Schools talk new tax levy
- Published: December 22, 2011
At their meeting Thursday, Dec. 8, Yellow Springs school board members and administrators initiated a discussion about options available to leverage income through new taxes. The issue was raised as a way to close the gap in the district’s current deficit spending, with the understanding that a levy could possibly be put on the May ballot. School leaders will continue to discuss their options at the next board meeting on Jan. 12, and will consider holding a work session on the subject next month as well.
According to the budget and fiscal projections, the district has been operating at about $600,000 per year over expenses since 2009. And as expenses grow while revenues remain flat or decline, the annual operating deficit is expected to grow to about $900,000 over the next three years, Yellow Springs Schools Superintendent Mario Basora said during the meeting.
The schools have responded to the fiscal problem with three major budget reductions over the past two years. The first cut of $150,000 in annual spending occurred in May 2010. Then in March of this year, the district cut another $437,000 in annual spending from nonrenewing contracts, six retirements, and reduced educational services contracts. Then over the summer all of the district’s teachers, staff and administrators agreed to $347,000 in pay cuts over the next two years.
But the deficit continues. The district has managed to survive on its cash reserves, which are expected to be depleted during the 2013–14 school year. A levy is a way to address the budget without making more cuts that could compromise the quality of education in the district, Basora said during the meeting.
“We believe that any further reductions in the budget would be cutting at the bone…and would have a significant negative impact on Yellow Springs schools,” he said. “Any further cuts could hurt the kids.”
Choosing a levy now would help prevent fiscal emergency for the district in the future, according to district Treasurer Dawn Weller.
“Discussing potential levy options now is a proactive response to a recessive economy showing few signs of recovery,” she wrote in a presentation to the board on Thursday.
While the district could choose from a dozen different levy options, according to Weller, the ones that make the most sense for Yellow Springs schools are an emergency property tax levy, a dollar incremental property tax, a school district income tax, or moving inside millage to the permanent improvement levy (the last option being an administrative decision rather than a voted one). An emergency levy is put on the ballot for a defined annual dollar amount that does not change with property valuations. The district already has an emergency levy that has generated a little over $1 million per year for the schools since 1999. A dollar incremental levy would be at a set dollar amount with regular predetermined increases each year. An income tax can be on either taxable or earned income, but not both. The district currently has a 1 percent income tax levy on taxable income, which is everything included in one’s federal adjusted gross income. Moving inside millage to permanent improvement would mean taking some of the district’s 4.3 inside mills that generated $541,070 last year and adding them to the current permanent improvement levy, which can only be used for “general improvements” to the physical facility.
Currently the schools bring in close to $4 million annually through four different kinds of property tax levies, and between $1.4 million and $1.1 million annually through a 1 percent income tax levy. The property tax levies are leveraged at 32.02 mills, or $32 of tax per $1,000 of taxable property valuation. Any additional property taxes would bring in approximately $125,830 per mill to the district. To make up the $800,000 or so of annual deficit spending, for example, the district would have to levy new property taxes between 6 and 7 mills.
For property owners in Yellow Springs, every additional mill that the school district levies translates into an addition of approximately $30 of property tax per $100,000 of property valuation. A 6-mill levy, for instance, would add about $183 to a property valued at $100,000, or an additional $400 to a property valued at $200,000. That levy would be added to the property taxes that currently go to the schools, which cost the owner of a property valued at $200,000 about $2,000. The percentage of property taxes that benefit the local schools are a little over half the total property taxes collected in Yellow Springs.
School board member Richard Lapedes emphasized the fiscal prudence the district has exercised over the past several years by building a cash surplus and economizing as much as possible. He also praised school leaders for pursuing a solution to both academic and fiscal issues with the Class of 2020 10-year strategic plan, which the district has recently begun to implement. He indicated that a levy was something that the district needs now.
“There have been three episodes of reductions…the belt has been tightened three notches, and it’s at a point where we can’t breathe anymore,” he said. “And we’ve given value to taxpayers’ money with the 2020 plan — we’re not selling an old tired model, we’re selling something new.”