Public school districts in Ohio must file a Five-Year Financial Forecast with the state department of education each October, with an update in May. This forecast lists revenue and expenditures for the current fiscal year, as well as the next four fiscal years. In addition, the district must list the assumptions used to create the forecast.
So, the district files its forecast in October 2007 stating that it will have a $2 million deficit at the end of FY09. The assumptions show that the assumed increase in base salaries is $1.93 million. On top of that, the district pays an additional 14% of employee salaries to the state retirement systems. This means that the increased salaries also increase the district's employee retirement contribution by $270,000. Therefore, the total cost for FY09 salary increases is more than the FY09 deficit. Got that?
So, negotiating a zero percent salary increase clears the deficit. 
Isn't that onerous? Not really. Keep in mind that teachers will still see an average increase for next year of 3.7%, based on step and education increases. Given that an average salary increase of 3.7% is above the standard for the private sector, and given that the district assumes it will fund an additional 12% of employee insurance costs -- well above the private sector, it's obvious that a levy failure and the implementation of this simply plan will keep things business as usual; not the catastrophe that the superintendent claims it is.
A simple solution.
 The district's Five-Year Financial Forecast is here.
 Or, the district could control healthcare costs and still provide a salary increase, in addition to the step and education increases.