  Thank you!

Here is a list of the questions on this page. You can scroll down to see the answers to each.
* Definition of financial terms
* How many mills is the November, 2012 operating levy, and how much will it cost me?
* Why does the school district need a levy right now?
* What will this extra revenue pay for?
* How long did the last operating levy last?
* How much has the district cut from expenses in the past four years?
* How do these sustained cuts add up to $20 million?  This is money that has not yet been spent, so how can you say it has been “reduced” from the budget?
* I’m looking at the five year forecast.  It shows a significant increase in expenditures for FY 2011 and also for FY 2010.  What were these?
* What additional revenue sources has the district added?
* Will personnel be receiving raises if the levy passes?
* Why doesn’t the district use more volunteers to reduce staff cost?
* How much would the district save if extracurriculars were made 100% pay-to-play?
* Why don’t we sell the property on Rt. 131, generating revenue for the district and eliminating interest payments?
* Why not run an earned income tax instead of a property tax levy?
* What percent of the budget goes to teacher salaries and benefits?
* Can you please explain the cost and funding of the new athletic fields?

Definition of financial terms
Treasurer Debbie Caudle has put together definitions of the key financial terms used by the district, in order to be sure we are clear when we are communicating about financial matters.

* Budget:  A financial plan of receipts and expenditures developed to facilitate control over revenues and expenditures during the year.   (The Current Fiscal year 2013 data as it is entered into our computer system – this also mirrors the current fiscal year on the five year forecast).

* Cuts:  reductions of current year expenditures.

* Sustained Cuts: reductions made in the current year that never get added back to the budget, thus decreasing expenditures in the current year and the years which follow.

* Forecast:  Ohio Department of Education requires a five year forecast reflecting the last three completed fiscal years’ activity, the current year budget and the following four years budgeted activity.

How many mills is the November, 2012 operating levy, and how much will it cost me?
The levy on the ballot is for 4.5 mills, which will cost a homeowner $137/$100,000 of their home’s market value.  This will generate $3.9 million in revenue each year for the district.

Why does the school district need a levy right now?
The Milford school district has been “living within its means” for the past four years – not spending more than we were taking in.  In fact, we have been able to build up a solid carryover balance because of conservative spending practices.

However, starting next year, we will be losing $4.1 million in revenue due to changes in how the state funds school districts.  With this loss, we will be unable to continue to live within our means.  The 4.5 mill levy, if passed, will replace most – but not all – of the funds we are losing, to keep us on par with where we are right now.

What will this extra revenue pay for?
This revenue is actually not “extra” – it will simply replace funds that we have been receiving, but which will be lost next year due to changes in state funding allocations.  Because of this, we will not be “adding” any programs or services.  Instead, this levy will allow us to maintain what we have.

The administration and board will continue to seek efficiencies and ways to improve the education we are providing without adding expenses.  The goal is for this levy to last at least four years, barring further changes in state funding, or unforeseen extra expenses (such as larger increases in insurance, gas, etc.).

How long did the last operating levy last?
As promised, the 2008 levy lasted four years.  If these changes to state funding had not happened, the district would have been able to stretch that levy even farther, due to extensive expense reductions plus new revenue sources.

How much has the district cut in the past four years?
Since the last levy, the board and administration have worked hard to reduce expenses.  We have cut over $20 million in recurring expenses from the five-year forecast, which has allowed us to live within our means during those four years.  The reductions have been cut proportionately with the amount of the budget each area represents; we cut from administration, personnel, extracurriculars, and general support.  Despite these cuts, we have been able to increase the level of education we are providing to our students.  If you would like more detail on these reductions, please let me know.

How do these sustained cuts add up to $20 million?  This is money that has not yet been spent, so how can you say it has been “reduced” from the budget?
The $20 million in reductions is reflected in a comparison of the 2011 Five Year Forecast and the 2015 Five Year Forecast (I have a summary sheet for anyone who is interested).  These cuts were made ACTUALLY in FY2011 & 2012.  Because they are SUSTAINED cuts, they then accumulate over the forecast.  While this money was not yet spent in future years, it was cut from a current forecast year budget (FY2011 or 2012).  Once it has been cut in one year, it is thus also cut from future projections.

These sustained cuts add up to $19.5 million over the five year forecast.

This would be similar to your home budget, if you owned an extra car.  You look at the current year’s budget and see you are paying $200 a month for that car.  You look at next year’s budget, and the year after that, and payments for that car are included; your bottom line in December reflects $2,400 less a year because you have that car payment.

If you then sell that car, you not only save $200 a month this year – you save it next year, and the following year, thus adding $2,400 to your bottom line each of those years.

I’m looking at the five year forecast.  It shows a significant increase in expenditures for FY 2011 and also for FY 2010.  What were these?
The forecast for FY 2011 does reflect a significant increase in expenditures. There was also a large increase in expenditures in FY 2010.  During FY 2010 and FY 2011, the district received and spent federal stabilization funds.  The Federal stabilization program lasted only those two years.

Once this money was no longer available, the district cut the positions & programs funded by it.  This was a one-to-one increase and decrease:  when we had extra funds from the federal stabilization program, we spent them, but we cut those expenditures when the funds were gone.

What additional revenue sources has the district added?
We have searched extensively to find ways to add to our revenue to reduce the burden on the community.  Four years ago, we began applying for Catastrophic Reimbursement funds for students on Individual Education Plans, which are available to all school districts but which we had not asked for previously.  This is currently bringing in appr. $235,000 a year.  Two years ago, we opened the district to Open Enrollment, which increases our revenue appr. $5,700 per student.  Last year, this brought in appr. $400,000 in addition revenue while filling “holes” in classes, adding motivated, high-achieving students, and not taking anything away from our Milford students.  This past year, we renegotiated the Union Township TIF (tax increment financing) agreement for the Polo Fields development.  This is currently adding $250,000/year to our bottom line, and will increase to $1.1 million by 2018.

Will personnel be receiving raises if the levy passes?
Per the negotiated union agreement, union staff this coming year will receive their step increases plus a 1% increase in base salary.  For the 2013-14 school year, the union has agreed to a freeze in step increases, plus no change in base salary.  For the next two years of the five-year forecast, we have estimated a 1.3% increase to cover the amount of a step increase plus expected increases in benefit costs.  What is actually negotiated at that point will depend on what law requires regarding step increases and merit recognition (current law removes step increases after existing union contracts expire, but does require “pay for performance”).  This may change by the time our current union contract expires, so we must wait until that point to see what the legal requirements allow us to negotiate.

Raises for administrators are not built in to the five-year forecast for any year.  Our administrators have gone without raises for two years now; either this year or next year, we will need to adjust their compensation, as it is only right to adjust salaries after several years of no change, and their salaries are low compared to local administrative salaries.  This is comparable to what is happening in the private sector:  after a few years of no raises, employees are seeing small increases.  However, this is an extremely small amount in our budget, and will not affect how long the levy lasts.

Why doesn’t the district use more volunteers to reduce staff cost?
We do use volunteers wherever we can per union restrictions and also practicality.  While many volunteers are committed and provide many hours of service, we cannot rely completely on volunteers to run classes or other activities where students must be monitored regularly.

How much would the district save if extracurriculars are made 100% pay-to-play?
Our entire extracurricular budget is about $1 million, which is less than 2% of the entire budget.  If we were to have students cover that entire expense, each student would be paying around $800 for each sport s/he participated in.  This would likely eliminate most students from participating in sports.

Yet, sports and extracurriculars are an important and valuable way for students to learn life lessons, develop other types of skills, identify interests, and even encourage them to come to – and do better – in school.  We are working to make sure the activities we are offering are appropriate and are the best they can be, to make sure we – and our students – are getting the most they can out of each activity.

Why don’t we sell the property on Rt. 131, generating revenue for the district and eliminating interest payments?
This property will actually still be needed, and a new Seipelt could be built as soon as the next few years (at no cost to taxpayers).  This is part of the “master plan” filed with the state for buildings in the district.  We earn 28% of anything we spend back from the state.  To date, we have earned somewhere around $18 million (updated after meeting with Ohio School Facilities Commission).  The state is paying districts up to the amount they have earned, to put into another portion of the master plan.  The money can only be used for one project, and any not used will be held by the state until the final payout when the entire master plan is complete.

Building a new Seipelt will be next on the list for several reasons:
1) Our current elementaries are overcrowded.  The new schools are slated for 650 or so students; Pattison has over 700, and Meadowview has close to that many.  The other new schools are full, and Boyd and Seipelt are also overflowing.  If we build a new school of the same 650-student capacity, we will be able to redistrict and reduce the pressure on other buildings.

2) Current Seipelt has many problems that would be too expensive to fix in such an old building.  For instance, the heating system is old and inefficient, and there are many current maintenance issues that do not make sense to address properly.  If we build a new building, we will actually reduce operational expenses by having updated systems and controls.  We have proven this through the management of the other new buildings.

As far as selling the land to generate revenue:  It would be extremely difficult to sell the land right now, especially for the amount it was purchased for.  The previous board and administration paid approximately 3 times the market value of the land – and that was before the economic downturn.  If we could even find a buyer, it is highly unlikely we’d make back what we paid.  But while we overpaid for the land, the total amount ($800,000 or so) is still not that much compared to our needs, and it would be one-time revenue.  Plus, we would still need land for the new Seipelt, since the land the school sits on now is not large enough to build a new school.

The net is we will be able to build a new building at no additional cost to the taxpayers, save operational funds, and reduce the pressure on other overcrowded buildings.

Why not run an earned income tax instead of a property tax levy?
The district has asked the community several times through surveys about an earned income tax, but it has not been of interest.  The most recent survey, which was run this past spring, showed the community would not be receptive to an earned income tax.

Here is a brief overview of how each of these options work:
An earned income tax is a tax only on money that has been “earned” –  for example, income from items like social security or stocks would not be subject to this tax, but a salary would be. The amount required for an earned income tax would be appr. 1% of income, meaning the tax would be $500/year on a salary of $50,000.  If there are two income earners in a family, both would be taxed.  This would increase the cost burden significantly on those who are currently working, increasing the cost they are paying significantly.

A property tax is levied on all property owners, including those who are not earning income (such as seniors or those out of work).  It is generally less per family, because it spreads out the amount across more in the community.  It hurts those who are on a fixed income or have other financial problems.  The current 4.5 mills asked for would cost a family $137/year for a home with a market value of $100,000.  It would affect anyone who owns a home in the district.  In addition, those living in apartments in the district may see a rent increase.

What percent of the budget goes to teacher salaries and benefits?
During fiscal year 11/12 the cost of instruction (teacher salaries and benefits) was $29,518,117 and the total expended for the fiscal year was $56,023,960.

The district spent 53% of the 11/12 fiscal budget on teacher salaries and benefits.

Can you please explain the cost and funding of the new athletic fields?
First, I’d like to clarify that no operating levy funds were used for new athletic fields.  This money came from bond funds, which must be used only for buildings, facilities and some technology.

When the community passed the bond levy to expand the high school, which was a renewal levy at no additional cost to the taxpayers, the district began working on plans for the expansion.  Because the economy was in a slump, construction costs were significantly lower than they had been when the original project was pre-bid.  The cost for the high school additions were $5.5 million under budget, which gave us the flexibility to complete additional projects at no extra cost to the community.

The major projects the district was able to complete, which also reduced funds needed for the future, were to add a Junior High addition for $1.2 million; re-roof the entire high school (which was desperately needed and would have to be done in the next year or so anyway) for $900k; upgrade the JH HVAC (which saved significantly in energy costs) for $630k; renovated the pool (another drastic need) for $294k; upgrade the temperature controls at all buildings (which also saved in energy costs) for $254k; and upgraded technology, which would have been spent out of the general fund, for $217k.  These plus other upgrades totaled the $5.5 million we saved in the overall project.  (If you’d like to see a list, I have it available).

Part of the other upgrades were the renovations and additions to the athletic fields.  Total spent was $817k, but the district paid less than half of this – the Athletic Boosters paid $425.5k, which they raised from private means.

I was not yet on the board at the time the athletic additions were completed, but I was involved in evaluating the bids, looking at expenditures, and asking questions. I asked a number of questions about the cost of several items.  After hearing these questions and the rationale behind them, Dr. Farrell looked for alternatives and was able to reduce costs, which allowed the district to funnel even more money in to other facility needs.

Also at the time, I was curious about how much this was actually costing the community.  Remember, this money could not be spent on operations – it was bond money, and had to be spent on facilities.

I asked how much each Milford resident would receive, in cash, if the district paid this money back to the residents instead of putting it in to the athletic fields.  The amount was actually a one-time payment of only a few dollars per family – less than $15 per $100,000 home valuation.

For this small amount of money, the district was able to build athletic fields the entire community can enjoy.  Other groups are renting out our fields, helping with maintenance costs.  People of all ages come to enjoy the games.

While it seems like a lot of money to the average homeowner, the district did get a good deal with the bond money overall – and with the athletic fields, which were half paid for by private funds.

 

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8 Responses to “2012 levy questions”

  1. Larry Deel Says:

    Andrea,

    Re: the State Route 131 property, you state in part “. . . and a new Seipelt could be built as soon as the next few years (at no cost to taxpayers).”

    If taxpayers will not pay for the building, who will? I am not trying to be overly critical, but I think this mindset has been used extensively by those promoting projects funded partially, or in whole by the local, state, or federal government. Unless it is privately funded, taxpayers WILL be paying for it.

    I understand what you meant, but this “no cost” attitude is just incorrect. People often failed to realize that any funds given out by a government must first be taken from somewhere (or someone) else.

    This type of spin is meant to sway people’s opinions. I think that was a poor choice of words meant to frame the situation up so that those in the district will be more likely to vote for a levy.

  2. andreabrady Says:

    Hi Larry,
    Of course, you’re right – the money ultimately comes from the taxpayers, as it is coming from the state. What I should have said was “at no additional cost to taxpayers,” as there will be no increase in taxation.

    I would hope you know me well enough to know this was not said as “spin” or to deceive. It was a poor choice of words, but not meant to frame the situation to encourage voting for a levy. I have been upfront and honest in sharing information, and willing to share the good & the bad. Obviously I want the levy to pass, but I’m not willing to obscure or spin or “frame” information so it will.

  3. Larry Deel Says:

    Forgive me if I came on too strong. Perhaps MY choice of words was a little too harsh. I didn’t mean to lay down any accusations. I think it is only human nature to choose words that parallel a person’s opinion. I guess that statement kind of reminded me of how the spinsters on national news frame things up.

    Suffice it to say that national politics has been on my mind more than usual thanks to TV commercials and the Internet. That has me fired up and ready to pounce.

  4. andreabrady Says:

    Thanks, Larry, I appreciate that 🙂 I agree, politics has been crazy, with both sides spinning whatever they can.

    I am hoping that does NOT happen with this levy, and I intend to do whatever I can to keep it from happening. That said, I also appreciate your pointing out when my statement was not completely accurate, and hope you will do so again if I say something that is not clear. It can get confusing sometimes when you’re so close to a topic – it is easy to forget others don’t know as much as you do about it, and therefore may take it a different way than it’s meant.

  5. Tom Cannon Says:

    These “cuts” you keep mentioning as proof of the administration’s hard work are very misleading. First of all, no adopted 5-year forecast exists that shows $20 million in reduced expenditures. Where are they? Then there’s your use of the words cuts, budget, expenditures, forecast, etc., these words have specific meaning when referring to finances. You seem to use them to make the impression that the board is saving money by reducing current expenses. And that is not happening. At least not to the tune of $20 million over four years. According to former board member Gary Knepp the 5-year forecasts are just “wish lists” and do not reflect actual intended expenditures (7/17/2008). The forecast created for 2011 is clear evidence of that.

    • andreabrady Says:

      Hi Tom,
      Sorry for the delay on this – we were out of town. I have added two questions above re: the financials, plus a few definitions.

      The FY2011 five year forecast actually does show the $20 million in sustained reductions, when compared to today’s forecast (I have the spreadsheet if you would like to see it). Cuts were made in either FY 2011 or 2012. That reduction then carries on through the following years. The total reductions, from cuts that were ongoing expenditures, are $19.5 million. These are real cuts, expenditures that were accumulating over the years, and there are no plans to add them back.

      Gary Knepp’s comment about “wish lists” is correct only in that a forecast reflects money that has not yet been spent, and potentially new programs or expenditures that the district would hope to add. However, the “wish list” was removed from the forecast years ago, as the district realized money will be tight and we need to focus on making what we have the best it can be.

      What is in the forecast now reflects the cost for personnel and programs in place that are intended to stay in place. These expenditures can be projected out fairly accurately (at least as a baseline). This portion of the budget is not a “wish list” – it reflects existing services. And this is where the cuts discussed have taken place.

      Of course, just as in any budget, more cuts can always be made – the question is what will it cost. We are currently at a point where the large cuts needed to balance the budget ($4 million+) will drastically hurt the quality of the education we are able to provide. Therefore, there are no “wish list” cuts to make up the amount we are losing from the state.

  6. Susan Terrell Kupka Says:

    Very interesting. And I appreciate you offering this tool for communication Andrea. Thanks 🙂

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