In every Ohio K-12 school district, public schools need to present a ballot issue to voters every few years in order to support the cost of public school education. Ohio residents need to understand why these levies are recurrent and that the districts are not being extravagant or spendthrifts with funds. State laws in Ohio mandate these recurring ballot issues to fund public education.

Ohio public schools are primarily funded in three ways:
1. Federal government monies allocated to the state systems are grant dollars for a specific restricted purpose. Wayne Local School District (WLS) receives 4.5% of their budget from the federal government. Most federal money from grants, etc. is not included in the general fund. These grant funds include Title I-A, Title II-A, and IDEA-B special ed funds. 

2. The State of Ohio contributes money based on the State Foundation Formula which provides Basic Aid to districts, taking into account the ability each district has to raise local taxes plus the per student minimum amount the state determines is necessary to provide an adequate education. A lower wealth district should receive more assistance than those with higher property wealth. WLS gets 32% of its budget from the state of Ohio. The specific state formula is very complicated and often changes, especially in recent years. The Ohio Supreme Court found the funding system of Ohio’s public schools unconstitutional in 1997 and the legislature has not given it the “complete systematic overhaul” required by the Court since that finding. Fortunately, the last two budget bills have included a guarantee that a school will not receive less funds than it did in FY2019. This has kept our unrestricted state funding flat for the past 5 years, rather than being reduced due to the perceived increased capacity of the Waynesville community to raise local funds. 

3. Local Support for public schools is primarily property tax revenue, although some also include a school district income tax. WLS does not have an income tax. The real property tax is one levied on land and buildings located within the school district boundaries. Owners of the land—businesses, public utilities, and private individuals—are taxed on the value of the real property. The county auditor appraises real property every six years. Every third year an “update” is performed on the value. The appraisal is the auditor’s value of the property and the taxes are based on the assessed value, which in Ohio is 35% of the appraised value.

The measurement or rate of local property tax is a mill. A mill is one thousandth of a dollar, or $0.001. There are two different types of millage: Inside Mills and Outside Mills.

Inside Mills: The Ohio Constitution allows for all of the local governments in a taxing district combined to have 10 mills without a vote of the people. This includes counties, school districts, municipalities, and/or townships. WLS has 4.88 inside mills, of which 2.88 are diverted for permanent improvement use.

Outside Mills: Voters must approve all mills in excess of 10 mills- this is referred to as “outside mills.” Millage in excess of the 10 mills cannot be collected without a majority vote from the voters in that specific district or community.

Inside Mills: Unvoted millage, up to 10 mills, that is shared with other entities within the taxing district. This millage is unique in that it moves in direct correlation with your property value. For instance, if your value increases or decreases 5%, your taxes on the inside millage will increase or decrease 5%, respectively.

Fixed Sum Levies: These levies are approved by voters to generate a specific amount of money. School districts typically can have an emergency levy, a tax that generates a specific dollar amount each year, or a bond levy, which is passed to meet the annual debt requirements related to a specific project.

Fixed Rate Levies: This is the most common type of levy. Due to HB 920, fixed rate levies only generate additional income on new construction.

House Bill 920 passed into law in 1976, limits the inflationary income of voted millage. County auditors reduce property tax millage correspondingly so that the real property tax of the average homeowner does not increase due to increased property valuation. This process creates a reduced tax rate or an effective millage rate that is less than the voted millage rate. (The opposite occurs when property valuations decrease, the effective tax rate may increase to collect the original amount of tax passed by the voters.)

Meanwhile, everything from teacher salaries - to textbooks - to gas for school buses, has all gone up in cost over that twenty-year period. But schools are not receiving additional tax revenue, other than the small amount of growth from inside millage. No matter how conservative or efficient districts are with taxpayer money, they simply cannot keep up with those day-to-day cost increases without asking for additional revenue from a levy.

To better understand HB 920, let’s plug in some numbers:

Non‐Business Credit: The 12.5% rollback is now called the Non-Business Credit. A 10% discount was given to all property owners and an additional 2.5% discount was given to residential property tax payers under the old law (pre-2014). These discounts were reimbursed to the school districts by the state so that the school districts were not losing dollars. Under the new law enacted in 2013 these rollbacks no longer apply to new or renewal levies, but do still apply to older levies.

Owner-Occupied Credit: The Homestead Exemption is now called the Owner Occupancy Credit. This discount ($8.75 per mill of tax exemption) was given to seniors over 65 years of age regardless of income. Since the 2013 law, the exemption now will only be granted to new applicants with an income figure of $30,000 or less or those with a permanent disability.

A few other forms of income can bring in small amounts of funds for Ohio Schools. There may be emergency levies and other forms of levies passed. Some districts have resorted to incremental levies, replacement levies, and emergency levies in an attempt to balance their budgets. The Lottery, often touted as providing funds for education, has mostly replaced state funding for schools, rather than adding to it. In 2009, the state expanded the use of lottery profits to include casinos, but it only brings in about $50 per student to a district per year. Some grants may bring in dollars for specific purposes. Infrequently there are bequests or donations to the district.

Bond issues are often passed to provide monies for capital improvements. Capital improvement monies are separate from operating funds and the two forms of financing may not be co-mingled. Wayne Local Schools has two bond issues (for tax year 2023):

1. The bond issue for the high school, built in 1998, is 1.65 mills, which expired December 31, 2023 (for collection in 2024).
2. The bond issue for the elementary school, passed in 2017 is currently 3.87 mills. This levy is subject to HB 920, and the rate will be reduced as property values increase.

The State of Ohio laws around school funding as they exist require schools to have a balanced budget AND meet particular mandates. The result is that levies appear on the ballot periodically to enable districts to maintain the curriculum and programs they have developed.

Although this funding mechanism has been declared unconstitutional, it is the flawed system under which all districts must function until the legislature sees fit to create a fairer and more equitable system of funding—completely overhauling the current one as stated by the Supreme Court of Ohio.