4.3.1 $12,000,000 Tax Hike
An additional question facing our community:
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What happens when 18 percent of school district revenue is cut off?
- Will the burden of replacing the lost revenue be shifted to residential and commercial property taxpayers?
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Will the school reduce its expenditure level an equivalent amount?
Before addressing that question and the board’s response, here is some background. In fiscal year 2005 (2004-2005 school year) Sycamore received approximately $12 million, or over 18% of its funding from the Tangible Personal Property Tax (TPPT). It is a property tax on business machinery, equipment and inventory. The TPP tax was eliminated in 2004, because it was a roadblock to income growth and job creation in Ohio. Since then the school has been receiving a full reimbursement of those TPPT funds from the state. Beginning in FY011, the state will start the phase out of these reimbursements. The reimbursement will end in the FY2018 resulting in a loss of annual revenue totaling $12 million.
Sycamore’s Five Year Forecast Assumptions dated October, 2005 included the following message. By implementing this change in the tax structure and providing reimbursement of funds lost for a period of time, the state has given school districts time to make adjustments to their expenditure patterns to prepare for this long-term loss of finds.
Board response: Our capped budget approach has been discussed in many of our Board Meetings held in public. As much as we would like, we have no control over Ohio State Legislators who have eliminated (phased out from 2011 – 2018 the Tangible Personal Property Tax for all school districts). Thus, our forecast reflects this phase out and is incorporated in our planned revenue base. We think our capped budget and under-spends for the past several years has cushioned this impact as best we can for property owners including residents and businesses.
DISSECTING THE STATE BUDGET
TAXES
Early phase-out would affect schools
.. Proposal: Accelerate the phase-out of tangible personal property taxes -the tax on commercial inventory and machinery. Many school districts rely heavily on this tax. Originally it was supposed to start being phased out in 2013 over five years, but Kasich’s budget starts phasing it out next year.. Local impact: The local impact depends on which of Ohio’s 614 school districts you live in. Districts that are home to a lot of big industries (Princeton, Sycamore, Mason, Cincinnati) get bigger percentages of their revenue from the tax and therefore will take a bigger hit from the phase-out than the less industrialized districts.
. Pro: The phase-out was initiated to spur more capital investment by businesses and thereby create more jobs.
. Con: The early phase-out means school districts must either find other ways to make up this revenue or cut expenses.
. Who’s affected: About 20 school districts rely heavily on TPP taxes. The accelerated phase-out means Cincinnati Public will lose $13.6 million next year (3 percent of its budget) and $17.4 million in 2013 (3.7 percent).
-Jessica Brown, The Enquirer Wednesday March 16, 2011 A6
Sycamore school taxpayers have had almost zero leadership about the looming $12,000,000 loss state revenue. The board’s ‘capped budget approach,’ spending increases and lobbying state Legislators efforts will not be enough. They will say they have done everything they could, so now we have to raise taxes. Mark my word! The 2011 Teacher contract settlement will very likely continue the upward exorbitant compensation trend.
Changing state law to offer school districts more flexibility over personnel during times of funding cuts is critical for helping them maintain their academic performance..
Something has to give. The state can either raise taxes or cut programs (or both) but Governor Kasich and the legislative majorities in both chambers were elected in November on the promise not to raise taxes. So cuts will be made and, as K-12 education eats up about 40 percent of the state’s revenue, schools and school employees will bear a share of the pain.
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Can this be done while protecting children and their learning? We know, for example, that relying on seniority-based layoffs to close fiscal gaps hurts pupil achievement. Last-hired/first-fired also hurts high-poverty schools, which typically have more junior teachers. Seniority-based RIFs will also trash some of the state’s most innovative schools – like STEM schools – because they’re new and staffed largely by younger teachers.
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I made this case to the group of teachers in Dayton the other morning and they unanimously rejected it. They defended seniority on two fronts. First, they insist that district officials will RIF their most expensive teachers first simply to save money. Second, they said, Ohio doesn’t have a decent system for measuring teacher performance and test scores—they insisted—don’t prove much and certainly not the caliber of a teacher’s effectiveness.
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Further, they kept asking, why the rush? Why all of the sudden is the state needing to make these changes? The teachers felt that GOP lawmakers are attacking them in retaliation for their unions not supporting Kasich in the last election. They seemed completely unaware of how thoroughly they (and other Ohioans) had been left in the dark these past few years about Ohio’s impending budget cliff, thanks to the federal stimulus dollars, some tricky accounting at the state level, and former Governor Strickland’s celebration of his hocus-pocus school-funding scheme, which promised billions of non-existent new dollars for schools over the next decade.
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Earlier this week, the self-same former governor emailed his supporters that “thousands and thousands of Ohioans just like you have crowded the Statehouse because the livelihoods of Ohio’s families are on the line. I was so inspired by these crowds that I decided to join them this past Thursday. There’s just too much at stake to let Governor Kasich and the legislature roll back the clock on progress for Ohio’s middle class.” It’s important to recall that not once during the three gubernatorial debates last autumn did Ted Strickland state that to balance Ohio’s budget would call for increased taxes. If that wasn’t his intent, however, how did he expect to balance the budget other than by cutting—which is precisely what Republicans are proposing?
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Teachers may be forgiven for feeling like all of this change has come out of nowhere because Ohio had zero leadership around the looming fiscal crisis before last month. The real debate in Ohio is just starting and there is no doubt that the current bills under consideration will be significantly amended or even put aside for alternatives. An air of suspense blankets the state until Kasich himself presents his budget by March 15.
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Hinting at what’s coming, the other evening he said, “We are searching for a balance. Give our managers, our cities, our schools, and even our state the tools to control their costs.” He added, “Workers have been overpromised. This is not about attacking anybody. It is about fixing the state and making us competitive again.”
He’s right. And it isn’t just Ohio that he’s right about.
Source: Buckeye Institute President ………
DAN, See the Bloated Cost Structure page. Spending per pupil for each of Ohio’s 116 school districts rated “excellent with distinction” for the 2008-2009 school year, except two. Some local districts are noted. For example, Loveland’s cost per student is $9,445. That is near the $9,461 median – the point at which half of the districts spend more and half spend less. Sycamore’s $13,523 cost per student is $4,062 more than the median.
If Sycamore’s bloated cost structure were reduced to the median of excellent with distinction districts, taxes would be reduced by more than $22 million annually, i.e. 5413 students times $4,062 equals $21,987,606.
Sycamore $13,523; Median $9,461; Milford $8,441; Loveland $9,445; Lakota $9,503; Mason $10,528; Wyoming $10,705; Kings $10,765; Madeira $10,961.
What are some examples of how the Sycamore School District has over spent in the last 5 years?
BEWARE! The “capped budget” approach has failed to reduce the exorbitant spending level and failed to make the district efficient enough to spare the taxpayers a $12 million tax hike. It seems that our board of education’s intent is to pass on the $12 million loss revenue to residential and commercial property owners. Enough is Enough!