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School superintendents speak out on possible property tax law changes and hope lawmakers are listening.

That's this week in the state of Ohio.

Welcome to the state of Ohio.

I'm Karen Kasler.

Ohioans paid $16.7 billion in property taxes last year, and a report released this last week says those high property taxes are not leading to lots of spending by schools, but instead are making up for low state spending on K through 12 education.

A report from school funding expert Howard Pfleger and former state budget director Greg Browning concluded Ohio was dropped to 45th in the nation in the state share of K through 12 revenue from 35th a few years ago.

But the state has the eighth highest property tax rate in the nation.

The authors write that those most hurt by those property tax bills are the least able to pay them.

A task force convened by governor Mike DeWine is expected to deliver its recommendations on property tax law changes in a few days.

The panel is charged with coming up with ideas on combating those soaring property tax bills while still funding schools, police and other services.

But they'll have to deal with a lot of issues, including House Bill 920, which blocks rising home values from creating unwanted tax increases on homeowners.

It reduces the tax rate on all voted property tax levies in proportion to increases in property value.

There's an exception to that that guarantees a school district's effective tax rate cannot fall below 2% of a home's assessed value, or 20 mills, which is known as the 20 mill floor.

I sat down with three school superintendents to talk about the pressures they're facing from property tax payers, from lawmakers, and from the families of the kids that they serve.

First up, George Wood, superintendent of the Federal Hocking Local School District in Athens County.

A consolidated rural district that's huge in size, but small enrollment, just over 800 students and around 70% of them are considered economically disadvantaged.

The school board voted to cut a handful of teaching positions earlier this year.

You know, the state pressures us a lot because we have made the decision that even though we're small, we will keep open our small elementary schools.

They're the center of life in Coalville and Ames Field.

They're small schools.

There were people go to school and get a great education.

They're they're well-maintained.

We take great care of these buildings.

They're safe.

The communities in and out all the time.

They're community events.

But the state always pressures us to close those buildings and bring all the students to the high school.

Middle school, which, when you're on a 180 mile square district, that means kindergartners can run busses for an hour and a half each way.

So that's that's the big pressure.

Some state lawmakers have anchored on this idea that school districts are holding a lot of money in their operating budgets, a big percentage of their operating budgets, billions of dollars, and collected property tax revenue from voter approved levies that could be returned to taxpayers.

And the last budget, there was a provision that would cap that at 40% of the operating budget.

Governor DeWine vetoed that.

That would have affected your district, I can imagine.

Yeah.

I appreciate what the governor did.

And here's what I'd say to the legislators.

And I'm sorry, but this is none of their damn business.

We raised those taxes.

We saved those taxes.

We saved that money over years.

And then we're able to do things like we install a solar, generating plant on top of the school, which virtually eliminates our electricity costs.

But we did that because we'd been saving money for ten years.

I mean, that's bank robbery.

That's larceny.

That's our bank.

Our our community paid that money in knowing where it was going and knew that we would do things with that money that would make our schools better.

We put new rules on with that money.

It's not like the state's going to come down here and put a new roof on a school.

So this legislators, I mean, they're bank robbers, that's all there.

The goal of doing that and that cap, that cap 40%, with the rest being returned to taxpayers, was to provide some property tax relief.

And certainly there's some concerns about property taxes with this movement that we try to abolish property taxes, that volunteers are now gathering signatures to put that before voters.

Is that something because you are so dependent on school, on property taxes, for school funding?

Is that an effort that you're worried about?

Well, sure.

But let's be clear that effort is property tax should be reformed.

I get it.

The property tax system was put in place in this country in the 1700s, when only white males could vote.

And only white males could own property.

So it's what you paid to get to vote, right?

Things have changed.

Yes, we should do something different.

But can we just honest for a minute.

This is not about property taxes.

This is just about cutting funding to public services.

We have a legislature that seems to dislike fire departments, police departments, schools, roads, cemeteries, parks, anyplace they can cut taxes and taxes pay for all those things, right?

I mean, the other side of it, Karen, is that this is also the legislature exceeding its bounds and continuing to try and cut local control.

Property taxes are we can't we can't add to the state income tax.

We can't just raise the income tax like they can't we can't raise a big sales tax.

We don't have many businesses in our area.

The one thing we can do is go to our voters and say, do you like what we're doing?

Do you approve what's going on in the schools?

Here's our situation.

Would you be willing to pay a little bit more money and they get to vote?

I think I think what the legislature forgets is these weren't magically imposed on people.

People voted these in should the system be changed and improved?

Absolutely.

Happy to be a part of that.

But that's not what this is about.

Do you think that schools can get ahead of that message to taxpayers who are frustrated and feel like they're being squeezed, that they can't afford their property taxes?

And so, you know, nobody wants to pay property taxes, right?

How do you get ahead of that message?

Let me first say I don't agree that nobody wants to pay.

I happily write my check.

And I see the fire department down the street, and the streetlights come on at night and the children go to school.

Of course, everyone would like to keep all their money, but taxes are what we pay for living in the community, in a civil society.

Look around the world.

You want to live somewhere where the.

No.

No schools, no fire department?

No.

That's where you don't pay taxes.

I think the message to our community needs to be, and we need to be real transparent and real public.

In fact, we've got a meeting schedule in October where we will roll out our our three year forecast and we will spend hours with our community explaining, here's where this revenue comes from.

Here's what we spend on this.

We want to be really transparent.

That's the important thing.

So people go away thinking, yeah, that's good.

I like having Friday Night Football.

I like basketball games, you know.

Yeah, that's a good day.

What message would you send to lawmakers about that changes that you think could be made to help property tax payers who are struggling, but also protect school districts?

What would you like to see lawmakers do pay their bill.

They don't give us enough money.

The only reason we do this is because that they're ever we've all known the funding system is broken.

They made a shot at fixing it.

It worked for a little bit, and then they just threw that one out.

Come up.

And I know that, honestly, I know this is a pipe dream.

It's not going to happen.

They just need to come up with a fair funding system.

And they need to fund schools, not out of residual money like what's left after we've done everything else schools need to be.

And I am not disrespecting my friends in the police force or the firefighters, actually.

There you go.

Fund schools, law enforcement, firefighters, then do everything else I do know people on limited incomes.

I do know people that have, especially around here, they've inherited really large, beautiful farms.

And here comes folks from other places who think they're really beautiful and they start buying them and the price starts going up.

And so their appraisal goes up.

Maybe a cap on appraisal increases, maybe something like that, something that prevents an impact on the community.

This community can't control.

We can't control that.

There's a lot of money in Cleveland, Columbus, Cincinnati, etc.

and we live in a beautiful place and people want to come buy it.

I can't control that.

But when they do it, it runs up the value of everybody's property and everybody has to pay more.

I don't have any different property now.

I don't have a different job.

I'm still retired.

So maybe if they looked at it, it's good to have this conversation because I never thought about it until you ask that question.

I also spoke with Darrell Cupolas of the Cloverleaf Local Schools, which is proposing a fifth property tax cut in five years.

The 2200 student district is getting $23 million from the Ohio School Facilities Commission, which will allow it to pay off construction debt.

And Medina is the only Ohio county that has a point 5% sales tax for improvements to schools.

So cloverleaf gets some of that, too.

Well, I think that some people have the mentality that school districts and school district leaders just want to take, take, take.

I guess the message I'm trying to get out is that we want to be part of the solution.

I think that the nuanced approach that the governor is taking with his task force is a great step in that direction.

I think that some of the proposals that come, that we've seen out of the General Assembly are, very drastic solutions that have dire consequences.

On the other end of those, I'm not sure if those have been vetted to the degree that a task force like what governor DeWine is working with right now, that group is looking at the positives and negatives.

Every time you do something, something is going to give on the other end of that.

So it's taking that nuanced approach and understanding, what are the implications of this?

And so I guess as a school superintendent, I want to help to be part of the solution in my particular situation.

And I know that we are going through unprecedented property value increases.

As a 20 mill floor school district, we have the ability to give some of that revenue back.

That is a solution that we are choosing to do in cloverleaf.

And some state lawmakers really have anchored on the idea that school districts are holding a lot of money, billions of dollars in collected property tax revenue from voter approved levies that could be returned to taxpayers.

In the last budget, there was a provision that would have capped the carryover balance that a district can hold as a percentage of its operating budget, at 40%.

That was vetoed by governor Mike DeWine.

That would have would that have affected your district?

Oh, absolutely.

I think governor DeWine has, an understanding of school funding, that that goes beyond what that 40%, does.

Here's the problem with the 40%, cap on the carryover school district.

We just talked about the 20 mil floor.

So that is an exception.

I also talked about House Bill 920 from 1976.

So in general terms, if you're not at the 20 mil floor, what happens is you pass a levy and your funding on that levy is stagnant over the course of the terms of that levy for our in our case, it's usually ten year increments.

Cloverleaf.

So we pass a levy for ten years.

What happens over the course of that ten years.

Our personnel costs go up, health care costs go up, the price of goods and services go up.

But yet our revenue is stagnant.

So how do you go from one levy to another?

With a stagnant revenue source?

While when you first pass a levy, you are bringing in more money than you are spending.

But in time, when price and costs go up, you're actually spending more than you bring in.

That's how school funding works.

That's how a levy cycle works.

So we utilize a cash carryover balance to get us to a point before we have to ask for new revenue.

So it's part of our spending plan.

Cash carryover is not a rainy day.

That rainy day connotes an emergency.

No cash carryover is part of our metered spending plan.

And so to cut that, to 40%, in our case, that would cost us over $20 million.

It would the bigger problem is it would cost us needing to go back on the ballot, not just quickly, but on the ballot repeatedly.

And the more we go on the ballot, the more fatigue, levy fatigue we're creating, the bigger distance we're getting between school districts and taxpayers.

And the more, infuriating it becomes.

So that's my concern about a 40, 40%, cap on that.

I think the ultimate representation of levy fatigue may be this proposal to abolish property taxes, that you've got a group of volunteers that are circulating petitions to try to put that before voters next year.

You said you were concerned about some of the things that the legislature may be doing when it comes to property taxes, but are you concerned about this one?

And how do you get out there in front of that?

And talk to homeowners who are frustrated about their property taxes?

But districts need money.

I have talked in person to some legislators that are very fearful of this, property tax initiative.

But part of the conversation needs to be that there is another side, and that other side has not been discussed at the state level, much to my understanding.

And that is that if such a proposal is put out there, we still live in a civilized society.

We still need schools, we still need fire, we still need police.

Our property taxes cover that.

If someone's having a heart attack in your house, you want a paramedic to be there.

That requires a tax.

If your house is burning down, you want someone to be able to put that fire out that requires a tax in a civilized society.

We need kids to be educated.

That requires a tax.

If we're not doing it through a property tax, then the question is how are we going to do it?

Some of the people I have talked to non legislators, have ended the conversation with, I don't want to pay a property tax.

That's great.

None of us do.

However, how are you going to pay for those other things?

What is your answer to that?

The only logical answer would be some sort of consumption tax.

So food, clothing, those basic necessities that we need.

Well what percentage of a sales tax are we going to need to have in order to have these services?

What other kinds of taxes are we going to need to have?

And then the question becomes and property tax.

The more value your property has, the more you're paying.

But in a consumption tax we all have to eat.

So who is harmed more by that?

I also talk with Trent Bowers from the Worthington City School District in Franklin County, which includes that suburb and part of Columbus.

It's one of the state's larger districts with more than 10,000 students.

Worthington passed a levy in 2022.

When we went to the voters, we said, this is going to last four years.

We're going to be back in 2026 for an eight operating levy and a bond issue.

We have now said, hey, we want to extend the life of that, right?

We think 2026 is too early.

We can make this last until 2028.

But that cash balance allows that to happen because we are in deficit spending.

And so we're spending down some of that cash balance we've planned to utilize that, if arbitrarily, there was a cap on that cash balance that we had to refund that to our taxpayers.

That is a win to our taxpayers in the short term.

Right?

So in a single year, you're going to pay less.

However, we're going to have to come back and ask for, you know, an increase in our revenue.

And we're going to have to do that earlier than we had planned, because we no longer have that cash balance.

And so we, you know, we obviously understand, in many parts of Ohio, House Bill 920 is not working the way it was intended to.

Right?

So I think one of the challenges for our representatives is, they are filling in with historic property value increases.

This part of this property tax challenge, in, in their local communities when there's a reappraisal, their school district might be getting all of that money from the reappraisal.

And so that's a that's a quirk in the system, but I'm not sure they understand that in our suburban districts.

And we have lots of advantages.

Let's be honest.

But in our suburban districts, House Bill 920 is treating that differently than it is and 3 to 400 other school districts.

And so I think people come to Columbus as a representative.

They know what happens in their area, and they want to make sure there's a shift.

And so part of what we would be saying is, okay, let's look at this, more collaboratively.

We do appreciate the governor's work group because there's a couple superintendents on there.

They can tell their story, you know, how does it work in Fort Frye?

Local.

How does it work in Dublin?

Those are totally different stories.

And we need a system that's that's not a sledgehammer, but that works for all parties.

You're also concerned and you've raised concerns about a bill that would eliminate the 1% of property tax value that schools and local governments can levy without voter approval, known as inside millage.

Yeah.

I mean, so, you know, inside millage for us was about $14 million a year.

And so again, if, if those two things were to happen.

Right.

So when we talked about that, if all of a sudden we didn't have our cash balance that we that we had counted on and we lost, say, $14 million a year, then we obviously need to either immediately go back to our voters and ask for a revenue bump to replace that money we lost.

And we're fortunate in Worthington.

There's a reasonable chance our voters would approve that and say, hey, we don't want to make reductions.

But the other option is you have to make reductions, right?

You have to reduce your budget to meet the revenue.

That's talking about cutting teachers.

You're talking about cutting.

Yes, you have to.

Right.

Because we're a service industry, so 85% of our budget is salary and benefit of employees.

We're just like a health care organization.

We hire people to work with kids.

We don't have a lot of, extra fun stuff.

We have a water bill, we have a gas bill.

We have an electric bill just like everybody else, a giant internet bill.

Right.

So, there's not all in that, you know, budget.

Most of it is people.

So the only way to make a meaningful reduction to a budget is to modify people.

Now, that could be reducing positions.

That could be changes to a collective bargaining agreement.

Right.

But employee compensation is the driver of cost when it comes to school districts.

Because we're a service industry, Worthington often makes the lists of wealthiest suburbs in Ohio.

But your district is not necessarily a wealthy district.

I mean, 31% of your kids are economically disadvantaged, so you don't have the advantages that some wealthier districts do in terms of the money.

That is coming in.

Yeah.

So I mean, obviously, you know, Worthington Schools is super fortunate.

We have an area that cares deeply about kids.

It's been foundational in our Worthington community, and we are property wealthy, right.

So, in a system that relies on local property taxes, Worthington is wealthy.

Now, the income of our residents is more mixed.

You know, 30 some percent, as you mentioned, of our students, do qualify for free and reduced lunch.

That makes us, like many of our suburbs in the Columbus region on the 270 outer belt.

So we have tons of advantages.

But we are a community that serves a diverse student population, 10,831 kids this year.

Over 1000 of them speak a language different than English.

1500 qualify as students with special needs.

So obviously we need a lot of resources to work with, our student population and provide for them what our community expects.

What is the pressure like for school districts to come up with different solutions with all of the hurt that property taxpayers are feeling, what's the pressure like on you folks to come up with different ways to do things, come up with different ideas to try to make this a little bit easier on taxpayers?

Yeah.

I mean, so, you know, with the historic rise of property values, and when I started my career, so I started in the 1990s, I've gotten old, residents, farmers and residents are paying about 50% of the property tax and businesses paying about 50%.

You know, we've made a lot of state tax changes, policy level changes over the last 35 years.

So now residents are paying 67% of that share of businesses, paying 33% of that share.

Some of that's been positive, right?

So we've we have brought business and jobs to the state of Ohio.

When we talk about reducing the income tax for working families, that might be a positive change.

But the challenges with that shift to local property taxes and residents paying more, if I'm a senior citizen or if I'm on a fixed income, that's pretty significant.

Now, again, I think in the suburbs, House Bill 920 has reduced the challenge, as it was intended to.

So when there's a reappraisal, Worthington values have gone way up, but our tax rate has gone down.

As that happens.

And some people have seen a reduction in taxes when that happens.

And so I think the conversation in the suburbs might not be as acute as it is in a small farming community, because in some of those communities, with reappraisal, the school district has captured the full amount of that reappraisal.

And I can understand my farm might not be worth more unless I sell it.

And all of a sudden I've got a much larger bill.

So we obviously, you know, we want a system, that is predictable and sustainable for schools.

Right?

We rely on local property taxes because that's the system that Ohio set up for schools to rely on.

And so that's the system that we've used.

If that system shifts, I think that's okay with us.

If there's a better model out there, we would just want that to be thoughtful.

We'd want there to be a plan in place, something that can be phased in so that it helps taxpayers.

But also provides the local services for schools, police, fire that honestly, all of our communities desire.

Veteran Republican lawmaker Bill Seitz, the co-chair of DeWine's working group.

He has suggested there are two tax relief ideas that could come up in the group's recommendations to the governor.

A circuit breaker which cuts taxes at a set percentage of income, and an increase in the homestead exemption for older and disabled homeowners.

But both of those would require state funding.

That is it for this week for my colleagues at the Statehouse News Bureau of Ohio Public Media.

Thanks for watching.

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Support for the Statehouse News Bureau comes from Medical Mutual, dedicated to the health and well-being of Ohioans, offering health insurance plans, as well as dental, vision and wellness programs to help people achieve their goals and remain healthy.

More at Med mutual.com.

The law offices of Porter, right, Morris and Arthur LLP.

Porter Wright is dedicated to bringing inspired legal outcomes to the Ohio business community.

More at porterwright.com.

Porter Wright inspired Every day in Ohio Education Association, representing 120,000 educators who are united in their mission to create the excellent public schools.

Every child deserves more at OHEA.org.