Ohio school groups are asking lawmakers to cut from the state budget a provision that Republicans say will provide immediate property tax relief, but districts say will cost them billions of dollars. But GOP leaders are suggesting that's not going to happen.
The budget introduced by House Republicans includes a 25% cap on the amount of money schools can carry over in their operating budgets, which are mostly funded by property taxes. Districts would be required to return anything over that to property tax payers—a plan GOP House leaders say would put money sitting in district accounts into taxpayers' pockets without shifting the burden to the state.
"This change will result in a catastrophic loss of billions of dollars of school revenue—maybe as much as $5.1 billion, seemingly overnight, while also eroding the hard fought increases for schools in this budget," Paul Imhoff with the Buckeye Association of School Administrators told the House Finance Committee. "Schools will face immediate and massive cuts to student programs, and nearly every school district will be forced to place a levy on the ballot far sooner than planned, while also having to return to the ballot on a more frequent basis in the future."
Republicans who proposed the plan say the 25% idea came from school officials as an appropriate amount to hold in reserve. But school groups have said that's the minimum carryover amount for a district to preserve its bond rating, and districts could hold more than that for a variety of reasons - for instance, reaching a level of financial stability allows them to proceed with a strategic plan to improve a district's facilities.
School officials hit with questions by lawmakers about carryovers
Republicans have said cash carryovers held by districts have grown from $3.6 billion in 2012 to $10.5 billion now. They challenged school officials in committee on what would be an appropriate maximum carryover amount for a district to hold.
"Should there be any upper limit? I mean, a school district with 68% carryover, $161 million in the bank—is there any limit that your organizations think would be reasonable?" House Finance Committee Chair Brian Stewart (R-Ashville) asked the school groups. “If you have $161 million in the bank, why should we continue to throw money in the pile over and above that?”
Katie Johnson with the Ohio Association of School Business Officials said that a carryover number represents one point in the long cycle of a district's budget - which can be very large. And she noted some districts are heavily funded by the state, while others get the bulk of their funding from local property and income taxes.
"A snapshot in time on every district in the state is not an accurate picture of their financial health," Johnson said. "When you're talking about an upper limit, there's not a straight answer because every district is different with the volatility of their expenditures and their revenues, depending on how they're funded."
Rep. Marilyn John (R-Richland Co.) asked about financial stability and strategic plans, saying she's heard of complaints from constituents who don't like how districts are using their money. Johnson said those questions are better posed to elected school board members rather than state lawmakers.
School groups ask for pause on cap idea for now
Imhoff asked for the 25% cap plan to be removed from the budget and proposed as a separate bill.
"We fully support property tax relief for Ohioans and understand the importance of that," said Imhoff. "But this proposal has the potential to jeopardize the financial health and stability of public schools and the students that we serve. And quite frankly, we see this as possibly the largest change in property tax legislation in the last half century. And it appears we're attempting to do this in only a week's time."
Stewart asked the school officials if they have supported any proposal that resulted in a decrease in the amount of property tax collected. Johnson said the groups have supported targeted means testing, which would help taxpayers on with fixed or lower incomes. Stewart said that wasn't an answer, and suggested the cap plan is staying in the budget.
"If folks want to sharpen their pencil, make edits, propose something different than 25%, put some extra provisions in here, work on extra guardrails—that's where the time should be spent," Stewart said. "But if the ask is just going to be take it all out, we're not going to go down this road. I think that's going to be a waste of time."
House Speaker Matt Huffman (R-Lima) has said he expects a floor vote on the budget next week.
