COLUMBUS, Ohio – Half a billion dollars.
That’s how much Ohio’s 10 largest school districts expect to spend on increased wages, and the increased cost of employee benefits, over the next five years – despite the fact that seven of those districts are projecting student enrollment to remain flat or decline.
These findings are from an EAGnews analysis of the school districts’ five-year financial forecasts on file with the Ohio Department of Education.
The precise amount of the districts’ new-spending binge from fiscal year 2014 to fiscal year 2018 is $515,048,138. That’s not too shabby for a group of public schools that have supposedly been starved of financial resources by state leaders for the past several years.
So where is all that new money going to end up?
Sixty-four percent of it – $332,516,032 – will go toward wages, pay raises, health insurance and other benefits for school employees, as the following chart illustrates:
It’s important to point out – as one school official noted in a district’s five-year forecast – that these spending projections are a “hypothetical representation of a district’s financial future based on historical trends and known facts.”
In other words, none of these expenditures are set in stone; they could be less – or more – than predicted. Still, Ohio taxpayers should find this information helpful as they sort through all the campaign rhetoric about the need for additional public school “investment” leading up to the November elections.
Three of the 10 districts examined by EAGnews – South-Western City, Olentangy and Hilliard – can justify some of their new employee spending on the fact that student enrollment is expected to grow and new employees are expected to be hired.
This is especially true of the Olentangy Local School District, which has been experiencing a serious influx of students for several years. From 2014 to 2018, officials expect their student body to grow by another 10.8 percent.
The seven other districts, however, don’t have that excuse for their employee spending explosion. Based on information found in the financial forecast notes, these districts are projecting student enrollment to flatline or decline over the next five years.
As a result, Cleveland City school officials, for example, are planning for staff reductions of 154 employees from 2014 to 2018.
Likewise, Columbus City schools are planning for $10.8 million in staff reductions between fiscal years 2014 and 2015.
Akron school officials will presumably make staffing cuts if their anticipated loss of 390 students a year – due to charter schools, Ohio’s voucher programs and open enrollment policies – comes to fruition.
Leaders of Butler County’s Lakota Local school district expect student enrollment to decline by about 200 students per year, but they say the reductions will be too spread out among grade levels to lead to corresponding teacher layoffs.
Obamacare, pay raises main drivers of new spending
So why are these districts ramping up employee-related spending?
A sizeable portion of the new spending is due to ballooning health insurance costs that are a result of President Obama’s “Affordable Care Act,” as EAGnews revealed in a previous report. There’s nothing the schools can do about that.
Employee pay raises are the other major driver of new K-12 spending. The raises are the result of collective bargaining between employee unions – which always demand more – and school boards, which frequently lack the backbone to say “no.”
Consider the Akron school district – the same one mentioned above that’s expecting 390 students to leave the district every year for the foreseeable future. According to the district’s five-year forecast notes, all Akron school employee unions are being given three across-the-board pay raises – of 2 percent, 2.35 percent and 2.85 percent – in the span of a year-and-a-half (from Jan. 2014 to July 2015). That’s a total raise of 7.2 percent.
In addition to those across-the-board raises, teachers will still receive annual “step” raises, which are pay hikes based on years of service, not effectiveness. In the recently expired Akron teachers union contract, the step raises – from whole step to whole step – appear to average about 4 percent. (EAGnews determined this by calculating the increases between four, randomly chosen steps on the pay schedule. The increases ranged from 3.9 to 4.7 percent).
Akron schools’ new teachers union contract is still being finalized and has not been made available for public inspection. Still, it’s no surprise that Akron officials are setting aside 57.8 percent of the $34 million in new spending for employees.
They’re not the only district leaders who plan on doling out nice pay raises to employees. Columbus City officials anticipate giving teachers 2.2 percent annual step raises over the next five years (averaging $8.4 million annually) as well as a 1 percent “wage adjustment” for fiscal years 2016 through 2018.
Cincinnati City teachers will see their base salaries stay frozen through 2018, but don’t feel too bad for them. The union members will still receive annual step raises (about 2 percent a year) along with $800 bonuses for each performance review evaluation they successfully complete.
EAGnews’ analysis of the district’s financial forecasts – which involved a couple of educated guesses due to confusing bureaucratic mumbo jumbo – finds that nine of the 10 largest districts will provide their teachers with steps raises. Six of those districts will also provide teachers with across-the-board raises.
Once all the pay raises and benefit increases are cared for, there won’t be much of that half billion dollars in new spending left for schools to use on classroom supplies, instructional materials, transportation needs and other day-to-day expenses.
SB 5 would come in handy right about now
This excessive employee-related school spending could have been brought under some control if Ohio voters in 2011 had chosen to keep Senate Bill 5 (SB 5), the state’s collective bargaining reform law for public employee unions. Voters rejected the measure in a ballot referendum, 62 to 38 percent).
For instance, SB 5 would have allowed school district leaders to select a health insurance plan without getting approval from the employee unions. That would have led to fewer “Cadillac”-style health plans.
The law would have also capped school districts’ contributions toward employee health insurance premiums at 85 percent.
While these reforms would not have prevented the spike in premiums that’s expected over the next five years – thanks to the federal “Affordable Care Act” – it would have shifted some of those costs from taxpayers and onto employees, says Greg R. Lawson, a policy analyst with the Buckeye Institute, a free market think tank.
“(SB 5) wouldn’t have been a silver bullet” to stop rising health care costs, but “it would have given more breathing space” to school districts, Lawson tells EAGnews.
SB 5 would have also increased employees’ contributions to their pension plans, and that would have been a modest help in reining in spending.
But even if SB 5 had been preserved by voters, public employee unions would still have been allowed to negotiate over pay increases, which as EAGnews’ analysis shows, is a major factor in driving school costs.
Lawson says the only way taxpayers will ever regain full control over their school districts’ finances is if public employee unions are banned from collective bargaining altogether.
Lawson points out that teacher unions effectively elect their bosses – school board members – and demand to be given pay raises. If board members’ balk, the unions threaten to campaign for the board members’ opponents in the next election.
“Collective bargaining has really shifted everything into the favor of public school unions – they have all the cards,” Lawson says.
And taxpayers get all of the bills – nearly half a billion dollars’ worth in ten school districts alone.