Schools worry as property tax reform seeks to change levies, millage

Ohio public schools' overreliance on local property taxes is a well-worn issue. Declared unconstitutional nearly three decades ago, formula fixes have come and gone in the state Legislature while the gap between state and local funding for districts continues to widen. Now, efforts to reform property taxes — the bulk of which fund area schools — have local superintendents sounding the alarm on what those changes may mean for their district's budgets. In a series of letters sent to the Chronicle-Telegram, superintendents from every district in the county cautioned that proposed legislation in the state, alongside the increase in the homestead and owner-occupancy credits in the county, will harm districts and prevent them from generating the local revenue needed to maintain their programs and services. "Schools are often blamed for why taxes are going up," said Franco Gallo, Lorain County Educational Service Center superintendent. "If the state did more of their share, we would've have to go to taxpayers — instead, the state share keeps going down … and the local share goes up because communities want the best schools they can have." The issue is not just in Lorain County, Gallo said, but across the state as politicians in Columbus look to lower constituents' tax bills. Proposed legislation Over the past three decades, the amount of homeowners' property taxes that go toward their local schools has skyrocketed — from about 47 percent in 1991 to nearly 70 percent now. Gallo said that does not mean schools are getting rich off that increase in funds. At the same time as local tax amounts have increased, state support has dwindled, he said, making schools more reliant on tax levies to remain afloat. "It's really easy to create this system where the schools appear to be a problem," Gallo said. It is an appearance only made worse by reappraisals that saw property values spike an average of 31 percent in Lorain County in 2024. Homeowners began paying taxes on those new valuations this year. The state tax code meant the revaluation triggered a reduction in millage that dropped many school districts below the state minimum of 20 mills of funding – commonly referred to as the 20-mill floor. That increase in local dollars, in turn, meant less support from the state. But local tax bills continued to rise and legislators have aimed at the problem by proposing changes to minimum millage, changes or eliminations of certain levy types, even eliminating property tax levies for school funding altogether. State Rep. Gayle Manning, R-Avon, said legislators are trying to find a fix that "works for everybody," but recognized some taxing entities are harmed by the legislation. House bills 129, 186, 309 and 335 all look to tackle property tax reform on the heels of legislators' vote to override Gov. Mike DeWine's vetoes in the state budget this summer. The party-line vote to override DeWine's actions included eliminating local government and school district authority to place new emergency or replacement levies on the ballot — which is now at the heart of HB 129. House Bill 129 looks to require all current fixed-sum levies be included in the calculation of a district's 20-mill floor and bar renewal of substitute levies, and only allow emergency levies to be renewed once. It recently passed the House and is now in the Senate for further discussion. Substitute levies are relatively rare in Ohio — but four districts in Lorain County rely on them. The levy type is just what its name suggests: a substitution for an existing emergency levy as a new fixed-sum levy that grows as new real property is added to the tax base. North Ridgeville is one of the districts in the county to have that levy type — a $12 million-per-year measure that is its only property tax levy at this time, Superintendent Roxann Ramsey-Caserio said. The suburban district has an annual budget of about $58 million, she said, and if it cannot renew that substitute levy as a "no-new-money issue" for residents, or if its renewal were to fail altogether, it could spell a major loss for the district. Its current substitute levy would need to be renewed in 2029. House Bill 186, which, like HB 129 recently passed the House and is in the Senate for further discussion, would take a retroactive look at property values and inflation in a bid to reduce taxes by authorizing a property tax credit for owners whose school districts are on the 20-mill floor. Under the bill, taxpayers would receive an "inflation cap credit" for the excess taxes charged and paid above the inflationary collections limit, according to the Legislative Budget Office's analysis. A provision amended into the bill before its passage out of the Ohio House would make schools whole for lost revenue through the state's Sales Tax Holiday Fund for tax years 2025 and 2026. Manning said she pushed for districts to be reimbursed their loss after she learned she had schools in her area set to lose more than $9 million over three years in the provision. "I basically said, I can't support this," she said. "We can't hurt our schools." Soon, a $400 million fix in the State Tax Holiday Fund was found. She said her colleagues have been open to hearing how proposed changes may negatively impact districts. "It's a battle to find the dollars I think we need for public schools," she said. House Bill 335, passed by the House and now awaiting further tweaks by the Senate, limits growth in property tax revenues from inside millage based on inflation. Senate Bill 93, recently introduced and referred to the chamber's Finance Committee, would eliminate property taxes from the way schools are funded altogether. SB 93, introduced by Sen. Andrew Brenner, R-Delaware, would trade school's property tax levies for a statewide property tax and increased sales tax to fund public schools. It would also change the state's per-pupil funding formula. The state's funding formula has been contested for more than 30 years, with an Ohio Supreme Court decision in 1991 finding its overreliance on local property taxes unconstitutional due to the disparity in tax base between rich and poor districts. The most recent biannual budget failed to fund the final rollout of the Fair School Funding plan and did not update the input data used to calculate the cost of educating students. Choices made State Sen. Nathan Manning R-North Ridgeville, said it is a priority in the Senate to address the bills sent over by the House sooner rather than later — while threading the needle of meaningful property tax reforms and not harming local schools' coffers. "I've tried to express to the schools, if we don't do anything, that's not a solution," Manning said. "We need to sit down and roll up our sleeves." He recognized any time there is a change, there is an impact on local schools and communities across the state in different ways — what may be crippling for one district in a corner of the state may have little to no impact on another. State Rep. Joe Miller, D-Amherst, recognized the issue is confusing, with skyrocketing home values resulting in homeowners paying a huge increase in their property taxes. "Two things I think need to be understood is the state has reduced its share of instruction investment in our public schools to the lowest amount ever in Ohio history," Miller said. "While at the same time, tax breaks and giveaways for corporations and businesses have … leveraged that (tax) on the backs of farmers and homeowners up to now 70 percent of revenue is derived from those two instead of an equally shared investment by business and corporations." By the state not fully funding local schools — in part by forgoing funding of the Fair School Funding plan in its most recent budget cycle — it has placed the burden even more on local residents and property taxes, Miller said. "The bottom line is it costs X amount of dollars to educate children and the General Assembly are making choices and those choices are for billionaires over children," he said. Schools want to help lessen tax burdens for families, Ramsey-Caserio said, but it has to be a balanced approach to fixing property taxes. "It can't simply be on the backs of public schools," she said. "We're currently 45th in the nation in state funding for public schools. … Our cost of running schools goes up every year but the state support hasn't kept up with that." She questioned if the whole system needs to break for it to be fixed. Gallo said the answer to tax reform would have been a "circuit breaker" bill to cap property taxes proportionate to a resident's income, prior to their ballooning out of control. Policy Matters Ohio compared the measure to an electrical circuit breaker, which prevents electrical current from overloading a system. So too would a tax circuit breaker bill keep property taxes from overburdening income-qualifying households. In 2024, the think tank estimated that one in six Ohio taxpayers would benefit. But that legislation did not happen, Gallo said, and now Columbus is taking a microscopic approach to fix the problem. "This is really an attack on public education," Gallo said — something he did not want to believe was happening. No safety net The Statehouse's myriad proposals in the House and Senate come while a group of citizens hopes to see property taxes eliminated altogether. A ballot initiative seeks to prohibit taxes on real property altogether – and may have the support to do it. Citizens for Property Tax Reform, the grassroots organization behind the potential constitutional amendment, told The Ohio Capital Journal it had "well over 100,000 signatures" of the 415,000 needed to get it before voters. One thing school leaders and legislators alike agree on is if that initiative passes, it will decimate school funding. Miller called the potential of zero property taxes a harbinger of chaos and destruction of public schools. Both Mannings echoed his concerns. "Nobody likes property taxes, myself included," Lorain Superintendent Jeff Graham said. "But right now, it's the only opportunity we have to support schools around the state." Lorain Schools is in survival mode, Graham said. It has a looming deficit in its financial forecast, even if its two upcoming renewal levies pass, and it has already lost about $4.1 million in state funds and anticipates another $1 million loss in local tax funds due to the county's doubling of the homestead and owner-occupied credits starting next year. "We need property tax relief, but when you ask what Plan B is, what's the safety net? There isn't one," Graham said. "... (School funding) doesn't make sense because it's not grounded in logic or math — it's just politics." Contact Carissa Woytach at (440) 329-7245 or cwoytach@chroniclet.com.