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One of the most common misconceptions I hear is that people
think the taxes generated by new homes automatically pay for the cost of
building schools, paying teachers, and operating the school infrastructure.
THAT IS NOT CORRECT. At best, a new home pays for only a third of the cost
of educating just one student. So where does the rest of the money come from?
This series of slides should help you understand the basic
dynamics of school funding in Ohio. If you click on the slide, it will expand to
screen size. If you would prefer to print the presentation, it is also available
in Adobe PDF format
here. If you already have a good handle on how school funding works,
jump here to read what I think is going on.
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Let's being with a stable community with one home
which houses one student, a school and a business. It costs $3 per year
to educate the student. The homeowner chips in $1, the business adds
another $1, and the State completes the funding with another $1. |
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Then one more house is built, housing another
student. The cost to run the school system has now doubled, to $6 per
year. The State sends another dollar for the new student. The remaining
$4 needs to be covered by the two houses and the one business. The
School Board puts a new levy on the ballot and we vote to increase our
taxes 33%, so each house and the business now pay $1.33 each per year.
This is the root of the funding problem! |
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Then a new apartment complex is constructed, with two
apartments and two more kids. Now the cost to operate the schools is $12
per year. But apartment buildings don't generate as much tax per
dwelling unit as a private home. For our example, we'll assume that the
two-unit apartment building pays the same tax as a single family home.
The State pays $4, and the other $8 needs to come from the two houses,
the apartment building and the business. The Board puts a new levy on
the ballot and we vote to increase our taxes another 50% to $2.
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The State of Ohio is phasing out Personal Property
Tax for Schools. If we assume that the revenue lost is not replaced by
the State as the legislators continue to divert money to the poor urban
and rural districts, then the revenue from the business goes down, and
the homeowners have to pick up still more. |
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The business is recruited away by the City of
Columbus, but we get a new one from some other suburb. The new business gets a 75% property tax
abatement however, so the residential taxpayers have to step up and
absorb the shortfall, once more. |
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The State of Ohio reduces its State Aid funding by 5%
per student for 'wealthy' suburban districts. Instead of getting $4 per
year, the school district only gets $3.80. Again, the homeowners must
absorb the shortfall... |
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The problem is the way the mix of taxpayers
change. Over time, the funding of Hilliard City Schools has shifted from
being an equal partnership of homeowners, businesses, and the State of
Ohio to being one where the homeowners are taking on more and more of
the cost. When an new home is built, it only gets worse. Putting the
third high school on the Emmelhainz property will accelerate residential
construction. |
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Tell Mayor Schonhardt and the Hilliard City Council
that they must not let residential development continue to
outpace commercial development. For every street of ten new $200,000
homes, there also needs to be $2 million dollars in new commercial real
estate constructed which pay property taxes or the equivalent to the
schools. |
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I am not an expert on school funding. I'm just a
business executive who knows how to analyze an enterprise from a fiscal
perspective, and think I see the key of our funding problem in the
Hilliard City Schools. I will happily accept advice and criticism, but
please invest the energy required to understand all this stuff
beforehand. |
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