February 25, 2000
Reapraisal;what's added for schools is subtracted from formula
By Cathy Willoughby
Staff Writer
Looks can be deceiving.
When many Seneca County residents received their real estate tax bills in January, they were shocked to discover their tax liability had increased markedly.
The portion of the tax pie schools receive also appeared to have risen.
However, school officials are quick to point out the districts they represent will not be the ones gaining from the increase in county property valuations.
The Legislature will simply have more money in its pot to draw from, since the state's share of school formula money will be decreased by the amount the local district's increases.
Mohawk Local Schools Superintendent Randy Chamberlain said the district is hit almost every year due to the district's encompassing parts of three counties, Seneca, Crawford and Wyandot. "Seneca County hit this year, but we are hit by a reappraisal every year,'' he said. "Then there was Crawford County last year and Wyandot the year before. It affects us every year. It's an issue we have to face every year.''
"It affects the foundation level that we receive from the state, or the amount that is allocated for the district to educate per pupil,'' Chamberlain said.
The amount the state allows per pupil for the cost of education is $4,052. That is a shared cost, between the state and the local tax dollars. Chamberlain gave the amount of $4,000 to use as an example. "Let's say for example, that each one has to pay 50 percent,'' he said. "So $2,000 will come from the state, and $2,000 locally.'' Due to legislation enacted in the 1980s, when property taxes rise, the amount that can be collected by the schools remains the same.
Yet each district must have at least 20 mills on the tax duplicates, which is called the 20-mill floor, or guarantee.
"If it is at 20 mills, they can't reduce the amount raised through the millage,'' Chamberlain explained. "Then if the local taxes brought in $2,300, the state amount will decrease, so they are only paying us $1,700.''
And Mohawk is now at the 20-mill floor in Seneca County. "When people are seeing a 30 or 35 percent increase, they think that a great deal more is going to the schools,'' Chamberlain said. "When they look at the bottom of the tax duplicate, that shows how much goes where, schools are getting a heck of a lot more. But that is all that's allowed is what the state foundation says we are to get.''
"And what we are going to get is that the state will reduce what they have to pay you,'' Chamberlain said of the district. "So we net zero.''
"There is more local money, and less state money, so it's a wash,'' said Bettsville Local Schools Treasurer Karen Botzko. She said she had not received any feedback from local residents. Bettsville has also hit the 20-mill guarantee. "Hopefully we won't have to do that,'' she said, of going to the voters again in the near future. "But it (reappraisal) could hurt school financing. It's hard to explain. It's even hard for the people who work with it to understand.''
The difficulty in conveying the facts to the residents of the district affects the schools, especially if they have an issue on the ballot.
Tiffin City Schools now has seen the effective rate of its voted millage decrease from 27 to 22. "Our valuation on the formula has gone from $283 million to $346 million, that means that in the state calculations, they will give us less money,'' Treasurer Fred Barba said.
Barba said the district cannot receive less money in the first two years following a revaluation. "It is in the third year where it will start reducing, in 2002,'' he said. "With the foundation formula we could use, based on our current foundation, we would lose $1,400,000.''
"We do get full millage on the inside mills,'' Barba added. "That increase would be $350,000, so we would have to subtract that from the $1,400,000 for what the loss is going to be.''
Tiffin City, as well as other districts with retail and manufacturing sites, will soon face the loss of personal property, or inventory tax, over the next 20 years, beginning with 2001. "The first year we will lose $50,000 out of the budget,'' he said. "The second year, $100,000, up to $1,000,000.'' And the Legislature has yet to come up with a plan to reimburse the schools for the huge losses they will face.
"All of this shows that there is an obvious need to come up with a new funding method,'' Tiffin City board member Chris English said. "And there is no money to make it up, the only way would be to go to the voters for more millage.''
"Right now we receive 53.95 percent of our funding from the state,'' Barba said. "It's almost a fifty-fifty split. In the five year plan, by the year 2001, it will be more like the school district residents 55 percent, the state 45. It doesn't make a lot of sense, especially when there are no provisions for the loss of the personal property tax or utilities tax. And with the state legislature, unless you see a check in the mail, what can you believe.''
English said that his co-workers at Webster Manufacturing expressed concern when their tax bills increased. "They said, 'Chris, I have kids in the Tiffin City Schools and I understand the dilemma that you face. But my bill for the half went up a $100. So the next time any issue comes up, I can not afford to vote for that.''
The underlying problem is the state's reliance on property taxes to fuel the schools. And every district is still waiting for the end result of the DeRolph decision in 1997, where the Ohio Supreme Court told the Legislature to find a more adequate, and equal method of funding the schools.
"The state would like to see a certain level of local participation,'' English added. "And if it's not where they think it should be, they penalize us.''
Unfortunately, the concepts of inside and outside millage, and formula funding to schools is a difficult concept, admitted English. "With the four mills on the inside we made extra money,'' he said. "But it is the millage that is restricted on the outside are the ones that are hurting us. It's a tough concept.''
English said the money the schools need to operate, from teachers salaries, textbooks to building maintenance, affect the larger community. "The type of schools we have will tell us what the community will look like in the next 10 years, and the economic development we will have,'' he added.