Schools justify new levy
- Published: November 1, 2012
Local voters will decide on Nov. 6 whether to approve a property tax increase for the Yellow Springs School District. The emergency 7.4-mill levy would funnel an additional $915,000 per year into the district for five years, an amount which school officials say is necessary to cover a half million dollar annual deficit and to keep class sizes small, continue art, music and physical education instruction and make sure the state does not take over the district’s budget.
“Our schools are in imminent financial danger,” School Superintendent Mario Basora said at a levy forum last week, attended by about 45 people. Local schools are in dire straits because state and federal funding for schools has been slashed over the last few years while collections on a local income tax levy passed in 2002 have been shrinking in a distressed economy, school officials said.
The proposed levy represents a 26 percent increase in the amount property tax payers pay for district operating expenses, according to data from the Greene County Treasurer’s website. If the levy passes, property owners in the school district, which includes the Village of Yellow Springs and parts of Miami Township, would see a 12 percent increase in their total property tax. For the typical local homeowner with a property valued at about $197,400, the median value according to the 2012 Cost of Living Report, that amount would be an increase of about $450 per year on a total new bill of $4,150.
According to Basora, the district seeks new tax revenue, having already cut $700,000 annually from its budget in the past few years. The biggest cuts were in staff reductions, including the elimination of 5.5 teaching positions and four classified positions, and a curtailing of building budgets by 10 percent for two years. Additional cuts to balance the budget, he said, would “hurt kids.”
“We’ve done everything we can to cut our costs,” Basora said. “Any more cuts would have an effect on student learning that I think would jeopardize everything that Yellow Springs Schools are about.”
But for villagers facing their own economic woes or local seniors on fixed incomes, a new property tax may be hard to swallow, forum attendees said. Currently 52 cents from every local property tax dollar goes to support schools, while the municipality reaps 17 cents on each dollar. (Property taxes account for a larger share of the local district’s revenue — 46 percent — while the Village Yellow Springs collects a higher amount of money from income taxes).
“Until a few months ago I was on a fixed income and if I’m looking at this it looks like a lot of money to me,” said Hays Moulton at the levy forum. “I want to support schools but I think you have to be respectful of people who have been here for a long time, who are on fixed incomes, and who look at that tax bill and say, ‘Should I go or stay?’”
Replacing lost revenues
School officials say that revenues to support the school district’s $8 million annual budget have been falling for years due to factors outside of the district’s control. The biggest hit was the loss of the tangible personal property tax, which was assessed on local businesses and generated about $400,000 annually for the district. In addition, federal revenue has declined 10 percent over previous years and state support has also been dropping, Basora said. For example, the district has stopped getting additional money per pupil from the state, despite growing from 621 to 709 students over the last 10 years, because Yellow Springs is considered a wealthy district, which is determined by median incomes and housing values.
“Despite the fact we have more students that live in the village who came into our district, we’re not getting any more dollars for them,” Basora said. The cost of educating a student in the district was $10,435 last school year, while the district took in $10,059 per student in operating revenue.
At the same time, the district’s local income tax, passed in 2002, has generated fewer and fewer dollars for the district over its lifetime. In fact, the school system collects 14 percent less from the tax than during the first full collection a decade ago, which is equivalent to about $200,000 to $300,000 per year, said School Treasurer Dawn Weller at the forum. The district had projected that this tax would increase over time, but instead it has led to a growing hole in its revenue forecasts.
While the school board considered seeking a higher income tax instead of a new property tax this year, the board decided a property tax would be best, in part because the current income tax would have to be repealed before a higher one could be approved.
“We had a long discussion about property tax or income tax and it’s a hard decision because either way it’s pain to the community,” said school board member Benji Maruyama at the forum. “We thought the property tax would be less of a burden to those challenged in these economic times.”
One bright spot for the district has been the relatively stable housing values in Yellow Springs compared to neighboring communities. Had local housing prices dropped during the housing crisis commensurate with many other Ohio towns, the district could well have collected even less money.
While in hindsight, passing an income tax for schools did not pay off as school leaders hoped, Maruyama said that local schools are aware of how important the local economy is for the school district, and vice versa.
“The economic development of the village is intricately linked with the success of the schools,” he said. “But it’s a vicious or virtuous cycle. If we have more businesses and more people, we can attract more money for our schools. If people don’t see good schools they may not see this as a place to relocate their places of business.”
Understanding the new tax
The 7.4-mill emergency levy (called emergency because it would bring in a constant dollar amount each year over a five-year period), is an additional levy that would increase the effective millage for the school district to 31.8 mills. Currently the school district collects on 14 levies, including one inside levy (passed by statute) and 13 voter-approved levies. Of the 13 levies, 11 are for general operating expenses. The most recent levy approved, an 8.3-mill emergency levy, was renewed in May 2010 with 75 percent of the vote. This year’s levy is the first new tax the school has asked for in 10 years.
Among communities in the tri-county area of Montgomery, Greene and Clark Counties, Yellow Springs ranks in the bottom third in property tax millage.
“It’s been incorrectly stated that Yellow Springs residents pay the highest school taxes in the area,” Basora said at the forum. When considering the additional income tax residents pay to schools, Yellow Springs is in the middle of the pack of the 27 area districts, collecting more than districts such as Xenia, Fairborn and Beavercreek but less than districts such as Kettering, Huber Heights and Oakwood.
According to figures calculated by Yellow Springs resident Jerry Sutton with data available on the Greene County Treasurer’s website, the levy represents a significant increase in the amount homeowners are paying to Yellow Springs Schools. He was surprised to find that when he ran the numbers, the levy accounted for a 26 percent increase in the amount the district collected from property owners for operating expenses. That’s because the effective millage on levies being used for operating expenses would grow from 28.3 to 35.7 if the levy passed.
“We have a tradition of passing levies but we can’t do that mindlessly,” Sutton said. “People need to know what the impact is.”
When the equivalent millage from the school income tax is factored in, the proposed levy, if it passed, would account for a 20 percent increase in operating dollars collected locally.
Using the average median house value from the 2012 Yellow Springs Cost of Living Report, $197,400, the tax bill of a typical Yellow Springs property owner would rise by $450 if the levy passes, while a senior who uses the homestead deduction would pay $390 more.
The future of YS Schools
The levy is not a long-term solution for the district’s financial challenges, school officials admit. In response to a question at the forum on how the district will make sure the proposed five-year, 7.4-mill levy won’t need to be renewed, Basora said that the district’s track record of cuts for three years speaks for itself, but that many of the school’s budget problems depend on external factors.
Theoretically, the village income tax could make a comeback, property taxes could grow with more new housing built in town, and additional state support could be extended to schools, Basora said in a later interview. But if all three scenarios fail to materialize, the district could again be facing deficit spending in the next five to eight years, he said. The long-term solution for school funding has to come from the state, he said.
“Ohio has the worse funding system for K-12 education nationwide,” Basora said. “Consequently everyone is struggling.”
Ohio’s educational funding model has been struck down as unconstitutional for its unfairness by the Ohio Supreme Court, but state legislators haven’t yet found a solution. Instead legislators are set on cutting taxes to grow the economy at the expense of students, Basora said. Their goal, he said, to create efficient schools with large class sizes, high student-teacher ratios and more electronic learning. But “efficient doesn’t mean effective,” and student-teacher relationships are important, he said.
One potential consequence of the levy’s failure would be that the state would begin to play more of a role in the school’s finances through a local committee that makes budget decisions. Basora said this oversight would result in many of the efficiency changes now being promoted, and would not serve local students well.
Another alternative for local schools, to consolidate with a nearby district, may not be the panacea that is often portrayed, Basora said. First, an outside district would have to agree to take in Yellow Springs students, and local property owners would then begin to pay whatever tax rate is currently being paid in that district, even if it were higher.
“There’s no way to shirk our responsibilities to our kids,” Basora said. “Either way you’re going to pay for it, but without the levy we could lose our autonomy.”