Over the years since moving to Hudson I've discussed questions of spending and levies that are required to finance our school district. I don't think anyone will disagree that the largest budget item in any school district is labor / personnel be it the teaching corp or administrative, maintenance, etc. Has anyone ever really asked what is in these contracts and what their cost implications might be based on the type of accounting system under which the current school system operates? I apologize for the following somewhat long-winded explanation but it is necessary to perhaps also explain some of the problems we will soon face as Hudson City property/income taxpayers. Does the school system operates on a "CASH BASIS" like many governments in Ohio, or an "ACCRUAL BASIS" as most businesses are accustomed to operating? I suspect that our Hudson School district operates on a "CASH BASIS" for its daily operations, but reports on an "ACCRUAL BASIS" for certain period-only to the State of Ohio to meet the State's requirements. More on this later as it is also important.

You might ask why this is important? "ACCRUAL BASIS" means you must recognize an expense in its entirety at the time it is incurred (via purchase order or contract) or earned which means every day in real time.

Lets take just one example of what goes on in the Hudson School District:

Teacher/administrator contract-mandated "accumulated sick leave" The cost of that accumulation is mounting and under an ACCRUAL BASIS system would be posted to the system and completely visible at the time it is earned from an accounting and citizen perspective. Under this system that amount is also a continuing reporting budget liability and therefore must appear in all trial, monthly, annual balance sheets as a liability until it is consumed and paid-for via payroll by the person retiring or taking the leave of absence or via actual sick time taken. That means that the expense cannot be put off for years but must be carried forward on each report that shows that accumulation's value in real time.

"CASH BASIS" accounting does not recognize liabilities which means that the above accumulated sick leave can be virtually "hidden" from reporting view because while it theoretically continues to accumulate based on union contract, it is not consumed or recognized until it is actually used and therefore doesn't appear to have value and is not required to be a liability budget line item or reported liability that is visible to the Hudson City taxpayer yet the contract says it must eventually be paid. it is effectively a school system IOU to its unionized or admin staff. Guess who actually owes the money? You the taxpayer!

Over the years Property Tax receipts which paid for the schools before income taxes have always been appropriated and collected in arrears and that is why cities have used "CASH BASIS" accounting, but the convenience of "CASH BASIS" has also been cleverly used by governments and agencies to not reveal thier spending via benefits awards on contract for many years. They always avoided that someday when some future administrations must pay the piper as the benefits that are coming due are used by personnel.

We know from conversation with people in the school district that Hudson allows "sick leave accumulation" by its personnel at levels up to and including a possible greater than 100 days carried over for the entire tenure of said personnel.

This accumulated "LIABILITY" (via contracts not being negotiated very wisely over the years) has an enormous actual dollar value when paid out because it comes due in today's contract dollars when people retire from the school district and collect the cash-value of that accumulated sick leave per their current contracts.

This benefit is a hidden retirement cost not associated with any Hudson School District retirement program. Not only that, under current contract the retiring teacher etc. only need work thirty (30) days of their last year's tenure in order to collect the potentially entire greater than 100 days accumulated sick leave benefit when retiring.

Even if the Hudson School District says it is using ACCRUAL BASIS accounting methods, when was the last time anyone heard the accumulated sick leave benefit liability being mentioned?

We know this condition exists because we know people who will be taking advantage of it.

That begs the following questions:

What commercial business would ever be crazy enough to allow that kind of union contract to be negotiated in the first place, especially on a continuing basis over many many contracts? Doing so would potentially bankrupt a "for profit" business.

Why is this not a published part of the Hudson School District retirement program that is made known to the general public and voted upon by those that will be paying the bills? (Businesses were required by the Federal Government to show / carry such retirement benefits at actual value on their balance sheets years ago. Due to prudent business practices this obviated any accumulated sick leave policy and that is why most expire on an annual basis.)

2. What is the current value of this potentially unfunded accumulated liability to the Hudson City taxpayer?

3. Since much of the teaching corp and administrative staff in Hudson City Schools are reaching their potential retirement age in less than five years, why hasn't this information been revealed to the Hudson City taxpayer ?

4. Why is it probably only being planned for by requesting levies to defray the eventual cost?

5. Why aren't the school board and superintendent opening this disasterous portion of the current contracts to renegotiation? (How about acting like New Jersey?)

6. Does anyone realize that given the average salary of a Hudson School teaching person that a large scale exodus via retirement might bankrupt the system?

7. Here is why.... Let's just say hypothetically that the average Hudson teaching salary is $ 60,000 per annum (it's much larger for most especially based on 180 day school year versus 240 average in business. Observe the ratio-value of pay rate (salary) versus hours-necessary-to-earn-that-salary and the number compounds to a greater $$$ extent in favor of the school personnel) Each year their contract has awarded a pay raise to elevate the liability even more.

If the average tenure of the teaching staff has allowed the maximum of > 100 days accumulated sick leave (have asked this question of many) then that is potentially one (1) full year salary liability for each teacher /administrator or $ 60,000 per person. (400 x $60k)

If the staff count of teaching and administration is greater than 400 and even if only half are nearing retirement, then at least 200 would be eligible to take advantage of their accumulated sick leave benefit. What if we have that group retirement event?

Let's see:: The math would be $ 60,000 x 200 = $ 12,000,000.00!!! Due day one of their retirement !!!!! Want to bet this is an unfunded liability? It may be if they are using CASH BASIS Accounting on a daily basis. All of this money is in addition to any retirement funds committed via the normal district retirement program!

This generates the real question about the coming Levy we are being asked to vote upon.... Is it funding this benefit to the detriment of the Hudson City Taxpayer? Are they expecting 1/4 of the teaching/admin corp to retire? ( Just about equals the Levy request doesn't it?)

Will the school board and superintendent have the guts to end this fiscal madness and terminate this benefit program?

What say you Hudson School District?

Wouldn't it be great if the Hudson Hub Times would investigate and do a complete report on this phenomenon to its public?