Loveland City Schools FY Revenue

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1 FREQUENTLY ASKED QUESTIONS 1. Where does the Loveland City School District revenue come from? In Ohio, the funding of schools is shared by the state and local school districts. The Ohio General Assembly determines what an adequate education costs in the State s biennial education budget. The constitutionality of Ohio s funding system has been in litigation for more than 17 years and no acceptable resolution has been passed by the state legislature. The Ohio Supreme Court ruled that the existing system of funding public schools did not provide sufficient monies to support an adequate education for all pupils. The court also found the division of responsibility between the state and its school districts relied too heavily on local revenue generated through property taxes. State and national mandates continue to be unfunded or underfunded placing a strain on the District s budget and local taxpayers. Loveland has grown tremendously in residential construction, but lacks a strong commercial base. Less than 2% of our total revenue from taxes comes from commercial/industrial, which places a larger tax burden on our property owners for the operation of the schools. Local Revenue 73.13% State Revenue 26.87% Property Tax Allocation (Local Revenue) $3,510,261 9% Restricted Grantsin-Aide (State Revenue) $61,169 0% Loveland City Schools FY Revenue All Other Operating Revenue (Local Revenue) $952,137 2% Unrestricted Grants-in-Aide (State Revenue) $10,809,173 27% Personal Property Taxes (Local Revenue) $788,976 2% Real Estate Taxes (Local Revenue) $24,108,647 60% Real Estate Taxes (Local Revenue) Personal Property Taxes (Local Revenue) Unrestricted Grants-in-Aide (State Revenue) Restricted Grants-in-Aide (State Revenue) Property Tax Allocation (Local Revenue) All Other Operating Revenue (Local Revenue)

2 2. Where does the Loveland City School District money go? Instruction $26,091,934 Instruction is the largest expenditure category and the one most directly impacting students. The costs (teacher salaries and benefits, classroom materials, textbooks, relate to the direct instruction of our students. Support Services Board and Administration $3,477,172 Costs related to the overall operation of the District and provision of administrative support to the staff and community. Support Services Pupil Support $3,735,031 Covers services such as guidance, educational aides, special education, media centers, gifted services, health services, psychological services, and district curriculum. Support Services Business and Fiscal $1,230,753 Portion of the budget that accounts for all fiscal services, including budgeting and accounting services, payroll and fringe benefit processing, annual auditing, and purchase process of the District. This area also includes the office of the business manager s. Operations and Maintenance $2,562,783 Ensures that the students and staff have an efficient environment through custodial and grounds services and building repairs. Transportation $3,019,743 Provides transportation services, bus maintenance, and repairs to the vehicles owned by the district. Extracurricular Activities $731,372 Accounts for salaries and benefits of club advisors, fine arts advisors, extracurricular activities, and athletic coaches.

3 Support Services - Food Service Operation, $2,667, 0% Support Services - Business and Fiscal, $1,230,753, 3% Operations and Maintenance, $2,559,783, 6% Transportation, $3,019,743, Extracurricular 7% Activites, $731,372, 2% Instruction - Regular, $19,453,808, 48% Support Services - Pupil Support, $3,735,031, 9% Support Services - Board and Administration, $3,477,172, 9% Instruction - Other, $790,475, 2% Instruction - Vocational, $159,755, 0% Instruction - Special Inst., $5,687,896, 14% 3. Does the district have a long-range financial plan? The district has a five-year plan as required by law. The plan can be found on the Treasurer s web page along with detailed notes. The district is required to file a 5 Year Forecast each October 31 st and update it no later than May 31 st. The 5 Year Forecast allows the State to anticipate the current and future financial status of all the public school districts so that the State budget can address the needs of public education. 4. I have no kids in the schools, why are schools important to me? Every resident of the Loveland City School District has a vested interest in the schools remaining strong. Excellent schools are a vital part of a strong community. Quality schools mean higher property values and keep Loveland a desirable community in which to live and raise a family. 5. Do all of our students live in the Loveland City School District? Loveland City Schools does not accept Tuition students and we are not an openenrollment district. You must live in the Loveland City School District to attend the Loveland City Schools. We work extremely hard and are very diligent in making sure we are only educating our students. The parents of every new student must fill out paperwork and show proof that they are a resident of this school district. If we are made aware of someone that possibly does not live here we will aggressively investigate. It is considered theft of public services which if charged and convicted will be a felony.

4 6. What is a mill? Local tax rates against property are always computed in mills. Despite its wide use, few citizens know that a mill is one-tenth of a penny (.001). A little multiplication will produce the following information about a mill: A mill produces 10 cents in tax income for every $100 worth of property it is levied against. A mill produces $1.00 in tax income for every $1,000 of property it is levied against. A mill produces $1,000 in tax income for every $1 million of property it is levied against. The total property valuation for tax purposes in the Loveland City School district last year was $750 million dollars. For each mill that would be placed on the ballot, and passed, would generate $750,000 each year the levy is in force for the school district. The tax rate expressed as mills is applied each year to the Assessed valuation of real property. Assessed valuation is 35% of the appraised value of the property. Therefore, for every $100,000 in assessed value, a mill produces $35. Currently, Loveland City School residents pay school taxes of: General operating mills 5 Permanent Improvement mills 3.34 Debt mills (bonds) Total mills 7. Where did the mills come from? The State of Ohio mandates that 20 mills must be collected from local taxpayers before the school is eligible to participate in the School Funding Formula. However the state now has a 20 mill charge off which means they reduce the funding they would normally give us by the amount 20 mills would generate in the Loveland City School District, and not the 20 mills needed to participate. Within that 20 mills are 4.56 mills assigned to Loveland City Schools by the County Auditor s Office. These mills are called Inside mills and they were assigned by the county many years ago, and are not voted on. The remaining mills are mills that have been approved by the voters in past years, and are called Outside mills. 8. What levy formats have the Loveland City Schools chosen to use over the past years: Operating Levies are for the day-to-expenses of running the schools. These levies are continuing, which means once they are voted, they will be collected until they are withdrawn by the district or repealed by the voter. The last Loveland City Schools Operating Levy passed was in 2011 for 3.5 mills.

5 Permanent Improvement (PI) Fund Levies are for capital expenditures of a lasting nature, such as roofing, parking lot paving, heating and air conditioning, buses or other purchases with a price tag of more than $5,000, as well as technology hardware and software. PI funds cannot be used for the day-to-day expenses of running the district. This type of levy can be for a time period of one to five years or can be made permanent. The one and only PI levy that the Loveland City Schools has was approved by the voters in March of This was a 5 mill levy and it is a continuing levy. Bond Levies are used to acquire land and build schools. A Bond Levy acts much like a mortgage, with a specified period until it is paid off. The last Bond Levy passed was in 1998 for 5 mills, and was used for the following: 75,000 sq. ft. at the high school, including the gym 15 classrooms New Intermediate School Complete restoration of the middle school Renovation of the other 3 buildings The bonds will be paid off in Tax Reduction Factor. Until 1976, continuing levies were just that. Their millage was applied to real property at its assessed value. The millage of a continuing levy remained constant; therefore if the value of the property went up, so did the tax. At that time property values began to rise sharply. The state legislature thought that people s taxes shouldn t increase just because their property values did. Therefore they passed House Bill 920, which limited a continuing property levy to collecting the same dollar amount as it collected in the year in which it was voted. Under this bill, which is still in effect today, the tax dollar amount of a continuing levy remains constant. When the value of the property goes up, the millage is reduced by the County Auditor. This reduction to the millage is to ensure that the same dollar amount that was originally passed is all that is collected. This is one of the major reasons that school districts in the State of Ohio place a new levy on the ballot every two to five years. Costs keep going up, but the revenue remains the same. Over the years, Loveland City School District voters have approved mills in continuing levies for residential and agricultural property. Because of HB920 Tax Reduction legislation in 1976, the current voted mills have been reduced to effective mills.

6 Exceptions to HB 920: Only a few exceptions exclude certain taxes from the operations of HB 920, but these exceptions have important consequences for school finance. The exceptions include: Inside mills A school districts un-voted mills are never reduced by a tax reduction factor. Bond levies A bond levy collects only as much revenue as required to pay debt service. Therefore, bond levies have a kind of internal reduction mechanism and do not require the use of HB 920 reductions. Emergency school levies School districts may ask voters for authority to levy an emergency amount of dollars for up to 10 years. As with a bond levy, this levies only a specified number of dollars and carries with it an internal rate limitation Two-percent or 20-mill floor Tax reduction factors may not force a school district s effective tax rate below 20% (20 mills). New Construction Increases in valuation caused by new construction do not trigger any offsetting reduction in taxes. 10. How does the school district determine how much to levy and when? Over the three or four-year period between levies, the school district is faced with increasing costs and flat revenues. The levy amount is set to accommodate this increase by collecting more than is spent in the early years to make up for a projected deficit in its later years. School Board members examine the costs of running the district as presented to them by the School Treasurer. The Treasurer is required to submit a new Five Year Forecast to the state twice a year. This document, which is posted on the district s website, guides the Board of Education in making financial decisions. Board members look closely at programs and services of the district to see where money is needed and where money could be saved. They determine how much money they will need to fund the operating expenses of the district. 11. When do our taxes increase? The county auditor completes a re-evaluation every 3 years and taxes are adjusted in January of the following year. In Hamilton County the next re-evaluation will occur in 2014 with tax bills adjusted in January 2015 and so forth. Some residents will see increases in their taxes and some residents will see a decrease. If your taxes went up then someone else s went down. Ohio law (HB920) does not allow schools to receive additional monies from voted levies when the county auditor re-evaluates property.

7 12. Keeping Costs Low? Although the Board of Education tries to operate like a business, unlike a business, there are things school districts cannot do: Control the materials (number or type of students enrolled). Control the production line (lower the credits to graduate, or the days in the school calendar). Advertise with tax funds for a levy campaign. Operate at a deficit. Go out of business. Many costs are mandated by the State and/or Federal government, and are either unfunded or under-funded. Some recent mandates are: Collective Bargaining mandated 1983 Charter Schools Authorized 1992 (payments charged to public schools). School Employees fingerprinting and background checks 1993 Educational Management Information System implemented Special Education Mandates NCLB No Child Left Behind High School credits needed to graduate. 16 in in in with three units in a lab based science in 2003 Education is heavily reliant on people. In 2013, 86% of our resources were spent on wages and benefits. Costs, such as utilities, county auditor and county treasurers fees, account for.05%, and are charges over which the district has little control. This means only 13.5% of the budget is discretionary. 13. What are other factors that affect school district revenues? In an attempt to generate growth in commerce and industry, both the state and local government have enacted laws that reduce revenue for the schools. HB 66 Accelerated elimination of the Tangible Personal Property Tax for businesses. Starting in calendar year 2006 through 2011, the State of Ohio replaced most of the taxes lost due to this bill. Starting in calendar year 2012, the state started phasing out this reimbursement. In 2013 the state stopped the reimbursements. At this time, we no longer receive Tangible Personal Property Tax. This law eliminated approximately $1,152,559 of existing Loveland City School District resources. Tax Abatements For many years, state tax policy has connected the prospects for economic development with the implementation of special tax concessions for business expansions. A variety of tax incentive programs enable county, municipal or

8 township governments the ability to grant exemption from the property taxes applicable to new business investment. At least in some cases, school districts may play a role in the process by which local governments grant such concessions. Also, in some instances, the beneficiary of a tax abatement may make payments in lieu of taxes to a school district under a contractual arrangement. In recent years, the method by which the state school aid formulas account for such payments has become an issue. Tax Increment Financing (TIFs) As further encouragement for economic development, the state has adopted tax policies by which a commercial development receives an abatement of taxes on the taxable property value of a new investment. As part of the abatement agreement, the taxpayer agrees to pay payments in lieu of taxes for use in financing site improvements by the city or township or county intended to facilitate the development. This policy has the effect of diverting taxes chargeable by a school district for education purposes into a cash flow used to fund economic development. 14. What is the current enrollment of the Loveland City Schools? At the end of the school year there were 4743 students throughout the Loveland City Schools. 15. Who determines how much I pay in taxes? The State Legislature determines the level of state aid given to schools, they set the amount of homestead credit, they set the inside millage everyone must pay, and they mandate schools to provide programs that the Legislature does not fund. The Auditors of Hamilton County, Clermont County, and Warren County assign each property a market value and property classification. The Loveland City Schools Board of Education determines the dollar amount needed, and submits this figure to the Hamilton County Auditor. The County Auditor determines the millage it will take to raise the dollar amount sought by the Board of Education. The Voters must approve a levy request at the ballot box for it to be implemented. 16. Voted millage (outside) vs. Inside millage? The Ohio Constitution permits a tax up to 1% of value without voter approval. These un-voted taxes take the form of the first 10 mills of property tax. Statutory provisions apportion these 10 mills among the various types of local governments schools, cities, or villages, counties and townships. Usually, school districts have the benefit of about

9 4.5 to 6 un-voted or inside mills. All taxes above a school district s un-voted mills must receive voter approval. Ohio statutes offer school districts a number of options for adopting real property taxes above the 10 mill limitation. These taxes are called voted or outside mills. State tax policies determine when school districts can submit a proposed property tax for voter approval, how long the tax will apply, how the ballot will describe the tax and whether the tax applies at a given rate or to raise a specific sum of dollars. Thus, school districts have some choices about when to submit a levy for voter approval and about how much to request in taxes, but the state prescribes procedures and defines the options available to school districts. Within the constraints imposed by the state, school districts can choose to submit a tax for a continuing period of time or for a limited number of years. If a tax approved for a limited number of years reaches its expiration date, a school district can ask voters to renew it. 17. What are Tax rollbacks and the homestead exemption? Taxpayers do not pay all of the taxes charged against residential and agricultural real property. All Class I property taxes receive a 10% discount. In addition, residential real property receives an additional 2.5% discount. Together, these reductions in real property taxes are called rollbacks. Finally, residential property of senior citizens and disabled persons qualifies for a homestead exemption. This exemption reduces the taxable value of a qualified property by $8,750 or $8.75 per mill of tax charged against the property. However, the state reimburses school districts for this loss on a dollar-fordollar basis. The rollback provisions mean that homeowners really pay only 87.5% of each dollar of taxes charged against their residence. Senior citizens pay a little less. Beginning January 1, 2014 the state is eliminating this practice on any new levies a school district puts on the ballot. Residents that used to automatically get this reduction will now have to qualify for it based on the criteria the state has set. 18. What is the Tax Base of Loveland City Schools? The real property tax base equals the value of the property. Value means the market value multiplied by an assessment percentage of 35%. In other words, if a home has a market value of $100,000, its value for tax purposes equals $35,000. The county auditor reappraises all real property once every six years. In the third year after the reappraisal, the auditor updates the value of each property in the county. School districts have no direct responsibility for establishing the taxable value of property. However, school districts may participate in the valuation process by filing complaints against the value of property in the school district if the county auditor s value appears too low. 19. The State says they give $5,653 to the school for every child. How much does Loveland City Schools really get per student?

10 In Fiscal Year we received $10,870,342 in school funding from the State of Ohio. Our Average Daily Members (ADM) was 4743 at the end of May This works out to $2,292 for each student. 20. Why doesn t the Loveland City School District receive the full amount the state says they give each student? The State of Ohio has developed a formula that will calculate how much money they will give a school district. This formula is complex with a myriad of variables when calculating funding for schools. Essentially the state determines a district s ability to pay based, in part, on the value of all the property within a district. The more total property value per student a district has, the greater its portion of the cost of an adequate education. By these standards, Loveland City Schools is considered a wealthy school district which translates into less state funding. 21. Why do I see yellow school busses everywhere? Next to the cost of salaries and fringe benefits for staff, the cost of transporting students to and from school is usually the largest expense facing a school district. Ohio law requires districts to provide transportation for kindergarten through eighth-grade students who live more than two miles from their school. Public schools in Ohio, along with the responsibility for the children attending their schools, also bear the responsibility for transporting students attending private or parochial schools, as well as those attending community schools. Districts are required to transport these students in the same manner they provide transportation for their own students. However, the district is not responsible for transporting the students for any more than 30 minutes maximum travel time.