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- Debra L. Cope
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- Arnzen’s career touched hundreds of youth
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School funding still unconstitutional
Ten years ago today, the Ohio Supreme Court upheld an earlier decision declaring the state’s method of funding public schools as unconstitutional. The problem lies with the formula and the state legislature has failed to fix what many might call a sinking ship.
The initial 1994 ruling in DeRolph v. State of Ohio was overturned on appeal before the high court upheld the initial decision in 1997, 2000, 2001 and 2002. However, no guidance has been provided to the legislature for fixing the formula. The court has also determined the legislature has made adequate efforts to address the problem.
All 613 districts must deal with the formula, which many say is so complicated that it’s difficult to understand and explain. However, Delphos City Schools Superintendent Bruce Sommers is up to the task.
According to Sommers, the state multiplies a uniform $5,403 per-student rate by a cost-of-doing-business factor that varies in each district. The state then multiplies that figure by the number of students. This brings Delphos City Schools to $5.6 million. The state also gives Delphos more than $49,000 as an “add-on” but then subtracts a very large portion before continuing its calculations.
“So, let’s make a long story short. If you take $5.6 million plus $49,000 in round numbers, you’ve got $5,650,000,” he began. “It would be fantastic if that were our total but it isn’t. Why not? Because the state deducts, from that number, 23 mills of what your assess valuation (property taxes) generates in your school district. Well, in Delphos, the state says we have an assess valuation — and they get this by working with Mr. Diepenbrock and Mrs. Dixon in their respective county auditor offices — of $171,949,779. Multiply that by .023 and we have to subtract $3,954,000. So, what does Delphos get? $1.8 million.”
The state then adds reimbursements for things such as transportation costs and funds paid to Vantage Career Center for Jefferson students to attend the vocational school.
“When all is said and done, Delphos City Schools’ net state funding is $2,700,000 and some change,” Sommers said.
The money deducted on the basis of property values is called a “charge-off.”
Sommers says the state only pays for one-third of the district’s annual funding, leaving local taxpayers to pick up the other two-thirds. The taxpayer burden would be much less if not for the charge-off. According to Treasurer Brad Rostorfer, the real cost of doing business this year is not low.
“Our revenues for the general fund for 2007 are expected to be $8.5 million,” he said.
Sommers says the charge-off causes him to dread property reappraisals as much as any taxpayer.
“Now, why do you hear me and other superintendents saying we don’t like reappraisals? It’s because it actually costs us state dollars,” Sommers said. “When reappraisals come out, taxpayers think ‘gee, I’m paying a little more’ and they’re not happy about that. We, as a school, are saying if that number goes up, the charge-off goes up and we get less in state aid. So, the superintendents are saying ‘voters, you’re paying more because of the reappraisal, yet we’re a net loser because what that made us in additional tax dollars from you — we lost that and then some in state aid’ and voters are asking how that can be and it’s because of the charge-off.”
Although many who pay private school tuition also pay property taxes that factor into public school funding, those dollars increase the charge-off without more per-student dollars added to the equation.
Because each county is mandated to do a full reappraisal every six years with updates every three years, there are only two years in each six-year period when Delphos City Schools’ state funding remains constant. This is because Allen and Van Wert counties engage in the respective activities at different times, according to Sommers.
Another area of concern is the phasing out of the personal property taxes.
“The revenue schools are generating from personal property taxes, which are taxes businesses and industries pay, is disappearing. The state passed a law a couple of years ago that says after a phase-out, personal property taxes are being eliminated,” he explained. “In Delphos, we get a little over $1 million from it, so if that source of revenue is drying up over the next 10 years or so, what’s taking its place? Why, the government says the CAT tax is taking its place and that we’ll get just as much revenue from it as we were getting before but the government can’t guarantee we can count on that beyond the first several years. You can see why school districts are driven to the ballot.”
The superintendent in Fort Jennings says the state’s problems preceded the DeRolph decision.
“The State of Ohio has always dropped the ball on school funding. Back in 1969 when I started, there were all kinds of problems with funding,” Frank Sukup acknowledged. “Neither political party has had the intestinal fortitude to do anything with school funding. It has always been a problem in my career and it will be for a long time unless they grasp the problem and solve it.
“I always laughed when former Governor (George) Voinovich said we needed to do more with less. Hell, we’ve always done more with less here at Jennings Local Schools, so that was nothing new to us.”
The formula’s charge-off caused Jennings’ funding for this year to be $1.4 million, when it could have been $2.1 million.
“Our current charge-off is $735,814.37,” Sukup said.
Treasurer Val Maag expects to spend $3,196,593 on this year’s expenses.
Fort Jennings would be able to do more if funds weren’t removed by the charge-off. The school would also be less pressured to ask voters for added funds as inflation causes district expenses to increase.
“There would be some extra things we could possibly look at doing; we run a bare-bones system but we provide a good quality education. Before our income tax, we were not on the ballot since 1988 and then we were on it in about 2005,” Sukup said. “So we went a long time but it’s getting more difficult with costs going up. I have no idea how long it’s going to be — hopefully a long time — before we’re on the ballot again but financially, right now, we are holding our own.”
If not for the charge-off, voters in the Ottoville area would also be less burdened with school funding.
Ottoville’s state share changes from $2.9 million to $1.8 because of the 23-mil charge.
“If we were getting the extra million dollars, we might not ever need to go to the voters,” said Treasurer Mike Ruen.
Ruen’s projected expenditure for this year is $4,214,314 and meeting the need would be easier if not for the charge-off.
“When you add everything in, we’re getting $2.6 million, so there’s a difference of about $316,000. If we had that extra amount every year, who knows when we would ever need a levy,” he added.
Ruen speculates that if the charge-off were not included in the formula, schools may still not come out ahead because the state would possibly offset the difference by withholding other dollars.
Ohio Fourth District Representative Matt Huffman agrees that the formula is problematic but understands why it remains unchanged.
“The problem with fixing the funding is that no matter how you try to change the formula, somebody’s going to be hurt and that’s why, even among school communities, they haven’t been able to come up with a funding solution; even among the Ohio Education Association and groups like that,” Huffman said.
Under the Tenth Amendment, the federal government delegates public school funding to the state. Ohio Department of Education Public Affairs Assistant Director J.C. Benton says more than $15 billion in state, local and federal funds are spent to educate 1.8 million public school students in Ohio each year.
The state theorizes a “shared-responsibility” system, according to Benton. The local “responsibility” is based on property values.
“The local share contributed by each district varies depending on the ‘ability to pay.’ The ‘ability to pay’ is determined by the value of all the property in a school district. The more total property value a district has, the greater its portion is to pay for the cost of their students’ education,” he said.
Huffman calls the theory an assumption.
“The assumption is that if you can afford a higher-value house, you can afford to pay more taxes,” he explained.
Many area taxpayers see certain districts getting state funds to construct new buildings and feel those districts are receiving preferential treatment from the government.
Huffman says the Ohio School Facilities Commission was created to address certain needs of districts with lower property values.
“The OSFC was created, not only to build new buildings, but to also go to the districts that have low property tax values and that’s why Lima City Schools was one of the districts that was chosen along with Canton and some other urban schools,” Huffman said.
Many of the taxpayers who feel this is unfair live in the Elida district.
The context in which construction plans become controversial is created by Elida Local Schools taking an especially hard hit by the state’s charge-off. Elida’s state funding for this year goes from $13.2 million to just $5.6 million after the charge-off is deducted.
“We get hammered with that 23-mil charge-off. I think the biggest bone of contention with that is that it’s so difficult to make the average taxpayer understand that game within the formula,” said Treasurer Joel Parker.
In addition, the Office of Budget Management projects Elida to receive no increase from the state for the next two years. This is based on the governor’s recent budget proposal.
Elida has already been without an increase in state funding the last two years because the district’s property valuation has grown. However, the general fund’s budget is $18.3 million for this year.
“If you look at the game within the game, who drives the valuation reappraisals and updates? The state drives that increase,” Parker said.
He indicates the county auditor submits his final numbers to the state but can be “forced to take an increase.”
“To me, if the state artificially inflates those values, which in turn makes the charge-off higher, then you have almost a Robin Hood situation where Elida’s flat for four years in a row but other schools aren’t,” he continued.
The district’s property values are high because of its size and because it is the home of more retail businesses than many other districts.
“Of my $365 million valuation, $97 million is commercial and industrial; $240 million is agricultural and residential,” he said.
Parker believes the unconstitutional formula causes a tense relationship between the school district and its taxpayers.
“If voters get hit with that reappraisal, they don’t care what I say. They don’t care that I lose money in the state formula. All they care about is that they have to pay more taxes and I understand that,” he explained. “It brings me back to the fact that the auditor did the reappraisal and the state approved it. The state helps drive that; the taxpayer pays more taxes, so he’s mad and he’s not thrilled about a bond issue coming up. I lose money in the funding formula; he thinks I’m getting wealthy— it’s all a silly cycle of misunderstanding and the complication leads to mistrust. If voters don’t understand the situation, they’re going to think something funny is going on.
“People say ‘you guys have to be getting rich with all this update money’ but we’ve been flatlined, now, for four consecutive years. That shows that the burden is being shifted from the state to the local, whether we want it to or not.”
The Elida treasurer doesn’t believe the state is going to resolve the situation any time soon; his representative agrees.
Huffman has also received projections from the Office of Budget Management that include Delphos in the list of flatlined districts.
“Delphos, Elida, Perry, Bath, Bluffton and Allen East will get no increase from 2007 to 2008. Elida, Bluffton and Allen East will also have no increase in the following year under the budget submitted by Governor (Ted) Strickland,” Huffman said.
In his recent State of the State address, the governor indicated he wants to increase school funding. However, Huffman indicates the increase isn’t quite what it seems.
“The governor wants to go from 44 percent to 54 percent in state funding, which would, supposedly, reduce the burden on local property taxes. It’s basically changing how you look at the numbers to get to 54 percent,” he observed. “For example, the state pays 12.5 percent of the real estate tax money. That was never counted as state money. So what they’re going to do is say ‘well, that 12.5 percent that goes on the property tax and to the schools’ —which formerly was considered local support — ‘we’re now going to start counting that as state support,’ so we suddenly now have increased the percentage by about five percent. That’s just one way you get to 54 percent.”
According to Huffman, 229 of the state’s 613 districts will be flatlined in the budget’s second year.
“The short end of it is that the governor, largely, gets there by accounting maneuvers. You can’t spend words; you spend dollars and if he’s telling public schools they’re getting more money— they’re not; I mean, not anything substantial,” he said.
Huffman added that he knows of nothing in the budget that will change how schools are funded. He does have one idea that can be considered by the General Assembly in the future.
“All the money should probably be determined on a statewide basis; paid to the state and the state supplies all the money. We can’t simply remove the property tax because that would take out about one-third of all the money paid into the state. It’s about $7 billion or $8 billion, so there has to be a real estate tax,” Huffman offered.
While Huffman knows of no plans in the General Assembly to overhaul the formula, a consortium of 12 statewide organizations plan to take school funding to voters in November.
“Getting it right for Ohio’s Future” would amend the state constitution and at press time, focuses on the breakdown of state and local funds for education. However, it doesn’t necessarily change the formula. Huffman says it would mandate the legislature find $4 billion more tax dollars for K-12 public education but doesn’t say where the money is going to come from.
In the meantime, Sommers and several other superintendents are concerned about voter understanding when ballot measures appear in May, especially those whose districts are to get no increase from the state while they lose funds due to rising property values and inflation.
#1 — Added 2 years, 10 months ago
My parents paid for me to attend a private school. And I paid to send one
of my children to private school.
So, feel it is the Parents not the state or school districts responsibility
to pay for an individual to attend a private school.
At some point in time Ohio will not only be last in consideration by
business for expansion but to be able to continue to enjoy an spendable
income like is now possible in other states, even the ones surrounding
us.
Enough already of Chinese math.
Think about it.
Homer
Posted on March 30, 2007 at 12:00 pm by Homer Loftis