Thursday, April 27, 2006

Pho in Dead Tree Media

OK, actually my alter ego, but you all know the real me. The Beacon Journal runs my op-ed on Issue 1 today, and I get a mention in the Events sidebar on the front page of the West Side Leader teasing the school funding Town Hall tonight.

Hope to see you all the meeting. I'll pretty much be grinding out the presentation today, so don't expect to see me here.

Have a good one.

6 comments:

Jill said...

Just read the op-ed, Pho. Really nice job, so clear.

Yellow Dog Sammy said...

Hey, Scott, great piece of writing! You send a clear message, I hope people are paying attention.

Anonymous said...

I think your logic is sound and that you did a good job.

I still do not know how I will vote. My kid is in athletics.

However, we are barely making ends meet now. Most of my refund went to pay Dominion Gas for my energy costs. And at almost $3.00 a gallon of gas, we sure aren't doing much running around.

I guess the message I want to send is - I can't do it any more! The well is dry!

CindyZawadzki said...

Congrats!

fansnote said...

Pho,

Very nice piece in the ABJ. My wife and I will vote for Issue One on Tuesday.

The APS do indeed face a serious budget situation, however my analysis of the APS budget shows that the predicted deficit is likely far less dramatic than what we have been led to believe.

I sent the following email to Stephanie Warsmith of the Beacon Journal in response to one of her recent stories on the levy.

Hi Stephanie,

I've found your articles on the Akron Public Schools levy to be very good and well balanced. I am supportive of Issue 1. However, in researching the APS budget and the effects of the Tangible Personal Property Tax revenue stream, I've come across a number of troubling and contrary data.

On the Akron Public Schools website, www.akronschools.com/pdf/fiveyear05.pdf they have posted a 5-year budget forecast that was updated on May 9, 2005. The APS was forecasting a Fiscal Year 2005 deficit of ($4,263,249). Fiscal Year 2005 ended on June 30, 2005 and the actual bottom line was a profit of $925,571. This is a positive swing of nearly $5.2 million in a month. This data can be viewed on the Issue One website www.forakronschools.com/pdf/fiveyear06.pdf

As you'll see on the latter budget, the Fiscal Year 2006 budget forecasts a loss of ($17,561,392). This is primarily the result of budgeted revenues being $4.5 million less than Fiscal Year 2005, and Increased Personal Service, Benefits, Purchased Services, and Capital Outlay.

I'm a little leery of several of the forecasted 2006 figures:

Personal Services - Actual costs for 2005 were $161,058,574; adding in a 2% raise brings the amount to $164,279,745 (and that assumes full employment where no one is terminated, quits, etc. for the whole year). Given those parameters, it's likely that the actual costs will be $3-4 million less than the budgeted figureof $167,789,057.

Benefits - Hard to tell if the budgeted Benefit amount of $63,085,157 is a good estimate. Health care costs may push it close to that amount, but if Personal Service costs are actually less, then Benefits should also decrease by 37.6% of the lower costs (63,085,157 Benefits/167,789,057 Personal Services).

Purchased Services - Rising utility costs could push it close to $50 million

Capital Outlay - A budget of $2,050,000 is proposed for Fiscal Years 2006 & 2007. Actual expenditures were only $603,465 and $612,327 in prior two fiscal years. It's possible that Repair and Renovation projects may have been deferred for awhile, but if APS is building brand new schools, and past expenditures have been less than 1/3 of the proposed budget, why is $2.05 Million being budgeted?

Revenue (Repeal of the Tangible Personal Property Tax) - As you know, the State of Ohio is phasing out the above tax (TPPT) which was a significant source of revenue for all schools including APS. For at least the next five years, the state is replacing these revenues with a new tax called the Commercial Activity Tax (CAT). I admittedly don't have all the details on this replacement revenue, but wondered if the APS has accounted for this revenue. My guess is yes, (probably shown in the Unrestricted Grants in-Aid Revenue 01.035).


Cash Balance - You'll note on the budget, that as of July 1, 2005 the APS had a cash balance of $21,851,524. If the forecast for 2006 is correct, that balance evaporates to $4.2 million, and then goes up to a ($39.8 million deficit in Fiscal Year 2008).

I do budgets and budget policy for a living (in higher ed, not K-12 education) and I enjoy sorting through the implications of budgets (exciting huh? :). A good budget analyst will, and should be conservative with their forecasts and I believe that the APS budget definitely meets that criteria. However, as the year progresses, and events unfold, the budget changes as well. Given that as recently as May 9, 2005 a $4.2 million dollar deficit was forecast, and a month later, it was actually a profit of $925K, I'm uncertain if the APS budget for Fiscal Year 2006 is up-to-date, and hence are skewing future year forecasts. I would be interested in a Fiscal Year 2006 projection as of today.

Budgeting is essentially about making choices. Those dollars on a spreadsheet are not abstract, they represent tangible items and decisions that greatly affect people's lives. Good schools make good communties, and vice-versa, the link is organic. As I noted, my intention is to support Issue One. It's important though that an Akron homeowner being asked to raise their property tax by over 25% have a clear understanding of all the facts. This will help ensure trust, and hopefully counter the invective of many in the community who decry the need for additional funds (just from a sampling of the blog related to your story), though begrudging seems to be a life choice for many of the bloggers.

thank you for your time.

______________________________

I still support Issue One, but will be quite curious about the actual expenditures for fiscal year 2006. The finance folks at the APS have to be conservative in their forecasts, but hopefully a level of disingenuity is not in play here.

I encourage all to do their own research to see if maybe I'm missing something in my analysis...

Pho said...

Fansnote:

Thanks for the extensive post.

A couple of points. First, the School District is, by law, required to project a balanced budget for five years using pessimistic assumptions.

Second, the capital outlays may well be tied to swing spaces for students displaced when their school is being rebuilt/renovated. Those expenses are not covered by the building project money. I don't know that, but it's a possiblity we should keep in mind.

Finally, I'd urge you to send your questions to the email contact on the levy committee website. I'd like to hear APS's reply.