by Daniel Downs
Since the Xenia City School District attempted to pass a 1.5 earned income tax levy in August, not much has changed. The economic situation is still uncertain. Employment is still near 8%, and growth is still very slow. The Congressional Budget Office estimates remain the same as is the outlook of economists like Nouriel Roubini and financial experts like John Mauldin. (see Passing Xenia Schools Income Tax Replacement Levy)
Also unchanged is the claim by Xenia School officials of a huge deficit looming over the election season horizon. On November 6, Xenia Community School officials want voters to agree that there is a dire need for landowners whose property value is $100,000 to pay an additional $200 per year in taxes. That is on top of the bond issue tax, the half-percent income tax, three or more previously renewed property taxes, Greene County Career Center taxes, city taxes, county taxes, state taxes, federal taxes, utility usage taxes including electricity, gas and communication taxes, sales taxes, business taxes, and many other taxes.
Why do school officials need more money? Past budget cuts made by the school district was due to rising costs of health insurance, utilities and diesel fuel costs, according to a recent Xenia Daily Gazette article. A Dayton Daily News article claims passing the emergency property tax levy will alleviate the looming budget deficit. Of course, giving Xenia schools $200 dollars more of your hard earned income each year will meet the most important need of all, benefiting student learning.
Will it not also assure administrators and teachers that they will continue getting union determined pay raises, health insurance that is continuing to rise, retirement, and other benefits?
We can thank our union President Barak Obama and congressional Democrats for rising health costs, and Capitol Hill bureaucrats and oil cartels for rising gas and utility pricing, part of which is funding research and development of new energy technologies.
But, what about the budget deficit? Here I want to make several observations based on the school district’s current 5 year budget forecast. The estimates assume a continual decline of daily attendance, which also means less revenue. The amount of taxes dollars returned to our school district by the state is determined by the number of students enrolled and attending. The forecast estimates that there will be 200 fewer students attending Xenia schools in five years. If we begin with 2012, the estimated decrease in the number of students attending our schools adds up to 430.
In a presentation to the Ohio School Boards Association, Randy Overbeck said, “the district enrollment has been fairly consistent over the past 15 years. ADM (average daily attendance) has remained around 4800-5100.” The school district estimated attendance to be 5,028 in 2012, 4,748 by 2013 and 4,548 by 2017, which figures are historically unprecedented.
The school’s 5 year budget forecast also assumes property and income tax revenue growth without a new levy. Actual property tax revenue was $17,092,007 in 2012. By 2017, property tax revenue is estimated to be $18,687,908. Income tax revenue estimates follows a similar trend. It grows from $3,197,402 to $3,239,094. While personal property taxes are still being phased out, the state was still reimbursing our school district over $2.9 million in 2012. It is estimated that the state will continue compensating our school district with over $1.8 million for the next 5 years. With the amount of personal property taxes still being collected, our school will continue receiving over $3 million, according to the budget forecast.
Of course, Xenia School District payroll expenses will continue to grow by 41.4 percent over 5 years. That is an annual increase of 8.3 percent, 90% of which covers insurance and retirement benefits. When the contracted services are included, payroll expenses increase to 54 percent, an annual increase of 10.8 percent.
Consequently, while the number of students served by Xenia Schools is estimated to significantly decline, Xenia taxpayers are expected to increase their tax burden to cover the presumed loss. If the decline turns out to be real, the school district revenue will certainly decrease because the state funding is based on daily average attendance.
There is a problem with Xenia school officials blaming the state funding formula for declining school attendance. It is even worse when they assume voters are dumb enough to believe that the nearly $4 million going to charter, STEM, and other nearby school districts is a real expense. It is not a real loss because the school district received revenue for those students to give to the school public school of their parents’ choice. How terrible it must be for families to have the freedom to choose how and where their children will be educated. Yet, the same school officials fail to inform the public about how much they receive from students from other districts enrolling and attending Xenia schools.
Xenia school officials are not loosing tax revenues because it was never theirs. Unlike county and state governments redistributing local tax money, it is unfortunate that Ohio law mandates the primary local school district to distribute tax dollars to other public schools like charters, STEM school, and now other nearby school districts.
Whether the estimated decrease of 200-430 students over the next 5 years is the supposed to be the result of families moving out of Xenia or attending other nearby schools is a question that is anyone’s guess.
What is not unknown is the ultimate goal of the proposed emergency property tax levy. That goal is same as identified in my last post about the school’s earned income tax levy. It is to increase cash flow so that school officials have an on-going year-end surplus of $5-6 million. The budget forecast estimates a $2 million surplus at the end of 2013 and $700,000 at the end of 2014. By that time, Romney may have been able to move the economy forward to a growing economy and 6% or less unemployment. Many more taxpayers would be making more money and would be able to afford giving schools $200 or more for five years and thereafter.
In the final analysis, Xenia School officials estimate a steady decline in student population, steady income revenue, and significantly rising costs. Most of the increased costs are due to above inflation employee benefits. Unless taxpayer annual income increases about 10-12 percent, Xenia taxpayers will not be able to afford the emergency property tax levy or any additional taxes. Based on the school’s estimates, the budget forecast is unsustainable. That is the bottom line.
Mandel’s Debt Management Office Director: An Answer to Cronyism Allegations
by Daniel Downs
U.S. Senate candidate Josh Mandel is being accused of cronyism by incumbent Sherrod Brown. Mandel is guilty but with some qualification. Obviously, before becoming Ohio’s Treasurer, Mandel had his sights on Congress. When he became Treasurer he hired his friend and campaign manager Joe Aquilino. Keeping Joe’s valuable services for his present and future work was important for Mandel’s future success.
Yes, Mandel deserves criticism for hiring an inexperienced investment bonds manager. If you read how Aquilino’s job is described you will glimpse Mandel’s reasonable strategy. First, he is referred to as the Director of the Debt Management Office and not of the Office of Debt Management. Second, the following is an excerpt from an April 4, 2012 Huffington Post article in which is disclosed Mandel’s view of Aquilino’s position:
“Joe is a licensed attorney. He managed staff in the Debt Management Department, and worked under Seth Metcalf’s direction on debt issuances,” Unger said. “Mr. Metcalf has extensive experience with debt issues, and continues to be the key person overseeing debt issuances in the treasurer’s office.”
In other words, Mandel hired experienced bonds manager Seth Metcalf to handle debt management. He kept attorney Joe Aquilino employed because he is an excellent manager of people and organizations. That is also why Aquilino is now employed as Mandel campaign manager.
Mandel was not rewarding his buddies with big jobs as campaign booty. Rather, it was a wise business decision: keeping a valuable employee.
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Posted in commentary, Ohio, politics
Tagged cronyism or strategic business decision, Election 2012, Josh Mandel, U.S. Senate race