LIMA — It is a tough balancing act.
Ohio schools operate on multimillion-dollar budgets, overseen by elected school boards in each district and administered by hired administrative staff. The administrators are managed by a school district superintendent. From this point, school districts are able to analyze what they have available and spend accordingly.
While that may sound simple, it is anything but, The Lima News learned in its 23rd annual review of public school salaries.
Both statewide and nationally, the percentage of a school district’s budget dedicated to compensation of its employees averages about 80 percent. In Ohio, 16.8 percent of the state budget is spent on public education, second only to Medicaid at about 36 percent.
Any quirk in the system can cause fits for administrators as they try to balance between being fiscally responsible and having compensation that will attract qualified talent.
“In recent years, the state revenue has been declining or flat,” said Elida schools Treasurer Joel Parker. “This creates a few issues to deal with as health care and all expenses will have an inflation factor each year. You have to work hard to stay ahead of health care inflation.”
The health care factor has forced school districts to get creative in order to maintain a balanced budget. Elida has implemented several changes, including adding spousal coordination of benefits (spouse must get single plan at his/her employer), increased deductibles, increased co-pays, increased maximum out-of-pocket costs, repricing drug companies every two years, adding health savings accounts, adding high-deductible plans, reviewing all activity monthly and increasing the employee share of premiums.
“It takes time, energy and creativity to stay ahead of the health care train,” Parker said.
St. Marys Board of Education member Bob Valentine said that the 80 percent figure may sound high, but it is where it needs to be. He said the majority of tax dollars spent should be going to instruction.
“Based on my experience with our local school system over the past 13 years, 2 and 2/3 years of which I have been a school board member, I do not believe there is any attempt to maintain or create such a balance,” Valentine said. “I do believe that this 80 percent is just an average of how expenses happen to work out, give or take 2 to 3 three either way. Our public education system is very heavily labor weighted and I believe that is as it should be, with the primary emphasis going toward classroom instruction of students.”
Valentine said there is a general pattern that emerges. Faculty salaries are determined through contract negotiations between the school board and the teachers union, and administrative and clerical staff usually follow suit in line with the teaching contract.
Waynesfield-Goshen Superintendent Chris Pfister oversaw this process firsthand recently. The district had severe budget problems and was forced to make changes in 2010-11. A reduction in force was implemented. In 2011-12, district employees agreed to a zero pay increase, no movement on salary index steps, and to pay 5 percent more for health insurance premiums. They also agreed to a 25 percent reduction in supplemental contract compensation.
“The associations agreed because they cared about students, the district, and local taxpayers,” Pfister said. “The board and staff were on the same page. Together they wanted to ensure opportunities for students given very limited resources. Because everyone is working together, annual expenditures have not exceeded annual revenue in the five years I have been here and we project the same for this year.
What the public expects from its tax dollars puts a limit on what school administrators can do.
“Much of what our public school district does and expends is determined by what the public believes is essential for K through 12 education of our youth,” Valentine said. “This is primarily controlled by the public’s perception of the value given by the school district’s educational system in return for the taxes required to pay for that system. The value received or, at least the perception, of the value received must, in the public’s view, be affordable and equal to the value given by that public.”
There are other limits. Pfister rattled off a long list of requirements that districts must meet.
“Another factor to consider is the myriad of state mandates,” Pfister said. “State minimum requirements for classes and staffing; state maximums for classroom size; the massive state testing program, ACT test requirements, Student Growth Measure tests, requirements for bus drivers and buses, the mandated technology expenditures. … The point is state law, rule, and regulation creates significant expense for districts and must be done by law. There is no choice. In my opinion perhaps the greatest driver of cost in education is state government.”
While the “80 percent rule” is not set in stone, it is a measuring stick administrators are educated to be aware of. Currently, Waynesfield-Goshen is close to that level at 74 percent of their budget going to employee compensation.
“The 80 percent isn’t so much as a rule as it is a guideline,” said Ottawa-Glandorf Superintendent Donald Horstman. “When you start getting into that 85 percent range, you are getting into trouble.”
Horstman echoed Pfister’s sentiments concerning unfunded mandates. He said the school district used to have a dual-enrollment system with Rhodes State College that controlled costs for the school district and still worked well for the university. Because of recent legislation called College Credits Plus, all high schools now are graded on the school report card for the state-sponsored system.
“We had a great system that we worked out locally,” Horstman said. “That system only costs the school district $10,000. Now we have a government system that will cost us $100,000.”
Horstman said it is just one area where unfunded mandates affect the budget. He said state legislators possibly realize they couldn’t pass such systems trying to pass a tax, so they do it on the backs of local school districts.
“The 80 percent in total personnel costs is one of many metrics taught in ed-admin classes,” Pfister said. “The rule always was, ‘Watch it and if you cross you will need to make adjustments.’”
Valentine said the percentage of total costs expended for employee salaries in comparison to other cost involved in operating the school system is determined by the nature of this enterprise and is not the result of any predetermined plan or controlled fiscal expense ratio. However, school districts are locked into the never-ending cycle of balancing the budget with increased costs and mandates.
“The board of education always has to walk the fine line of fiscal responsibility and ensuring employees are treated fairly and valued,” Pfister said. “Additionally, every district must be somewhat competitive with other districts if they want to attract talent.”
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