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State of Ohio | Governor's Blue Ribbon Task Force on Financing Student Success

Committees

Operations and Efficiency Committee

November 12, 2003 Minutes

Committee members present were Chairman Walt Davis, Vice Chairman Dennis Woods, Richard Baker (for Jennifer Sheets), Senator Robert Gardner, David Locke, James Mahoney, Barbara Sprague, and David Varda. Other Task Force members present included Task Force Chairman William Wilkins, Richard Maxwell, Daniel Navin, and Barbara Shaner.

Presentations:

Committee Chairman Davis called the meeting to order at 10:10 a.m.  Mr. Davis introduced Craig Burford, Donald Thompson, Edward Swartz and David Distel, who gave a presentation on the regionalization recommendations of the Ohio Educational Service Centers Association (OESCA).  Mr. Burford is the Executive Director of the OESCA, Mr. Thompson is the Director of the Montgomery County Educational Service Center, Mr. Swartz is the Director of the Cuyahoga County Educational Service Center and Mr. Distel is the Director of the Hamilton County Educational Service Center.

Mr. Distel gave a brief overview of the functions of educational service centers (ESCs).  These include such things as providing school leadership, teaching students with disabilities, providing business solutions such as more centralized purchasing for school districts, and contracts with the Ohio Department of Education for certain services.

Mr. Burford described briefly some of the recent studies in Ohio that have examined the regional provision of services. These reports included one done by CELT for the Ohio SchoolNet Commission, which also extended to a review of regional professional development activities, among other things. Mr. Burford also noted the work of the Governor's Commission for Student Success and the Governor's Commission on Teaching Success.  The OESCA released its recommendations in February of 2003.  The report noted that there is a lack of a coordinated system and that some entities have gone beyond their original charges.

Mr. Swartz reviewed OESCA's proposal. He noted the need for alignment among ESCs, Special Education Regional Resource Centers, Data Acquisition Sites, and other entities, including statewide organizations such as the Buckeye Association of School Administrators.  Representatives of OESCA met with staff from the Ohio Department of Education (ODE), the Governor's Office and legislators to discuss regionalization They began their process by determining what core services are best for students.  They then worked backward from these core services to determine what needed to be provided to schools relative to these core services.  Mr. Swartz stated that the General Assembly was interested in the OESCA proposal, but time was inadequate during the budget deliberations to really implement it.  Instead, ODE was given the task of preparing a report on improving the regionalization of services for schools in H.B. 95.

Mr. Thompson and Mr. Distel went through the basics of the OESCA plan, including the proposal to divide the state into19 regions. The focus of the report was how to improve the regional delivery of services without imposing another layer of bureaucracy.  The number 19 was determined by looking at geography, location and capacity of current providers, and other relevant factors.  The report recommends that the fiscal agents for the 19 regions should be selected based on an objective set of criteria, and should have the capacity to provide necessary services for the region.

Mr. Distel observed that coordination of services to school districts is a major challenge.  Educational service centers are usually the coordinators of the various services being provided by various entities.  The state needs to provide certain kinds of services, while local school districts have a need for different types of services.  The challenge is to align and coordinate current services through these 19 fiscal agents.  "How do you use the current system more efficiently?" is the question.  How do you make all of this accountable? Educational service centers are market-driven since school districts do not need to purchase services from a particular ESC, or any ESC at all.  The market is already competitive.  Contracts are based on performance.  The ESCs are trying to put current activities under one umbrella using the existing structure.

Mr. Burford reinforced that these 19 regions were not new.  Under the OESCA proposal Ohio would have 41 ESCs that would be unchanged in their roles and 19 ESCs that would also serve in an expanded capacity.  Educational service centers average 168 employees, so they have considerable capacity.  He stated that the ESCs have the resources and experience to fulfill this mission. Proximity is also important, and ESCs are located throughout the state.  The ESCs are already fiscal agents for most of the regional service providers such as regional professional development centers and other similar entities.

Senator Robert Gardner asked what the relationship would be between the 19 regional ESCs and other ESCs. Mr. Burford responded that the local ESCs would still be providing services while the regional ESCs would provide umbrella services. Both regional and local services need to be provided.  It is not one or the other, it is both.  Different entities and types of entities need different services.  School districts may need things that are very different from regional professional development centers or other entities.

Mr. Wilkins asked about the governance structure of the new regional system, Mr. Burford responded that the regional ESCs would still be governed by an advisory board made up of consumers. Mr. Wilkins wondered why a board was needed at all.  Mr. Thompson answered that it is important to have a public board scrutinize the ESC's activities.  Also, some entity needs to ultimately accountable.

Mr. Distel noted that the OESCA proposal reduces overlaps in service provision.  Senator Gardner stated that this is really a one-stop shopping notion The data acquisition sites seem to be the largest obstacles because of the heavy investment in infrastructure. This makes the transition more difficult for these entities. Dennis Woods observed that migrations need to be incentive-driven because of the investments that school districts have already made in equipment.

James Mahoney asked if this proposal would still be the one recommended if Ohio had no existing regional delivery system. Mr. Burford responded that we cannot ignore what is already in place. The answer depends on what you want the system to look like.  What do you want to focus on and what services do you want provided?

Mr. Locke asked about to whom the new boards would report. Mr. Thompson responded that the Ohio Department of Education, through its performance contract with the regional ESC, is the entity to whom the board is ultimately responsible. The model in OESCA's proposal is built around local control as far as service delivery is concerned, but ODE has a role as well.

Mr. Wilkins observed that we may need to do more with regions as far as enforcement is concerned.  Should there be another board for each of the 19 regions? The Ohio Supreme Court has said that we have a single state system.  Mr. Thompson responded that the ESCs do not want to create another layer of bureaucracy.

Chairman Davis then introduced Roger Nehls, Deputy Superintendent of the Ohio Department of Education (ODE). Mr. Nehls noted that ODE is currently in the process of putting together a presentation they will make to the State Board of Education next week.  He addressed a series of questions that ODE asked at its regional meetings with interest groups.

Mr. Wilkins asked about the mission of the new 19 regional centers and who should be in charge. Mr. Nehls responded that this is a fundamental question.  The exact mission is not yet defined, but it is being developed.  Activities related to school improvement is one piece.  The other piece is the business operations, such as being a fiscal agent, providing bus driver physicals, report cards, scheduling, and other such activities.

Mr. Nehls observed that some feel that ODE should be in charge and some feel that these 19 regions should be controlled locally. Two members expressed a need for clear definitions of duel responsibilities.

Mr. Nehls noted that the funding of services across the state is very uneven.  Some ESCs receive $37 per pupil and some receive $40.52 per pupil Some ESCs receive no state funding for their agreements with school districts (i.e. those districts that entered into agreements with ESCs after the statutory deadline).  Mr. Nehls feels that data acquisition sites and ESCs are the key players in regionalization due to their infrastructures and capacities. The ODE is looking for a solution that honors the strengths of the current system and does not undermine it.

Mr. Varda asked where community schools fit in. Mr. Nehls noted that both community schools and chartered nonpublic schools would be a part of the system, although nonpublic schools would be less involved.

Mr. Wilkins asked if ESCs have to meet ODE standards. The answer is that they currently do not, but pending legislation would require this. Mr. Nehls was asked how these questions are going to be answered by the end of March. Mr. Nehls answered that ODE is narrowing the range of options, and will take them back to the field. The ODE will also talk about the implications of the available choices.  This is ultimately a political process.  The ODE only makes recommendations to the General Assembly. Mr. Nehls observed that any number of regions is arbitrary, but, whichever number is selected, there needs to be a commitment to making it work.

After a lunch break, Chairman Davis reconvened the committee.  He noted that he is trying to begin building a consensus for the Committee's report to the full task force on December 18th. He observed that the Committee needs to pursue those things that it finds most promising.  Do we want more presenters or more research to answer continuing questions?  What are some things where we have consensus?  Chairman Davis asked each Committee member in turn for ideas.

Senator Gardner feels that regionalization of services is convoluted, so he is glad that the Committee is reviewing this. Staffing of hard-to-staff schools is also an important issue.

Vice Chairman Woods would like to look more at conditions of employment and compensation issues, and Senator Gardner agrees.

Barbara Sprague feels that service delivery should be at the top of the list, as well as compensation and staffing issues.

Richard Baker does not feel that 612 school districts are too many.  Consolidating school districts and taking schools out of the community is not good. We really need to look at how services are delivered, especially with the changes in technology He noted that the Committee might want to examine a study done by ODE and the State Board several years ago on the relative efficiency of school districts.

David Locke feels that the top five items on the Committee's list are good.  He would like to add regionalization issues that were discussed earlier today to this list. He feels that the number of school districts can be reduced drastically and that we can achieve efficiencies if the number of school districts is reduced.

Walt Davis' two favorites are the general area of hiring and compensation, plus centralization of functions, including the possibility of centralized contract negotiations.  His superintendents have pleaded with him to look at this issue to get them out of this business.

William Wilkins would like to look at some of the social services programs and make sure that school districts are receiving the benefits of them.  Schools should be the site for the delivery of these services (health care and some other basic services that children require).

Dennis Woods noted that there is no coordinating agency at the state level that oversees efficiency.  The Committee needs to focus on those big-cost items where we can make a significant difference.  We need to provide financial incentives for consolidations, as we did with ESCs (when we went from 88 to 60).  Mr. Woods also likes the potential of more aggressive collection of delinquent taxes The School Employees Retirement System (SERS) surcharge is an issue since it encourages districts not to hire part-time employees. The threshold is being raised to about $25,000, which will impact many noncertificated employees. The cost of this surcharge is going up dramatically.  Mr. Woods noted that in some cases, the SERS surcharge is more than the employee's salary.

James Mahoney stated that special education funding is an issue.  If a special education student moves after the October student count, the receiving district gets no state funding.  Another big issue is the regionalization of the delivery of services.  Mr. Mahoney likes the concept of performance audits. It is valuable to have somebody external look at your operations.  Health insurance is the other big issue.  How can we provide this coverage more efficiently?

Mr. Varda noted that, for special education funding, we have never determined actual costs and who should pay how much. What are the relative state, local and federal shares?  He is not sure if this is an issue for this Committee, but it is an issue Health care and perhaps transportation are two centralized costs that we could look at regionally or on a statewide basis. He cautioned that we may not be able to do the health care change right away.  It may be more of a long-term objective.  Transportation is a very disequalizing expenditure since poorer school districts tend to spend a larger percentage of their budget on this. He is concerned about the impact on voters relative to levies if the state begins consolidating school districts. Consolidation can create bad political situations for school districts.

Mr. Wilkins thinks that the committee is on the right track and has not gone beyond the boundaries of his charge He hopes that we can work with the General Assembly and the Department of Education to make expectations clearer He would leave alone those schools that are doing well, only intervening with those who are not doing well.  Mr. Wilkins observed that most governmental entities have extremely rich fringe benefits, especially for health care.  We need more balance between what the employees and the employers pay.

Walt Davis asked if we could install a system to replace local school district boards or board members.  David Varda is concerned about this, since board members are elected officials.  James Mahoney agreed with Mr. Varda.  Mr. Mahoney feels that there is already a process for dealing with school board members through the election process.

At its meeting on November 25th, the Committee will discuss various ideas that have been presented Task Force staff will help draft materials to help guide the discussion. The purpose is to surface areas of agreement and areas where further research is needed for inclusion in the Committee's report to the full Task Force on December 18th.

Chairman Davis adjourned the Committee at 1:55 p.m.


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THE FINAL REPORT
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