Poor Revenue May Add $4M to TPS Deficit (OH)

May 7, 2010

The bad news keeps coming for Toledo Public Schools as it tries to steady its financial ship.

Its income tax levy failed Tuesday, meaning more layoffs and program cuts to close a $30 million budget hole next fiscal year.

Now there also could be $2 million to $4 million more in losses over the next fiscal year from lagging tax collections to add to the red ink in the new budget, which takes effect July 1.

That’s because property-tax delinquencies are rising in addition to successful appeals from Lucas County property owners to reduce their tax bills, said TPS Treasurer Dan Romano, who said he learned of the development this month from the county auditor’s office.

“Are we surprised, yes,” said Mr. Romano, who added his staff is trying to win some federal grants to close the hole. “There is some opportunity for us, if we can make our case.”

It’s one more challenge facing a school district gushing red ink. District officials still must negotiate major union contracts and hire a new superintendent to succeed John Foley, who’s leaving at the end of July.

The district is also being led by a fragmented school board that disagrees on basic policies, such as which schools to close and programs to cut, and it appears to be losing public support.

Leading up to Tuesday’s levy vote, several influential groups criticized the board and TPS leadership in general, saying the district lacks a clear financial plan and that its employees make too much money and that their salaries must be cut.

The TPS operating budget is about $290 million and $210 million of it last year was paid out as wages, from the superintendent down to the occasional part-time worker.

Mr. Foley said Tuesday that school districts across Ohio and the nation face unprecedented problems with mass student defections to charter and private schools. He said school funding sources are few and often out of the district’s control.

“We spent a great deal of time cutting programs that would be least harmful to the least number of students,” he said. “Two-thirds of our funding is from the state and local funding is from property tax and we have no control over property valuations. It’s easy to blame us for lack of foresight.”

The school system — looking into the financial abyss — needs new revenue and budget savings.

“At this point, we have to look at everything and not just getting money from unions,” said board President Bob Vasquez. “As we go on, all of the things are on the table. And when you start to get down this far, you do talk about unions be cause it doesn’t leave many other services you can cut.”

Union leaders contacted yesterday said the financial ills of the school system can’t be cured by Draconian salary cuts or massive layoffs.

A 5 percent salary cut, for example, might “work for a year or two, perhaps, and then teachers and educators would decide their standard of living isn’t up to their peers … and then bail on their profession,” said Don Yates, president of the Toledo Association of Administrative Professionals, which represents about 300 principals, counselors, psychologists, and other nonteaching professionals.

“If it were that simple, and we could solve school funding issues with concessions like that, I would look at it,” he said. “But I don’t believe for a second that concessions would solve the problem because the state doesn’t want to take up the issue of how to properly fund school systems.”

Mr. Yates and other school officials say urban school districts are burdened by expensive mandates from the state that are unfunded, such as requiring all-day kindergarten class and certain professional development.

“Those are good, positive things,” he said. “But I think when the state mandates things they should pay for it.”

Francine Lawrence, president of the Toledo Federation of Teachers, said a 5 percent pay cut, as an example, would be unacceptable.

She said all the unions agreed in good faith in March to a 1 percent pay cut and adjustments to health care coverage, including increasing co-pays. But that agreement was tabled by the administration after the school board voted to keep Libbey High School open.

41 more teachers
Ms. Lawr ence said because the levy failed, school officials this week added 41 teachers to the previous layoff list of 213 teaching positions.

“I want a fair settlement for teachers and a good outcome for our students,” she said. “But I will not take a settlement based on the [layoffs] that they’ve put forward.”

Because of the levy’s failure, nine extra administrative positions will be cut in addition to the 16 already slated for elimination, Mr. Yates said.

The layoff numbers could increase as TPS officials and the district’s three main bargaining units reopen negotiations that stalled April 1 after the Libbey vote.

Saving Libbey erased a $1.3 million savings and had the effect of nullifying several negotiated contracts.

School board member Brenda Hill said Tuesday night — after learning the levy failed — that her vote to save the school was only in effect if the levy passed.

She predicted Tuesday night that Libbey would be closed after all.

She did not return phone messages left by The Blade yesterday, seeking more clarification.

Board Vice President Lisa Sobecki and other school officials said yesterday that the Libbey vote was designed to stand on its own. She said because the vote was part of a final list of cuts meant to inform voters, it should be honored if the board is to be trusted by the public.

Ms. Hill was one of three board members to vote in favor of keeping the school open. She joined former Toledo mayor and school board member Jack Ford, who made the motion, and board member Larry Sykes.

Mr. Vasquez and Ms. Sobecki voted to keep Libbey on the closing list.

Mr. Sykes said yesterday he wants to re-examine all the approved cuts, including the decision to keep Libbey open.

“Change makes people change,” Mr. Sykes said. “We have to sit down and look at everything. … now that the levy didn’t pass, we have to look at some major overhaul.”

Lack of trust
Mr. Sykes said he wants to form a task force to run an independent audit of the school system’s budget and said he doesn’t trust TPS management’s numbers on the projected deficit.

“I can’t get a grasp on what the deficit is. I hear this number. I hear that number, and I am uncomfortable. That’s the reason I would like to have a task force and say, ‘Hey guys, this is what this is. This is a community problem,’ and I want to reach across the table, I want to call the mayor in. He must be doing something right, he got his levy passed,” Mr. Sykes said.

“And nobody’s talking about a new superintendent. We need to bring someone in to oversee our finances. There was not a face on this levy. We have to go back and reassess. We have a lot of work to do on this board.”

He added that he favors offering buyouts for teachers with multiple years of experience so younger teachers with families and mortgages can keep their jobs.

Mr. Vasquez said that the district already has an independent audit committee that reviews finances and systems.

“If Mr. Sykes has any question about this, as far as going back to revisit cuts, he has not asked the president of the board to go back.”

Mr. Vasquez noted that all board members, including Mr. Sykes, voted for the cuts: “ We told the voters what we were going to do.”