Saturday, March 24, 2012

Win-Win in the News Again

One of the very first articles I wrote for this blog, back in January 2007, was about the so-called Win-Win Agreement between Columbus City Schools and several of the suburban school districts in Franklin County.

Now it appears that the Win-Win Agreement is back in the news again.

The Win-Win Agreement came to be in order to settle a dispute that flared up in the late 1970s between Columbus City Schools (CCS) - who wanted the State Board of Education to realign CCS's boundaries with that of the City of Columbus - and the suburban school districts, which at the time were seeing rapidly accelerating growth in new housing developments that were in the suburban school districts, but within the City of Columbus. CCS was becoming concerned about the "white flight" to the suburbs which was occurring in reaction to the Federal Court order to desegregate CCS through the implementation of a busing program.

In truth, the dispute was less between the CCS and suburban districts than it was between CCS and real estate developers. The land developers and homebuilders were becoming concerned that if CCS prevailed in their demand to have the CCS district boundaries made coincident with the City of Columbus boundaries, it would stop the "white flight" new home construction bonanza in its tracks.

For whatever reason, and through whatever means, developers and homebuilders have always held great political power in central Ohio. So while my neighbors and I in Golfview Woods, one of the disputed developments, freaked out about having our brand new homes we had built in the Hilliard School District sucked into Columbus City Schools, our voices meant pretty much nothing to the politicians. But when the developers and homebuilders got in the game, dealmaking ensued.

Nonetheless, it took a little while to sort out, and the parties agreed to at least a couple of one-year moratorium periods while the deal was crafted. The General Assembly eventually got involved, creating laws that not only enabled the Win-Win Agreement, but also encoded some of it into the Ohio Revised Code.

While the developers are not named parties to the Win-Win Agreement, they were clearly the winners. Subsequent to its adoption, the housing boom resumed, and the Hilliard City School district began growing at a rate that led us to build a new school building pretty much every year between 1989 and 2002 (13 buildings in 14 years). We all bear the cost of paying off the bonds issued to finance the construction of all those those buildings, and with every new house built, we subsidized an increasing share of the cost to educate the kids who live there.

Key to the settlement of the Win-Win Agreement was a requirement that the suburban school districts make a "revenue sharing" payment each year to CCS. I prefer to call it a ransom payment, and ours has been $1 million per year for a number of years.

Some say that this $1 million ransom payment is a good deal for Hilliard Schools, as we collect much more than that in property taxes on the parcels within the area covered by the Agreement. While is true that we collect a substantial amount of tax revenue from the commercial properties within the Agreement area - such as the Columbus part of Mill Run, and the substantial retail corridor on Hilliard-Rome Rd - this analysis is incomplete.

To get the full economic picture, you also have to take into account that more than 7,000 of our students - 47% - live within the boundaries of the City of Columbus. That carries a price tag of more than $80 million dollars per year, given our current per student cost of $11,475/yr, half of which is paid with local property taxes.

From an purely financial standpoint, there is no question that Hilliard City Schools would be better off letting CCS take all the territory within the City of Columbus, the tax revenue that goes with it, and also all the 7,000 kids we're spending $80 million/year to educate. The state law would require CCS to buy from us a commensurate number of school buildings as part of the process.

But we have to take note of a key point: Those houses and apartments now in the City of Columbus were never served by CCS. The land they were built on has always been within the boundaries of the Hilliard City School District, and were in one of several townships until annexed into the City of Columbus, as was required by the City of Columbus in order for the City of Columbus to agree to provide water/sewer services.

Elizabeth Warren, the Harvard Law professor, expert on bankruptcy law, and advisor to the Obama Administration, has said - accurately I believe - that one of the reasons for the housing bubble was that families use every dime of money they can scrape up to buy a house in the best school district they can afford. Demand exceeds supply, and prices go up - one of the most basic economic principles. The cost of a house has become the price of admission to a well-respected school district, and a primary factor in the resale value of that house in the future.

Those homes within the Win-Win areas were built there because folks wanted to get their kids into Hilliard City Schools, or at least wanted the real estate benefits of owning a home in our school district. I know - as I said we built our first home in Golfview Woods for precisely this reason.

To just exit from the Win-Win Agreement would mean telling half the people of our community that we don't want them any more, that we don't care if their kids are booted out of Hilliard Schools, and that we don't care if their property values are further eroded after being absorbed into CCS.

I think the more sensible outcome is for the parties to agree that the Win-Win Agreement served its purpose during a unique time in our region's history, but that these ransom payments are no longer appropriate - too much has changed in the ensuing years.

In our part of the county, the Big Darby Accord is in the process of becoming established as the policy structure which will dictate future development anyway.

April 4, 2012: The Columbus Dispatch ran this story in regard to incorrect billings sent by Columbus City Schools to the suburban districts who participate in the Win-Win Agreement. Hilliard Schools will need to pay the full $1 million 'ransom payment' plus $96,000 in accumulated errors in billings over several past years.


  1. I see Columbus Schools have suspended payments for 1 year, so does that mean HCSD is $1m better off?

    Any guesses as to how fast the district spends it on something frivolous?

  2. Until we hear otherwise, we have to treat the $1 million as a payable.

  3. As suspected, we still owe the $1 million, plus another $96,000 due to past billing errors on the part of Columbus Schools. No windfall here.

  4. I say stop paying them and let them fight the homeowners. I'm not sure why they think they are entitled to anything that was never in their district. I pay for water and sewer each quarter, so why do they think they need a million dollars too? Mom3XY

  5. The "Cold War" continues without a shot being fired. Here's the Dispatch reporting that some believe school districts in neighboring counties should protect their boundaries by signing on to the Win-Win as well.

    You can be sure that the people pressing the hardest are the developers who see the value of their real estate holdings being threatened - which is what brought us the Win-Win in the first place.

  6. Could Hilliard selectively give back territory or is it an all or nothing? Seems like the % of kids affected is too high to ever consider making this switch. Hilliard Schools would go from big to small in an instant.

  7. Under normal circumstances, the only thing a school district can do is appeal to the State Board of Education to shift boundaries. They are inclined to do this only when it realigns school district and municipal boundaries.

    Of course, the Win-Win came to be precisely to prevent Columbus City Schools from trying to convince the State Board of Ed to realign the boundaries of the City of Columbus and Columbus City Schools.

    So for us to cede some of our district to Columbus City Schools, we would need CCS to agree to renegotiate the terms of the Win-Win Agreement, which they are not likely inclined to do. If they renegotiate with us, all the other school districts who are party to the Win-Win would probably want to renegotiate too.

    Then there is the matter that some of the Win-Win Agreement is encoded into Ohio law. I'm not a lawyer, but unwinding that would not likely be very easy.

    We could just choose to not renew our participation in the Win-Win the next time it expires, in a few years. That leaves it open to CCS to apply to the State Board of Ed to move the boundaries.

    As I've said many times, having lived in a Win-Win area when this battle was being fought, I'm not interested in throwing my friends and former neighbors under the bus - especially when most of them have lived in the district for 30+ years.