I invite people to a free, open, and non-partisan “Workshop on School Finance” at the Dole branch library, 255 Augusta, on March 2, starting at 1 p.m. Everyone is invited: Board candidates, high school students, the press, and most of all, the public, who will get to vote this April in board elections for districts 90, 97, and 200.

Things will be graphically oriented, based on Microsoft Excel-based models. You will be welcome to try your hand at creating your own scenarios on a computer. That, and a general discussion, will close the workshop. My objective: Have an informed election in April.

Here is a preview of things:

  • School inflation naturally exceeds the growth of the Consumer Price Index, since schools are labor-intensive enterprises, with few means of productivity improvement, compared to private industry (Professor Baumol’s “cost disease”).
  • This means tax caps inevitably have to be exceeded via referenda, but there is room to pay for that, as long as we have productivity improvement in the economy overall.
  • Schools have had steady, slow growth in the missions assigned to them, which leads to further cost growth, but these things are offset by other things going on in the labor force and society.
  • There is no “right” amount for a referendum, but there are some wrong amounts. How long should its effect last?
  • Too little leads to referendum periods that are short, and that leads to voter fatigue. Too much leads to massive intergenerational transfers of wealth from the past and present to the far future. Those future people will not be fully paying for the benefits they are receiving, and there will be a rude awakening when things necessarily adjust up to much higher taxes. We have strong elements of this going on now in D200.
  • “No deficit spending” seductively sounds like a great policy until one realizes that it results in uncontrolled growth of cash balances. Schools go through a see-saw cycle of boom and bust, where half the time, they are accumulating cash, and half the time they are in deficit.
  • Learn the seeming paradox of “faculty salaried step and lane tables”: How everyone can be moving up, yet the average position is moving down half of the time.
  • Learn about OPRF High School’s chief financial challenges: enrollment increases and pension cost shifting from the State.

And much more.

Volunteers are needed. This workshop will be a success if you help to think out and draw the graphs on the easel, and work the computer. Hopefully, we’ll leave knowing more than we did and knowing that still more remains to be understood. For more info, call 708-386-0616.

See you there.

Kevin Peppard has an MBA in finance from the University of Michigan and was director of automotive planning for $2 billion worth of business for a Fortune 100 company.

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