Pickerington Area Taxpayers Alliance

Dear friends and neighbors:

As you probably know, your school board is beginning to discuss putting one or more tax levies on the ballot this November, both for additional operating revenue and two build one or more additional elementary schools. I would like your advice.

Pickerington voters have always generously supported good schools. When they have turned down levies, it has been because they did not believe what they were being told by the PLSD and its various levy committees, or because they did not believe that the PLSD had appropriate cost control measures in place. Often the voters have been right on both points.

As a school board member, therefore, I am determined to tell you the truth, as well as I can determine it. If I am mistaken, I welcome correction. I also welcome your advice.

Let's start with some basic facts, first on the operating side. At present, the total assessed value of all taxable personal and real property in the school district is approximately $751 million. Thus one additional mill of property taxation will yield approximately $751,000 of additional revenue.

This $751 million includes approximately $723 million of real estate, approximately 82% of which is residential, and approximately 16% of which is commercial or industrial. Residential taxpayers currently pay school tax at a rate of approximately 44 mills, or 4.4%, on the taxable value of their homes. Remember, however, that residential real estate is taxed at only 35% of its appraised value, and that the state pays 12.5% of such millage (this is sometimes termed the ''state rollback''). Thus the owner of a $200,000 home would pay annual school taxes, net the state rollback, of approximately $2,695.

On top of this, however, the PLSD collects a 1% income tax from all residents of the school district. This income tax generates approximately the same total revenue (approximately $8.8 million this year) as would an 11 mill operating levy. Assume, therefore, that the owner of the hypothetical $200,000 home noted above had an annual income of $100,000. This taxpayer would have paid a total of approximately $3,695 of school taxes.

Our new Treasurer, Vince Utterback, currently projects that the PLSD will finish the 2003-04 school year nearly $2.6 million in the red. Since our former Treasurer, Dennis Menoski,
shortly before retiring, announced that with passage of the recent renewal levy, the PLSD should be set through the end of the 2004-05 school year, you might wonder what has gone wrong.

To begin, Mr. Utterback has carefully reevaluated Mr. Menoski's revenue assumptions, due in part to revenue shortfalls this year. For example, the PLSD received this year approximately $270,000 less income tax revenues than Mr. Menoski had projected, approximately $1.1 million less real estate revenues than he had projected, and approximately $500,000 less interest earnings than he had projected. While these shortfalls were made up, in substantial part, by increased state funding, the PLSD's total revenues for the 2001-02 school year have fallen $35,000 short of Mr. Menoski's projections.

The school district's total expenses for the past school year exceeded Mr. Menoski's projections by approximately $333,000. Although some expense lines actually came in under budget, these gains were erased by nearly $1 million in increased health insurance and employee benefit costs.

Indeed, employee benefits appear to have taken a quantum leap. Whereas, historically, benefits have cost the school district approximately 24% of total wages and salaries, they now cost the district nearly 28% of total wages and salaries. [TO BE CONTINUED].

By Bruce Rigelman

School Levies -- Part 2

First, let me correct one thing I said in the first part of this letter. I am afraid that my rapidly aging eyes need better light to read all the tables that are sitting in front of me. Unfortunately, the bottom line on the operating side is worse than I had suggested.

Mr. Utterback now projects that, during the 2002-03 school year, the PLSD's expenses will exceed its revenues by approximately $2.6 million, and that the PLSD will finish the school year with a surplus of approximately $2.9 million. He projects that, for the 2003-04 school year, the year our new schools open, our expenses will exceed our revenues by approximately $9.6 million, and we will end with a $6.7 million deficit.

I realize that we have all seen such dire predictions before. I have grown increasingly sketical of them. Since Mr. Menoski had projected that we would end the 2003-04 school year with a $2.7 million surplus, we must ask what has gone wrong. And, given past experience, we must do so with a jaundiced eye.

On the revenue side, Mr. Utterback projects that this year's shortfalls will compound so that, for the 2003-04 school year, total revenues will fall nearly $3.4 million short of Mr. Menoski's projections. Based on discussions with state officials, Mr. Utterback now believes that the PLSD will receive approximately $2.4 million less state aid that year than had been projected.

The problems on the expense side are driven primarily by health insurance and other employee benefits. By the 2003-04 school year, Mr. Menoski projects, this year's overrun will have compounded to nearly $3.2 million.

What explains these discrepancies? The recession, and falling interest rates, certainly are major factors. Runaway health care, and health insurance, costs have had a major impact. And there may be other factors.

I should emphasize, however, that Mr. Utterback, unlike Mr. Menoski, has been open and forthcoming about all of these matters with the school board, including the school board's new finance committee, on which I serve. He has given us detailed information to support his projections, and has sought advice from state and county officials, and from us, on all of these matters. Finance committee meetings sometimes last six hours, and our discussions are increasingly detailed. Moreover, Mr. Utterback is building a credible record as a cost cutter.

Thus I believe that Mr. Utterback's revenue projections carry a lot of credibility, and that his expense projections honestly carry current spending patterns forward into future years.

What should we do? I believe that we must begin by questioning current spending patterns. That questioning has already begun. At Mr. Utterback's urging, the PLSD has cut its budget for new faculty and staff salaries for next year by over $760,000. Again at Mr. Utterback's urging, and with the full cooperation of our principals, next year's budget for supplies has been cut by more than $270,000. In consultation with our faculty and staff, we will investigate possible ways of controlling health insurance costs. Transportation costs, the PLSD's third largest expense item, also are on the block. And we are exploring various other possible expense reductions.

There is also one possible additional revenue source: the interest earnings on the building fund for the new junior/senior high schools. Although it is uncertain, at this point, what those earnings might total, it could be as much as $2 million. Those funds could be used to meet operating expenses, and to reduce the projected 2003-04 deficit.

I hope, indeed, that we can cut that deficit in half with expense reductions and these interest earnings. Barring a sudden improvement in the economy, however, I doubt that expense reductions alone can do the job. It appears to me, at this point, that the best we can do is reduce the amount of new millage that we request.


By Bruce Rigelman

School Levies Part 3

Now a few words about buildings.

It is obvious to everyone that four of our five elementary schools are overcrowded -- in some cases badly overcrowded. The modular classrooms sitting next to these schools tell the story. Also, our new middle schools already are nearing capacity. Although there will be no modular classrooms at Harmon or Diley Middle Schools next fall, the 2003-04 school year may tell a different story. We need to deal with overcrowding at grades K-6.

One alternative would be to place a bond levy on the ballot this fall to finance one, and perhaps two, new elementary schools. These schools could be built on land already owned by the PLSD. We might also seek funds now to build another middle school.

However, there are other alternatives. Some would argue that we should make full use of the buildings we already have, before building new one. We are not making full use of our five elementary schools. Although four of these schools are overcrowded, the fifth elementary school, Heritage, has substantial additional classroom space, perhaps as many as 11 classrooms. Most of these classrooms are now being used as administrative offices. Those offices, however, could be moved to the modular classrooms that are vacated when the new junior/senior high schools open.

Our pre-school program, now housed in 3 Heritage classrooms, could be moved to PHS Central when the new schools open. And we could move Kindergarten, which uses 13 elementary classrooms district wide, to PHS Central as well. Some years ago all kindergartens were housed in Pickerington Junior High School -- an arrangement that worked well for my youngest daughter -- so there is precedent for such a move.

These measures, in total, could free up as many as 27 elementary classrooms. With some reconfiguring of the seven schools that now house grades K-6, this could be enough to meet our housing needs at this level for several years, without building any additional schools. It could keep a bond levy off the ballot for as much as 2-3 years.

One suggestion is to combine elementary and middle school, and have seven schools each housing grades 1-6 or K-6. This would have the added benefit of bringing these schools closer to their communities.

Another possibility would be to turn three of these schools into primary schools, housing grades 1-3, and have three middle schools, housing grades 4-6. Heritage, which is larger than the other elementary schools, and arguably would work better as a middle school, would become our third middle school.

What do you think? Would it be worth moving preschool and kindergarten to PHS Central, and reconfiguring K-6, in order to postpone building additional elementary and middle schools? Or should we bite the bullet, and ask the voters for the funds to build these additional schools now? What chance is there that voters would approve both a building and an operating levy this fall?

By Bruce Rigelman

Correction

One more correction: Pickerington homeowners currently pay total school taxes, including bond millage, of approximately 33 mills, not 44 mills. This includes approximately 22 operating mills, and approximately 11 bond mills. This translates into a school tax of approximately $2,310 on a $200,000 home. However, the PLSD income tax raises the same amount of revenue as would 11 mills of property tax. So, in a sense, the school tax imposed on Pickerington homeowners is equivalent to 44 mills, and the total school tax, including income tax, paid by the owner of a $200,000 home with $100,000 of income would be $3,310. As I said, I welcome correction, including self-correction.

By Bruce Rigelman