With the upcoming decision to close a single elementary school and a potential bond levy, neither, or both together solve the extreme financial issues the district faces.
Our leadership at the state and local level continue to look at short-term fixes instead of meaningful changes. In an effort to provide solutions, we all need to become informed on what meaningful change looks like for the sustainability of our children’s education.
1. The top priority for the district needs to be the Public Employees Retirement System. The poor economic and discount rate environment has PERS roughly $14 billion underfunded. To keep the plan funded, each state entity must fund its portion of the liability.
a. This is equating to millions of dollars in additional expenses that have never been paid by the district before. In review of the actuarial projections produced by Milliman from the state website, the liability continues to grow. The district will need hundreds of thousands of more dollars every year to fund its portion of the liability with no meaningful relief pending.
(Note: Any funds raised by the bond or a school closure are really replacing the funds expended by the district to fund PERS Liabilities regardless of specified language in the ballot measure. It’s a shell game.)
b. Gov. Kitzhaber and the Legislature have tried to reduce the pension liability by lowering benefits to PERS participants. The initial attempt was a two-prong strategy: 1) reduce cost-of-living adjustments and 2) eliminate the tax break for retirees living out of the state of Oregon. While this is small progress, opponents are already lining up fight the changes. The teachers union will probably legally oppose these changes.
c. $2.9 billion will need to be contributed by taxpayers in the state over the next two years; this is up from $900 million over the last two years and growing.
d. When researching the PERS issue I contacted the district offices for the Roseburg School District. The district has already issued (non-voter approved) “pension obligation bonds.” A POB is a financing maneuver that allows state entities to “wipe out” unfunded pension liabilities by borrowing against future funding from the state. The proceeds are invested in equities and other high-yield (risky) investments in hopes to earn a higher rate of interest than the bond. An extreme gamble that should raise a red flag to all of us. Our education is being mortgaged.
What we can do for ourselves now:
2. Sell off all undeveloped land. We issued bonds many years ago to purchase land for a high school that was never built. Sell it. It makes no sense that we still own it, especially with no plans to build.
3. The district owns 10 private residences and functions as a landlord. The total tax-assessed value on the properties (low value): $1,486,581. Property taxes paid since property purchases: $176,341. The district is responsible to educate, not collect rent; an estimated $1.5 million could be raised immediately by selling.
4. Liquidate all administrative offices and property. The empty classroom space is a perfect place to relocate these services.
5. Consolidate all elementary schools into one school and eliminate under-capacity. Hundreds of districts around the country have this setup.
a. We eliminate many administrative jobs (multiplied by nine for each elementary school), thus slowing the accrual of our PERS liability.
b. A single school eliminates parental turf wars and brings the community together.
c. If your kid is having issues with a teacher, simply change classes, not schools. If enrollment is down, shut down a floor to the building. If enrollment is up, add on to the building.
d. All buses go to one location. The same concept is employed at Roseburg High School.
e. A single elementary school can be designed for school security that protects our children from intruders.
f. One centralized computer lab instead of duplicates around the district.
g. The district building review shows Green Elementary has surpassed its lifetime and will be cheaper to replace than to repair. We can bet the district will be asking for a bond of roughly $26-28 million in a few years to rebuild the school. It would be far better to use these funds toward a single, more centralized elementary school. (2008 Facility Forecast Plan)
h. We already own vacant land originally purchased for a high school that will never be built. Use the land for a consolidated school or liquidate.
The above strategies will raise millions of dollars of revenue now without having to do a bond. The above approaches give our children an education in a responsible and sustainable way. The Roseburg School Board and the superintendent need to implement meaningful change while we have flexibility. The financial noose is tightening.
Ben Frasier of Roseburg is a parent of Melrose Elementary School students and is the benefits manager at Roseburg Forest Products. He has a bachelor’s degree in business finance and a master’s of business administration, both from the University of Phoenix. He can be reached at email@example.com.