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Westlake school financing primer

Editor’s note: The Westlake High School Performing Arts Center will host a school board candidate forum Thursday evening from 7 to 8:30. Doors will open at 6:30. There is no cost to attend. All seven candidates for the three open seats on the school board will be in attendance. West Life managing editor Peter Comings and Westlake reporter Kevin Kelley will moderate the forum. In advance, West Life submitted questions to Westlake City Schools Treasurer Mark Pepera and is publshing, unedited, the answers here. Questions from the public may be submitted for use Thursday night by e-mailing them to editor@westlifenews.com. Questions here are from staff writer Kevin Kelley.

1. From where does the Westlake City School district receive its revenue? Please give percentage and dollar amounts for the current fiscal year, i.e. state funding, property taxes, etc.

The district general fund receives revenue primarily from federal, state and local Sources.  Revenue sources in 2010-11 were as follows:

Local Property Taxes 78% $39m

State Aid 5.4% $2.7m

Other Local Revenues 1.3% $650k

State Reimbursements 16.6% $8.3m

2. We heard a lot this year about cuts in state funding. Exactly how much are the Westlake City Schools losing annually, beginning with this year’s state budget?

Compared to 2010-11 school year, the Westlake Schools will lose $4.4 million over the next two years thru a combination of losses in Basic Aid, and Public Utility and Tangible Personal Property Reimbursement. This equates to combined loss of 3.2 mills. For purposes of illustration, our last operating levy was for 6.9 mills.

3. What is the breakdown on how that money is spent? (Please give percentage and dollar amounts for the current fiscal year, i.e., salaries, transportation costs, maintenance, etc.)

The 2010-11 breakdown for categorical costs are similar to all Ohio school districts and were as follows:

Personnel $31.6m 63.8%

Payroll Taxes-

Health Benefits $10.9m 22.1%

Purchased Services $4m 8.1%

Supplies-Materials $1.5m 3%

Equipment $691k 1.4%

Other Non-Classified

Expenses $784k 1.6%

4. How are teachers’ salaries determined?

The community and district have indicated their desire to remain competitive in the marketplace in order to attract the best educators for our students.  Based upon that desire, and in fulfillment of our mission, compensation for our professional staff is predicated on their level of academic achievement and professional experience. Who makes this determination? The Director of Human Resources is responsible for determining appropriate placement using official transcript and validated employment information.

5. Who negotiates and approves union contracts?

The board is required to approve all union contracts. The negotiating team is determined by the board and typically consists of the board attorney, superintendent and CFO/treasurer. Other District administration representatives are asked to provide team support when representation is needed in their respective area of operation.

6. What role do step increases play in teacher salaries, and how does a teacher qualify for a step increase?

Most school districts in the United States compensate their professional staff on a scale which recognizes training and experience.  Westlake has a similar scale which also caps increases.  Professional staff can advance on the scale when they earn advanced degrees or obtain additional coursework and experience.

7. I understand that revenues from property taxes are now declining. If an operating levy is set at a certain millage, why would it collect less money over time?

The amount of money a levy collects will be reduced by factors such as taxpayer delinquency, late payments or reductions in tax valuation. The district experienced this phenomenon most recently with the elimination of tangible personal property taxes provided for in HB66.

8. The last operating levy, a 6.9-mill tax, was passed in May 2006. The last one prior to that was a 5.5-mill replacement levy in March 2000. How often are new operating levies needed?

Due to how Ohio schools are funded, all school districts must petition their local communities for operating levies. As such, additional resources are needed from time to time due to many factors such as reductions in state funding, increased state and federal mandates, and changes in student population or academic programming driven by the community. The main reason schools often come back to their communities to ask for additional resources in the form of a levy is a direct result of HB #920 which essentially restricts growth on voted levies enacted in a community.  In other words, over time school district levies are collecting similar amounts of money as when first enacted even if the tax duplicate has grown.  Unlike a municipality, it is important to note here there is virtually no inflationary component to the districts revenue stream even though there continues to be an increase in fixed costs of its operations. Therefore, the actual timing of levies can vary from district to district, but are a result of noninflationary increases in the district’s revenue stream to just keep pace with ongoing expenses.

9. Some have expressed alarm that the district is projecting deficits beginning in 2013. But that was anticipated for several years, correct?

It was understood that the current operating levy would not be sufficient to fund the district indefinitely, right? As discussed earlier, that is why school districts must go back to their constituents from time to time for additional resources.  In fact, the Westlake community was informed back in 2006 the district would need to seek additional resources within the next 4 years. The District has actually surpassed that commitment by reducing its projected operating costs and the Superintendent has recently informed the Board of Education that should they desire, they may defer an operating levy until 2013.

10. Do most public school districts in Northeast Ohio have to place operating levies on the ballot periodically?

Based on how schools are funded, primarily through property taxes, all schools must periodically go back to their voters for support. In fact, the Ohio School Boards Association has reported almost 1/3 of Ohio school districts were on the ballot in 2010.

11. Some people have expressed concern that, for the current fiscal year, the district is spending more money than it is collecting in revenue.  Is this a surprise to you?

As most recently presented to the Board of Education on July 18, 2011, the fact that the district’s expenses will at some point exceed its revenues is not a surprise for Westlake Schools or any other Ohio school district. As stated previously, this is largely due to local tax revenues being capped by the effects of HB c#920.

12. So it’s typical that, late in a levy cycle, a district will spend more money than it collects in revenue, correct?

That is correct but the timing of that will vary from district to district.  In fact, this phenomenon is acknowledged by the National rating agencies of Standard and Poor’s and Moody’s, who have continued to indicate Westlake Schools has strong fiscal oversight and good fiscal management practices.

13. Is there any way for a district such as Westlake to collect exactly, or nearly exactly, the same amount of money that it spends each year?

Current law dictates how schools in Ohio may ask for tax revenues to be raised in their communities.  Bearing that in mind, there are no provisions in law to annually calibrate a levy based upon a school districts need for that year.  The only alternative way would be for the district to cut their educational programs and services every year to compensate for the exact revenue they receive.  Again, this would be extremely difficult to do for many of the uncontrollable fixed costs such as utilities, fuel and insurance.

 

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