Battered But Not Broken

After a decade of budget cuts, CPS looks to Issue 42 for stability

Oct 3, 2012 at 10:21 am

By the end of November 2011, Cincinnati Public Schools (CPS) knew it would soon have bigger financial problems. The school district had just lost the battle for Issue 32, a permanent levy that would have raised $49.5 million for CPS every year. CPS claimed the levy was necessary in response to state funding cuts and the damaged economy. It was the only way the district could avoid layoffs and service reductions for the 2012-13 school year. CPS also said the money was necessary to provide better technology for a modern education.

But the levy would have raised property taxes in the middle of a struggling economy. The unemployment rate at the time remained high in Ohio at 8.1 percent. Taxes on a home worth $100,000 would have been bumped up by $243. Without the levy, a Cincinnati taxpayer with a $100,000 home pays $1,324 for CPS levies. That would have amounted to a nearly 18 percent hike, which became the main ammunition for opposition like the Coalition Opposed to Additional Spending and Taxes (COAST).

That opposition helped bring down the levy, which lost in the polls in a 47-53 vote. The results hit the school hard. Facing a $43 million budget deficit for the 2013 fiscal year — approximately 9.3 percent of the school district’s $454 million budget — the school eliminated 122 staff positions. The staff reduction saved about $11 million, but it came at the loss of both administrators and teachers. CPS also made significant cuts in supplies and equipment purchases.

“People that thought they might need computer upgrades were asked to limp along for now,” says Janet Walsh, spokesperson for CPS. She says most of the cuts ended up affecting expenditures that were “desirable, but not absolutely required.”

And 2011’s problems were just one year in what has been a tough decade for CPS. During the past 10 years, the school district has eliminated more than 1,300 staff positions (22 percent of its total staff), closed down 17 buildings and negotiated with employees to level out spending on health care.

But the problems aren’t over. Voters this November will decide Issue 42, which renews a levy Cincinnati voters approved in 2008 and will expire in 2014. As it stands, the school will run a balanced budget if voters approve Issue 42. If the levy doesn’t pass, the school district will be down $51.5 million a year — about 11 percent of the school’s budget — starting in 2014. Once again, the school district’s fate is in the hands of voters, but Walsh says the stakes are more serious this time if voters say no.

“It would be hard to see a scenario where that wouldn’t impact instruction,” she says.

CPS claims it’s been fiscally responsible, but outside factors — the recession, state and local budget cuts and the loss of federal stimulus — have hurt revenue streams the school district was previously counting on. That has led to tighter budgets than previously expected.

Despite the cuts, the school district has not given up on education. CPS has made huge strides with its community learning centers program, which was recently praised by the president of the Institute for Educational Leadership. With the levy, the school would worry more about improving such education programs and less about balancing the budget.
Even though the levy isn’t set to expire until after next year, CPS wants to pass Issue 42 now to provide some budgetary steadiness in the wake of years of cuts and facing an uncertain future.

Levy renewal

Ohio has a strange process for funding schools. Relying so much on local levies has become the norm in school districts around the state, but that’s not how some say it should work. Jens Sutmoller, head of the campaign for Issue 42, says the levy system is set up to make up for a lackluster state funding system.

“The state Supreme Court has found the way that Ohio funds public education is unconstitutional,” he says. “They found that four times. So we’re working within a broken system. Public schools, the school board, teachers, parents and students all have to fight for existing levy dollars.”

In that light, he said the levy system, while awkward, is necessary. With a broken public education funding system, it’s the only reliable way schools can come up with funding.

Even Republican Gov. John Kasich wouldn’t disagree. That’s why Rob Nichols, Kasich’s spokesperson, says reforming the state funding formula is necessary.

“Ohio is one of the worst states in terms of funding bureaucracy, overhead and red tape over getting the money into the classroom for instruction,” Nichols says. “We’re among the big state spenders on overhead and red tape and one of the lowest spenders on getting money into the classroom for instruction. We want to flip that.”

The state government will be reworking its school funding formula in the 2014-2015 budget. The formula change could completely alter how much money schools get in the future.

“It’s a big undertaking,” Nichols says. “Many governors have tried before. Many states have been sued over their formulas. It’s something we have to take our time with and get it done right.”

But until that’s done, CPS must rely on its levies. That puts the pressure on Issue 42, and that’s where Sutmoller comes in. As head of the levy renewal campaign, he has to make sure voters say yes to Issue 42. So far, he’s optimistic.

“We’re getting a large influx of teachers, parents and even students working to volunteer on the campaign,” Sutmoller says. He says the campaign sees about 20 people in campaign offices every day putting together and distributing yard signs, phone banking and going out to talk to people about the levy renewal.

But Sutmoller acknowledges the campaign isn’t easy. He has the fresh memory of last year’s voter rejection in mind, and he knows COAST, a local conservative group, is already pushing against the levy.

Tom Brinkman, chairman of COAST, says the organization is generally against additional spending and taxes, but increased spending and taxes are not the only consideration for the group. He says his organization is not opposing this year’s mental health and services levy, even though it does maintain higher taxes and spending. Looking back to the 2011 levy, he says COAST opposed the levy for reasons beyond its tax hike. One specific reason was CPS asking for money the district said it had before.

“They said they needed money for maintenance for schools they had built,” he says. “What we reminded the taxpayer is that when they first built those buildings, they said that they had figured they would have the money for maintenance all down.”

He added, “Now they’re coming along and saying, ‘Oh, now we need money to maintain these buildings.’ But wait a minute, that was part of your promises from last time.”

Citing the Hyde Park building, Brinkman also claimed that the school district said it would be unable to open certain buildings if it did not get the 2011 levy. But the levy didn’t pass, and the Hyde Park school ended up reopening anyway. This, to Brinkman, is proof the school district tends to exaggerate when campaigning for a levy.

COAST’s opposition for this year’s levy renewal is more about the levy’s timing and less about the school district. Brinkman says COAST definitely wants to hold the school accountable for its performance with the threat of taxpayer dollars, and at a few points in the conversation he cited recent reports that CPS regressed in some areas in this year’s preliminary report card data, which the state government provides in an attempt to rate schools around Ohio. In the preliminary data, CPS failed to meet federal standards for advancing different student sub-groups, such as minorities; but the school district did manage to meet standards for year-to-year advancement in state testing for students between third and eighth grade.

But, again, the current results aren’t the main focus for COAST. Brinkman says the organization is more interested in the timing of the levy renewal this time around.

“The money does not go away until January of 2014,” Brinkman says. “It’s a five-year levy. The reason we have five-year levies is so the public can gauge after four or four and a half years how the entity where the taxes are going to is doing with the money.”

From that perspective, it’s important to COAST that the levy is brought up for renewal as late in the game as possible, meaning November 2013. That way, Brinkman says, the school can be held accountable for what it does with all the levy money.

But Sutmoller disagrees with that approach. He says the school district plans out its spending for years ahead, so knowing the money is ready in advance greatly benefits CPS. Plus, with the extra year, Sutmoller says CPS can bring the levy renewal up again in May and November 2013 in case voters reject renewal this November. Sutmoller says bringing up the levy now gives CPS more room to plan its budgetary future.

Falling into red

Diana Whitt, treasurer for CPS, says the school district is not having budget problems because of irresponsibility. She says the school has tried to be responsible, as demonstrated by a decade of cuts, but multiple outside factors have consistently reduced the school’s budget.

One factor is widespread economic hardship brought on by the recent recession and nationwide housing crisis. Whitt says she was “primarily looking at foreclosures” as the cause for losses from property tax revenue. In total, the school lost $2.18 million due to an 8-percent devaluation from a Dec. 31, 2011 reappraisal of the city of Cincinnati.

Whitt says actions by local and state governments have limited funds as well. According to the CPS budget numbers in the school district’s five-year forecast, the state government reduced spending to CPS by about $30.9 million in the 2013 fiscal year relative to the 2011 fiscal year.

However, nearly $11.5 million of that came from the loss of federal stimulus funds, which were always set to expire in the 2012 fiscal year. So only about $19.4 million of those cuts are attributable to a direct cut in state funding. Most of those cuts came from the phasing out of the Tangible Personal Property (TPP) reimbursements, a subsidy that some schools — including CPS — disproportionately benefited from. In total, the drop in TPP reimbursements cost CPS about $21.4 million in the 2013 fiscal year. The state raised other aid by nearly $2 million, which helped mitigate the loss of the subsidy.

The city of Cincinnati made cuts as well, which led to $1.9 million less in funds for the 2013 fiscal year. On a county level, Hamilton County slashed $1 million in funds to CPS for the 2013 fiscal year.

In total, government cuts add up to $33.8 million less funds in the 2013 fiscal year, or about 7.4 percent of the current CPS budget.

On top of government cuts, Duke Energy announced in June 2010 that it was appealing its property tax estimate. If Duke Energy’s appeal is successful, schools will lose $7 million in funding every year, and schools will also have to retroactively reimburse Duke Energy for any excess tax payments.

Among all these cuts, by far the largest are coming from the state government by the way of education cuts and cuts in financial aid to counties. In July, Innovation Ohio and Policy Matters Ohio launched a website to show the impacts. The Cuts Hurt Ohio website uses an interactive map to show how much each county is losing by comparing the 2010-2011 budget, which was passed by former Gov. Ted Strickland, and the 2012-2013 budget, which was passed by Kasich.

In Hamilton County, state government cuts to education amounted to $136 million, and state government cuts to county aid added up to $105 million, according to the website. Statewide, the government is slashing education funding by $1.8 billion, and counties will be receiving $1.08 billion less from the state government.

A substantial amount of these cuts come from the loss of federal stimulus funds that Ohio was getting, but not all. The 2012-2013 budget pulled funding to the Ohio Department of Education down to $9.8 billion for the 2013 fiscal year — lower than the amount of funding education received before Ohio obtained federal stimulus programs.

Nichols, spokesperson for Kasich, says the cuts were necessary because Ohio is constitutionally required to balance budgets.

“The reality is we walked into an $8 billion budget deficit,” he says. “We had to fix that.”

Nichols claims most of the cuts came from “reforming programs,” but some cuts did have to make their way into the budget. But he insists the cuts should not be too emphasized: “Cincinnati schools saw less than 3 percent of core budget cuts as a result of the loss of state aid.”

Still, the “less than 3 percent,” which refers to the 2012 fiscal year, is equal to about $12.8 million in a $450 million budget. That’s a substantial amount for a school district that already has to tighten its belt due to an afflicted economy.

And the 2013 fiscal year saw even bigger cuts with about $19.4 million in state aid cuts — about 4.3 percent of the budget.

Budget deficit, innovation surplus

Despite the lower funding and cuts, CPS has made some innovations in recent years. In 2000, the school district began its community learning center program, which has since evolved into a much bigger part of getting an education at CPS. Martin Blank, president of the Institute for Educational Leadership based in Washington, D.C., praised CPS’s program, calling it one of the best in the nation.

A community learning center is a hub in which multiple aspects of the community come together to meet a goal set by schools and the community at large. These programs can cover a huge variety of needs — education, health care, community organizing, after-school programs and preparing for college are just a few examples — but they come together at the “focal point” of a school to improve communities and schools overall.

Blank says the program, which brings needs beyond academic achievement into the focus at schools, boosts academic achievement. Although he’s careful not to draw a direct correlation since there is no strong research in the area, he points to the dramatically rising graduation rates in CPS since the community learning center initiative began in 2000. Between 2000 and 2010, graduation rates at CPS went from 51 to 81.9 percent.

“What we know is that what the community learning centers do is what middle- and upper-middle-class parents do for their children,” Blank says. “Cincinnati is trying to do that for its most vulnerable children because that’s the equitable approach to educating them.”

He added, “Indeed, the results are good for the city. Instead of having a fragmented system and an inefficient system of getting help to kids, you have a system that is responsive and well integrated. I would suggest that the teachers in these community learning centers feel a sense of greater support from their communities and perform at higher levels because of it, but I don’t have research that tells me that.”

To Blank, CPS’s community learning center program is unique for five main reasons: It brings more community leaders together, including leaders at the school, United Way, the school union and health, community and family foundations; school board policy demands all schools must be community learning centers; a majority of schools have resource coordinators, which Blank says are pivotal for integrating the work of the school and its partners; the school has a cross-boundary leadership team that “brings together people who lead collaborative efforts in Cincinnati focused on particular topics,” such as after-school programs, mental health programs and mentoring; and strong community engagement between residents, students, teachers and administrators.

The sort of community engagement can even lead to new schools. Blank says parents at East End and Oyler knew their kids weren’t getting the best education they could at bigger high schools, so they used community engagement to get new, closer facilities built.

“The school board responded, and you’ve seen graduation rates for those children in that neighborhood that we’ve never seen before,” Blank says. “Is there further to go? Of course there is. But they’re making tremendous progress.”

CPS says the community learning centers program isn’t its only innovation. The school district is also proud of its Elementary Initiative, which CPS has used to target 16 problematic elementary schools with new data-driven goals, funding realignment, greater focus on math and reading, stronger leadership and a summer program called “Fifth Quarter” that extends the school year by a month. In an email, Christine Wolff, another spokesperson for CPS, credited the program with providing a “dramatic turnaround” in struggling elementary schools over the past three school years.

The program recently found national praise and attention, and the University of Virginia is studying the potential of the initiative in other schools.

Future funds

CPS knows it needs Issue 42 to pass to avoid having to reduce its budget by another 11 percent. But the levy alone will not solve all its problems. No one knows exactly how the new state funding formula will work, and the federal government is facing massive budget problems that could lead to education cuts.

Beyond the funding uncertainties, education changes already approved by the state present a few problems to Cincinnati’s schools. The state is currently working on a new grading system, which it will use to measure if and how schools are progressing or regressing in different areas. In a simulation released by the Ohio Department of Education in May, CPS performed poorly under the new system. The simulation, which used 2010-2011 data, found most local schools would significantly drop in grades. In particular, 23 Cincinnati schools would flunk under the new system. Overall, CPS would drop from the second-best rating of “Effective” under the old system to a “D-” under the new system.

If the simulation’s example holds up, CPS should expect grim evaluations from the state in the future. That could lead to funding cuts and stricter standards with higher costs — not good signs for a school already struggling to make ends meet.

In the end, it seems convincing voters is just the first step. The school is going to have to deal with many more outside forces after November.  ©

CONTACT GERMAN LOPEZ: [email protected]