by Kim and Rick Donaldson
At its February 18th business meeting, the Loveland City School District Board of Education reviewed the administration’s updated five-year financial forecast, which includes annual operating expenditure cuts averaging $2.5 million and fee increases averaging $0.2 million.* The updated forecast still requires passage of a 6.95 mill operating levy, which will raise annual revenue by $6.3 million, to maintain an adequate cash balance through fiscal year 2024. Indeed, the included budget cuts were made for the express purpose of limiting the levy to only 6.95 mills. So, after cutting $2.5 million from expenditures, why do we need an additional $6.5 million (taxes plus fees) in revenue? Let’s look at the numbers.
As shown in the included chart, both five-year forecasts start from a very high baseline expenditure level established in 2019 when operating expenditures increased 13% from the previous year.** That increase was the culmination of an accelerated spending trend that started in 2015, bringing the total four-year increase to 26%. By comparison, the cumulative inflation rate was only 7.7% during the same period.*** This rapid expenditure increase quickly overtook the 23% annual revenue increase in the years following the 2014 levy.
Since median income tends to be tied, albeit loosely, to inflation, expenditure increases that exceed the inflation rate make our schools increasingly less affordable to taxpayers.
Furthermore, it is important to recognize that the spending cuts and fee increases included in the updated forecast are all relative to the previous forecast, which anticipated increasing expenditures by 4% annually. Since the Federal Reserve Board targets a 2% annual inflation rate, the plan was to increase spending by twice the rate of inflation. The updated forecast anticipates annual increases of 3%, which is still 50% above the target inflation rate. Since median income tends to be tied, albeit loosely, to inflation, expenditure increases that exceed the inflation rate make our schools increasingly less affordable to taxpayers.
As a more affordable alternative, we advocate limiting operating expenditures to 2015 levels on a per student basis, adjusted for inflation. As shown on the chart, this approach would result in spending much lower than the updated five-year forecast and, more importantly, lower than current projected revenue. It would thus obviate the need for any additional operating levy. It is worth noting that this would be consistent with, and a continuation of, expenditure trends from 2006 through 2015.
If a 2015 baseline seems too aggressive, the same approach using a 2018 baseline could be considered. Although it would require an additional levy, the levy vote could be postponed to November 2021 and would only need to be around 1 mill to maintain the same cash balance as in the updated forecast.
These particular cuts, chosen by the administration, raise some serious questions.
So, what would we cut? After all, in the same February 18th presentation we were told that we will have to eliminate teaching and staff positions even if we approve the levy in March. We have also been warned that failure to pass the levy in March will result in additional cuts, including staff, teachers and high school transportation. These particular cuts, chosen by the administration, raise some serious questions. If we could afford current staffing levels in 2018, why can we not afford them in 2021 with nearly 13% higher expenditures in the updated forecast?**** Even if we choose to defeat the levy and limit expenditures to inflation-adjusted 2018 levels, why could we not continue to support essentially the same staff and transportation that we did in 2018? Where is the additional money going, and why has the administration chosen to cut staff and transportation?
Before we head to the polls in March, we need to have satisfactory answers to these questions that are quantitative, complete and transparent. We need to know whether the proposed budget and associated cuts are indicative of fiscally responsible management for the benefit of our children, or emotional manipulation designed to get the levy passed. Ultimately, it comes down to a question of trust.
*5 Year Forecast Update from 18 February 2020 Board Meeting: https://go.boarddocs.com/oh/love/Board.nsf/files/BLY4FG0B571B/$file/5%20Year%20Forecast%20Presentation.pdf
**Ohio Department of Education District Profile (Cupp) Reports: http://education.ohio.gov/Topics/Finance-and-Funding/School-Payment-Reports/District-Profile-Reports
***US Bureau of Labor Statistics CPI Inflation Calculator:
****Ohio Department of Education District Teacher Information: https://reportcard.education.ohio.gov/download