Thursday, February 14, 2008

What People are Asking

Citizens for Strong Schools, the campaign committee working for the passage of Issue 26 – our 9.5 mill school funding levy – has brought up a website with a lot of good information about our school system. I compliment Bobbi Mueller and her team for providing the left-brain analyticals like me with numbers and facts, and not making this simply a "do you love your kids" effort.

One section of the campaign website is called "What People Are Asking." The campaign committee is being pretty cautious and conservative in its responses, sidestepping a few of the questions. For those, I'd like to reiterate the analysis and opinions I've stated in the past:

What size levy is projected for three years from now?

The campaign committee answered that it is hard to predict. That doesn't mean the question shouldn't be answered directly using the best information available to us right now. If you take the Treasurer's Five Year Forecast at face value, then another levy on the order of 10 mills will be needed within three years (9.5 mills has been put on the ballot rather than 10 mills for the same reason gasoline is priced at $3.059 instead of $3.06).

Is asking for approx 9.5 mil levies every three to four years going to be the standard operating model for Hilliard City Schools beyond this levy and the next projected levy? In other words, is there a plan to control property taxes that are escalating faster than inflation or will these very large levies become a way of life that should be expected every 3-4 years?

Again, the campaign committee said it is impossible to predict. However, if you extrapolate the Treasurer's forecast out further, we can expect to have a levy on the order of 10 mills on the ballot around every three years for the foreseeable future. The reason is simple – 90% of our operating budget is the salaries and benefits of the teachers, administrators and staff, and this will grow steadily with increases in salaries and especially with health care costs.

Isn't it unconstitutional to pay for school taxes out of property taxes?

The campaign committee answered that the Ohio Supreme Court has ruled three times that the reliance on property taxes is unconstitutional. That's not the whole story. The problem is not the system as designed, but rather the refusal of the General Assembly to fund education to the level the system demands. There would have never been any cases in the Supreme Court had the General Assembly allocated the money specified by the funding formula. But we also have to remember the General Assembly has many programs to fund, and education is only one of the top priorities (Medicaid is another growing cost for example).

The proposed amendment being pushed by the Getting It Right for Ohio's Future (GIRFOF) campaign doesn't do away with property taxes either. In fact it requires each district to continue to collect 20 mills for its own local funding. The rest is supposed to come from "the State" - but who is that exactly? Well, it's us of course. It just means that we will pay for schools through income taxes, sales taxes, estate taxes etc etc. And as a so-called wealthy district, Hilliard can expect to get back only a fraction of the taxes we pay, with most of our money going to subsidize other districts. The amendment anticipates this by allowing school districts such as ours to levy property taxes above and beyond the required 20 mills. However, it also removes the protections of HB920, which prevents your property taxes from increasing just because the County Auditor raises the valuation of your property.

So we pay more in income, sales, estate and other taxes, and still have to pay property taxes, and lose the protections of HB920. I believe that our total tax burden would increase with this amendment – at least if we want to keep funding our school district as generously as we do now. It may be a good deal for the more impoverished districts in the state, but no Hilliard taxpayer should support this amendment on the belief that it will lower our total tax burden.

The GIRFOF amendment is heavily supported by the state and local teachers' unions. It is also supported by our own Superintendent and our School Board. The true purpose of this amendment is to redefine the State Board of Education as a kind of super-legislature that gets first dibs on the state treasury. When we remind ourselves that 90% of the operating cost of most school districts is the salaries and benefits of the teachers, administrators and staff, it's easy to understand why school officials think this amendment is a good thing. However, both Governor Strickland and most state legislators opposed it.

Our School Board's support of this amendment is misplaced. They simply want to get out of the business of putting levies on the ballot every 3 years, even if the amendment ends up costing the people of the Hilliard community more. The tragedy is that I don't think this amendment would necessarily change that at all – we'll still need regular property tax levies.

Has the land on Leppert Road (originally purchased for the 3rd high school) been sold and, if not sold, is it being actively marketed? If not sold or being actively marketed why?

The campaign committee says the land is currently being marketed.

But who do they think is going to buy it – someone who will put it back into agricultural use? Of course not. It will be bought by a developer, most likely a homebuilder. Of course, right now the homebuilding business in central Ohio is in the crapper, and homebuilders are selling off land – not acquiring. But if it is sold, at some point it will be developed. Mayor Schonhardt has already published a development plan for this tract.

Let's do some radical math: What if the school district sells 100 acres (keeping the rest for a future school site), and a developer puts 400 homes on that property, which can predicted to add something on the order of 400 new kids to the school population. Those 400 kids will cost the district about $10,000 per year to educate, or $ 4 million per year. Those 400 homeowners will contribute about $3,000 each per year in property taxes, or $1.2 million/yr. The remaining $2.8 million/yr will have to be paid for via addition property tax levies on the rest of us!

I will suggest to you that the best thing to do with the Cosgray Rd property is to just keep it. It's cheaper to pay principle and interest on the bonds used to raise money to buy that land than it is to subsidize the cost of an additional 400 new kids in the school district. Let one of the area farmers rent the land and hold on to the land for now. It can always be sold later, in a less distressed market.

In your explanation about cost to property owners, you use the terms "valuation, valued", but it is unclear what this means. Is this the "assessed valuation" of a persons home; that "valuation" upon which a persons property tax is determined?

This is real simple, but we keep mixing up the vocabulary. The campaign website answered this question with: "Yes, it is determined by the assessed valuation." Unfortunately in that answer, they probably confused the questioner more. What the questioner wanted to know was "You keep saying this levy will cost $291 per year for each $100,000 of valuation. What does valuation mean and how do I figure out how much I have to pay?"

The County Auditor determines the Market Value of your home every three years. The Market Value is meant to be an estimate of what you could sell your property for at the time it was assessed. By state law, your Market Value is multiplied by 0.35 to determine your Assessed Value. Your actual property taxes are calculated using a multi-step procedure that takes into accounts all kinds of tax tweaks that have been implemented over the years.
Fortunately, you don't have to worry about all that – there is a simple calculation that will answer this question:

To correctly determine how much this levy will cost a homeowner, you need to multiply each $100,000 in Market Value of your home by $291 per year. Or better said, multiply the Market Value of your home by 0.00291.


  1. Is there anything we can do to prevent the Cosgray Rd property from being sold to a developer? Who should we contact?

  2. TS:

    I think it's as is always the case - people have to tell the School Board what they want.


  3. I don't know the Hilliard situation, but it's a little misleading to suggest that 10 mills is being added every three years. Most levies have expiration dates, and have to be replaced. Old levies and new levies drop off all the time.

    Plus, it's not just inflation that drives up the districts' costs. It's growth. Hilliard, I'm sure, is adding students a pretty rapid clip.

    In my district, one of the problems we are experiencing is that the state has capped our aid. So even as we add students and expenses grow the amount of state aid is flatlined.

    Strickland has disappointed me... no funding plan after a year. It's funny... voters raise hell with their school board and administrators when they really should be raising hell with their state legislators. Misdirected anger.

  4. Dave:

    All of our current operating levies are permanent levies, as is the one on the ballot next month.

    I agree - it is most definitely not inflation. But it's not just growth. The number of employees in our district has grown at 1.8 times the rate of student growth over the past 10 years, even though the student/teacher ratio has remained constant at 20:1 that whole period.

    Yep, our state funding is capped too.

    Your district is like ours - one of the so-called affluent ones. That pretty much means any state-level solution is going to give us less and take more.

    Our economics were blown up when the local city governments let developers build houses by the thousands without balancing residential construction with commercial development.