2024 Earned Income Tax

The Milford Schools Board of Education voted to place a 1% Earned Income Tax on the November 2024 ballot. This is not a property tax. A school district Earned Income Tax is defined by the State of Ohio as a tax on compensation (wages, salaries, tips, etc.) and net earnings from self-employment to the extent included in modified adjusted gross income. 

It generally does not include:

• Retirement income
• Social Security
• Child support
• Workers compensation
• Unemployment benefits
• Interest, dividends or capital gains

The revenue that funds Milford Schools has not kept pace with inflation. 

• Property taxes from operating levies do not increase as property values increase.
• Our most recent operating levy, which provides local funding, is from 2013. 
• The Ohio funding that Milford Schools receives through the Fair School Funding plan is at 2017-2018 levels. 

Despite school funding being deemed unconstitutional in 1997, schools in Ohio are funded primarily by their communities. Milford is considered a “wealthy” district by the State and our community is responsible for 66% of our funding. 

Traditionally, Milford has raised local revenue through property taxes. However, as property values and taxes have risen, the Board was concerned about imposing additional property tax revenue on all property owners within the school district.

Another vehicle for raising funds is an income tax. The Board of Education has chosen an Earned Income Tax because it does not tax income from sources such as retirement income, social security, child support, and capital gains.

A 1% rate was chosen because it provides adequate funding for our schools without over-funding the district. It keeps Milford at current spending levels. Since January 2023, Milford Schools has made approximately $4.5M in permanent budget reductions inclusive of 19 positions, contract reductions, and debt financing. 

On its current revenue trajectory, Milford Schools would enter Fiscal Caution in 2025, and Fiscal Warning and Fiscal Emergency in 2026. These designations mean that the State of Ohio could begin to make decisions about what school programs and supports are funded in the Milford community. 

A 1% earned income tax appropriately funds our schools over the foreseeable future. This differs from a 5.99 mil operating levy, which would delay the timeframe in which Milford Schools is expected to enter Fiscal Caution, but would not bring the district out of deficit spending. 

A school district Earned Income Tax is defined by the State of Ohio as a tax on compensation (wages, salaries, tips, etc.) and net earnings from self-employment to the extent included in modified adjusted gross income. 

It generally does not include:

• Retirement income
• Social Security
• Child support
• Workers compensation
• Unemployment benefits
• Interest, dividends or capital gains

Residents who live within the boundaries of Milford Exempted Village Schools would pay the earned income tax. It would not apply to individuals who work in the Milford Schools district boundary but live in other jurisdictions.

Property taxes from operating levies do not go away, but they also do not increase as property valuations increase. This means that the effective tax rate decreases over time. Operating levies pay for the day-to-day running of the school district. 

Bonds do expire within a defined time period. Bonds pay for capital improvements within a school district, such as the new Middle School, and expire when debt is repaid.

If the Earned Income Tax fails in November 2024, the board would consider additional changes for the 2025-2026 school year in an effort to delay when Milford Schools would enter Fiscal Caution/Watch/Emergency. These could include:

• Eliminate neighborhood elementary schools and move to grade-level sister schools
• Shift from transporting all students to state minimum busing, which would mean no busing for High School students and enacting a 2-mile walk radius.
• Eliminate elementary Art, Music and PE
• Reduce course offerings at the High School
• Eliminate the 21 additional staff positions which were previously discussed

The link to the April 2024 board finance presentation is here. 

Board meetings can be viewed here.