Two former public employees agree with Governor John Kasich that it’s time to rein in school spending by adopting some of the tools Senate Bill 5 will provide local school districts.
Mike White, former director of public utilities for the City of Toledo, and Jim Austermiller, a CPA who worked 26 years in the public sector including 13 years with the state auditor’s office, are two members of Oregon Residents for Effective and Efficient Schools, a citizens committee formed shortly before last November’s election.
Both men have also worked in the private sector: White spent five years working as office manager for Finkbeiner, Pettis and Strout, which was sold during his tenure to Arcadis, an international engineering services corporation. Austermiller worked 13 years for Trinova.
Both have observed differences between public and private sectors, which have led to their support of SB 5. Mike White, now retired, recalls working for Arcadis, “We had to be competitive in order to get work and we had to provide a very good product in order to keep clients. (If you don’t) you don’t last long.”
That reality tempers negotiations between unions and management. That’s the missing factor in public sector negotiations, he said. Governments don’t go out of business.
Both men believe benefits in the public sector have outpaced those in the private sector and, given the state of our region’s economy and the sacrifices those in the private sector have made, it’s time for a reset because homeowners cannot absorb another tax increase at this time.
SB 5 will help local school boards reset those benefit packages. It bans collective bargaining for benefits, eliminates automatic yearly pay increases for teachers and mandates increases in employee contributions for pension and health care plans.
The bill, which passed the Ohio Senate 17-16, is expected to pass the house and be signed by the governor, whose budget reduces funds to the Department of Education by 11.5 percent, due mostly to a loss of federal stimulus money.
The group proposes a number of changes, some of which were recommended by Mary Taylor, former state auditor, in a performance audit of the school district completed in May 2009.
Austemiller, who performed similar audits for the Oregon district while he was at the state auditor’s office, supports the Taylor recommendations. They include the following:
•Consider eliminating three administrative positions for an annual savings of $224,000;
•Consider eliminating 50 teachers for an annual savings of $3.2 million;
•Consider eliminating 11 educational service personnel; 13 teaching aides and two clerical workers for an annual savings of $1.1 million;
•Address “high salary levels” by limiting negotiated wage increase and negotiate alterations to the automatic raise schedule;
•Consider eliminating the retirement pick-up benefit given to administrative staff for a savings of $99,400;
•Require all staff to contribute at least 15 percent of healthcare insurance premiums for an annual savings of $599,000;
•Close one elementary school for a savings of $216,000.
There are a number of other recommendations to align Oregon Schools with a “peer” group of 10 school districts termed urban/suburban-high median income. Two local districts are in this group—Anthony Wayne and Lake. Select comparisons were also made with Maumee, Perrysburg, Sylvania, Washington Local and Toledo Public Schools.
White says his group wants the school board to implement these recommendations to keep from going to the voters for a tax increase. The group was outspoken in November when the district tried to pass a 5.9 mill levy, which would have cost the homeowner of a $100,000 home $182 a year. The levy was defeated 59 to 41 percent.
Dr. Mike Zalar, Oregon School superintendent, defends the district’s approach to “surgical” cost reductions versus the wholesale cuts the state auditor recommends. He said the auditor’s cuts would take an excellent school district to state minimum standards. He also says the audit was not a fair comparison because Oregon is a comprehensive school district offering vocational education while some of the others in the peer group do not.
Oregon has cut $7.5 million from its budget in the last few years, Dr. Zalar said. Forty teaching positions have been eliminated through attrition and retirements, saving some $3.5 million. The board has committed to closing Wynn Elementary, reduced transportation services, and cut back on custodial services. The moves will save another $2.4 million next year.
Dr. Zalar says the board has not addressed the yearly automatic raises, pension pick-ups for administrators and employee contributions to health care insurance plans. The current contract expires July 31. Negotiations will depend on the final provisions in SB 5 if and when it passes, subsequent law suits and whether or not the effort to repeal it will result in a ballot measure in November.
The day before Gov. Kasich unveiled his budget, Dr. Zalar said he did not anticipate Oregon going to the taxpayers this November. However, the Governor’s budget speeds up the state’s hold harmless policy which provided districts with revenue lost through the elimination of the tangible personal property tax. Oregon was anticipating $6.3 million of this hold harmless money for the 2011-2012 school year, according to treasurer Jane Fruth, or roughly 15 percent of a $40 million budget.
The tangible personal property tax was eliminated to make Ohio more attractive to industry. It was replaced by the commercial activity tax (CAT), a tax assessed all businesses in Ohio. Seventy percent of this tax is permanently earmarked by law to schools, according to Frederick Church, deputy tax commissioner of the Department of Taxation. While 2010 revenues were $1.34 billion, lower than the projected $1.4 billion, this fiscal year projections are running $56 million ahead of the forecast of $1.024 billion, a 5.5 percent increase, Church stated.
However, Church states Gov. Kasich’s budget calls for elimination of 70 percent earmark and phases out the hold harmless money as soon as next year. That, however, will require legislative action.
While the turmoil surrounding SB 5 and its implementation and possible repeal play out, Oregon Residents for Effective and Efficient Schools is seeking candidates to run for the school board.