Loveland contributes less as a percentage of income than 90% of schools
A third levy attempt is 1.6x more likely to fail than the original attempt
by Jason Hubbard
As we know from previous posts and articles, because of HB920 even when inflation drives costs up, schools don’t receive additional local revenue from voted in levies. I would argue, even if this was the case, schools would still need additional revenue because the inflation number we typically use doesn’t apply to Loveland (or any other school).
To explain why it doesn’t apply, we first must understand what inflation is. Inflation is the calculation of the rising (or falling) costs of a basket of goods and services. Those specific goods and services, and the weight of those goods and services, will dramatically affect the final outcome. Typically when we talk about inflation, we are referencing either the Consumer Price Index (CPI) or Personal Consumption Expenditure, both of which are calculated based on the buying habits of personal consumers.
As you can imagine, the buying habits of personal consumers and schools are vastly different, both in terms of the basket of goods and services and the weights/quantities inside the basket.
While we can’t use the CPI itself, we can look at various components or other indexes to get a better idea of the actual adjustments of cost. Let’s first talk about the cost of people. The vast majority of the district’s expenses are people (87% for Loveland in 2012), so this makes up the biggest part or weight of the “basket”. When we look at the components that make up people, we find health insurance costs have increased 31.2% since 2012 and benefits generally have increased 24.6%, while salaries nationwide within public elementary and secondary schools have increased 13.7% (all private-sector salaries increased 14.7%). Total compensation for government education employees increased 17.86% nationwide while the private industry increased 17.85%. During this same timeframe, Loveland has seen only a 22.9% increase in benefits, average teacher salaries have increased 11.8%, and average administration salaries have increased only 1%.
Other areas of the budget would need to be broken down for comparisons as they don’t match well with indexes that exist, for example, supplies and materials contain textbooks, which has seen a 21% increase nationwide since 2012, but also contains fuel, maintenance parts, etc. Purchased services contain other salary resources along with special services associated with teaching (primarily around disability services) and operations/maintenance of the building. Instead of trying to compare additional indexes, we could look at the elementary and high school tuition and fees index for consumers; that has increased 29.3% since 2012, which is actually in line with Loveland’s 30.2% increase (a difference of only $476,720.75, well below the cuts already made). If we assume the weight used within the CPI for elementary and high school tuition and fees index is consistent with Loveland’s property tax, then the increase would have contributed less than 1% of the total increase in expenses to the CPI since 2012.
It’s also the case that school taxes typically make up a small percentage of household total income, and if it was increasing faster than income, the effects would be negligible, especially considering some costs of expenses fall offsetting other expenses. The fact is though, this has not been the case for Loveland. If we look at total revenue collected from residential real estate and compare that to total federally adjusted gross income, Loveland contributed less in 2019 than in 2012. Loveland also has a lower local property tax collection to income than the state average, ranking in the lowest 10%. Additionally, Loveland has a low commercial to residential real estate ratio, which typically means more burden will fall on homeowners to support the school, but over the years this hasn’t happened. If Loveland contributed a similar amount of commercial and residential real estate tax as a percent of income, they would have received over $50M more in revenue over the last 6 years.
I’m writing all this, not to tell you to vote Yes, but to ask you to look at your own expenses and income and come to a conclusion yourself. I (and everyone else) can look at all the data and make generalized assumptions, but I don’t know your own situation. The fact is, Loveland’s budget isn’t extravagant, it’s completely ordinary, average. Even with this levy, it will trend lower compared to other schools, so I hope you ask yourself, is my situation really what those that oppose the levy claim, or am I in a position to be able to support this levy and keep Loveland’s average budget where it is. Additionally, even with passage of this levy, the state average and similar* district’s budget increases will outpace Loveland and per-pupil expense will exceed Loveland’s within 2 years.
Lastly, I would like you to consider the risks of a failed levy. I’m not talking about the additional cuts the administration has already announced, but the loss of support of the schools within the community. If you look historically at other districts with multiple failed levies, school support decreases and it becomes more likely additional levies will fail. Schools with two failed levies are 1.6 times more likely to fail the following request than schools that passed their previous attempt. If you are still undecided, I ask that you consider how much budget cuts you’re willing to tolerate and how much of a decrease in property tax that really means for you, with the over $3M of additional cuts announced if this levy fails (over 25 positions and other changes), that would mean only around $6/month per $100,000 of appraised value. And while the opposition may claim they would endorse a levy later, we’ve already seen they are willing to move the goalpost, so there is no guarantee there won’t be additional opposition. The question is, is voting down this levy worth the risk, do we really want to go through another campaign like this? Voting this down because the incremental cost was slightly higher than you expected, may mean another failed levy on a budget you would support.
* Similar district as defined by Ohio Department of Education, http://webapp2.ode.state.oh.us/similar_districts/similar_districts.asp?strIRN=044271&intSchool_Year=2019&action=Run
Sources: U.S. Bureau of Labor Statistics Employment Cost Index & Consumer Price Index, OEA and Ohio Board of Elections Levy Results, Ohio Department of Education District Profile Report, Ohio Department of Education 5-year Forecast, Ohio Department of Taxation
