The Oregon school board will meet on Tuesday to consider a general fund reduction plan proposed by Superintendent Dr. Mike Zalar that will include significant cuts in certified and classified positions.
The district faces a $1.9 million deficit at the end of the 2009-10 fiscal year. That figure jumps to $7 million the following fiscal year, and $23.4 million in 2012-13.
In the last three years, the district has reduced expenses by approximately $3.5 million. Last year, voters passed a 5.9 mill operating levy.
“The board of education must make some difficult decisions regarding next year’s operating budget,” said Zalar. “Schools are a people business and, like every other school district, 80-85 percent of our operating costs are used to compensate our employees through salaries and benefits. Therefore, the majority of the recommended reductions will directly impact district personnel. I will be recommending that a significant number of certified and classified employees be reduced and that our administrative costs are in line with other high performing low cost districts. This is the only way to regain control of our operating budget that will allow us to change the trajectory of our five-year forecast.”
Most of the district’s financial woes are attributable to House Bill 66.
“The ramifications of House Bill 66 have really put the district at a disadvantage,” said Jeff Ziviski, vice president of the school board. The bill, passed by the legislature in June, 2005, phases out tax on tangible personal property of general businesses, telephone and telecommunications companies and railroads.
“The district received a large portion of its revenue from tax on tangible personal property,” explained Ziviski. “In fact, Oregon schools rank 66th out of over 600 public schools in the state in terms of negative financial impact from the result of House Bill 66.”
The district lost approximately 25 percent – or approximately $10 million in revenue – as a result of House Bill 66, said Ziviski.
“The previous administration chose to address the financial impact of House Bill 66 through reductions that preserved as many jobs as possible. That approach seemed appropriate at the time, but in hindsight, was really just a temporary short-term solution,” said Ziviski. The approach that is being taken by Zalar is more of a long-term solution, he added.
When the board hired Zalar last July, he was asked to develop a more permanent solution to the financial problems of the district – one that did not solely rely on taxpayers, said Ziviski.
The district has used the Department of Education, State of Ohio Performance auditors, and credit reporting agencies such as The Fitch Report, to help identify areas where cuts and savings could be made, said Ziviski.
“For the longest time, this was being done within the district, but in order to get a true non-biased perspective, we realized this had to be done by a third party,” he said.
Two years ago, the board requested a staffing and financial analysis from the Ohio Department of Education, which was the basis for the initial round of reductions, said Ziviski.
On April 13, the board will be meeting with the Auditor of State to review its preliminary report, he said.
“The purpose of the performance audit is to identify programs or areas of operation in which the office believes greater operational efficiency, effectiveness, or accountability may be achieved,” said Ziviski. The audit began last August and was completed in January.
The audit accessed the areas of financial systems, human resources, facilities, and transportation, said Ziviski. “The goal of the performance audit process was to assist the district’s administration and board in identifying opportunities for cost savings and improving management practices,” he said.
The district services 3,872 students in preschool through grade 12, a slight decline from the past several years. Total enrollment in the 2007-08 school year was down about 1 percent from the 2005-06 school year, according to Ziviski.
The district employed approximately 434 full-time equivalent staff, which included 23 administrators, 261 educational personnel, 11 professional/technical personnel, 53 office/clerical staff, and 86 operations and other staff, he said. The current student to teacher ration is 16-1. The district receives about 57.9 percent of its revenue from local sources, 36.9 percent from the state, and 5.2 percent from federal sources.
Ziviski notes that the performance audit shows that the district has been impacted by the economic climate in the region. According to the U.S. Census Bureau, Lucas County’s population has decreased three percent from 2000-2007, while the state had an overall increase of 1 percent. Additionally, the county’s poverty rate was almost 17 percent in 2007 as compared to the statewide average of 13 percent.
“When we review the general fund reduction plan that Dr. Zalar is going to recommend to the board on Tuesday, I believe it will address many of the concerns and recommendations listed in the performance audit,” said Ziviski. “At some point, we have to adjust our staffing to the enrollment trends. Through the previous reductions, the district has not had any reduction-in-force, or lay-offs. By working with both unions and our administrative team, the district has, through attrition, reduced the number of administrative positions by eight and certified positions by nine. In the past year, there has been a strong push by the board to reduce its administrative costs. When Dr. Zalar came on, he restructured the administrative staff and we have reduced the number of positions by 24 percent. The biggest change was not replacing the two assistance superintendents when they resigned.”
Simply, the district’s operating costs are too high, said Zalar.
“Positions have been eliminated or absorbed when people have retired or left the district for other reasons,” said Zalar. “Unfortunately, the district is out of time and can no longer afford to reduce operating costs slowly.”