Treasurer Column: School Funding - It’s Complicated!

School funding in Ohio is complicated and confusing, even to those of us who work with it every day. As with most complicated things, it is easier to tackle when you break it into smaller parts. Today, I will write about the smallest part, which is a “mill.” A mill is a term associated with property tax levies. Property taxes are an important part of school funding, unfortunately. I say “unfortunately” because taxes are not popular, no matter what kind of tax we are talking about. But the way property taxes work is especially unfortunate for Pickerington Local Schools. We tend to get the short end of the stick. How so? Because it takes a higher levy in Pickerington to raise a certain dollar amount per pupil than it does in most other school districts. That’s because our property valuation per pupil is low compared to most districts. (We are mostly residential, with not as much business and industry.) The state funding formula does not make up for the shortage. The current funding system does not work well for a “bedroom community” such as ours. This is why school funding in Ohio is so inequitable. A school levy has to be about twice as big here as in the Gahanna-Jefferson school district (for example), to raise the same dollar amount per pupil. Is that fair? Let’s back up for a minute and see why it works this way. First let’s define the words “levy” and “mill.” The word levy is derived from the word lever. A lever is used to raise things -- in this case, to raise a tax on someone’s property. (Yes, I know this is an unpleasant topic.) Property tax levies are measured in mills. So what exactly is a mill? It comes from the Latin word millesimus which is a thousandth. It’s actually 1/1000 of a dollar or $.001 which is one-tenth of a cent. For every $1,000 of assessed property value, a one mill tax will produce one dollar of revenue for the school district. If you take the assessed property value of our whole district, then divide by our number of students, you arrive at about $108,000 of valuation per student, compared with $208,000 in Gahanna. A one-mill tax will cost about $30.63 a year on a $100,000 home, no matter where you live in Ohio. But the amount it will generate for the schools differs greatly. One mill produces only $108 per student in Pickerington, compared to $208 in Gahanna. Therefore, district wealth (valuation per pupil) has a huge impact on the size of levy needed. It would take a 10-mill levy in Pickerington to produce the same amount of money as a 5.2-mill levy in Gahanna. How fair is that to taxpayers and to the students? This is one of the main reasons school funding in Ohio has been found unconstitutional. The funding system makes it difficult for all students to have similar opportunities. These differences in local wealth are supposed to be equalized through the state portion of school funding, but the formula has not worked that way. And with the state facing an $8 billion shortfall, deep cuts are expected in our state aid. So Pickerington unfortunately gets shortchanged on both ends of the revenue stick (state and local). With all due respect to our friends in Gahanna and at the Statehouse, something is wrong with this school-funding picture. As the Board and administration carefully review levy options in 2011, and the size of the levy needed, please keep in mind these school-funding inequities are outside our control. Take a look at the measures we have taken to curtail expenditures. Also take a moment to express school-funding concerns to your legislators. We appreciate your support as we join together to navigate these stormy financial times for the Pickerington Local School District.