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Milford’s Last Operating Levy Hits 6 Year Anniversary

Posted on: July 18, 2019
Tags: Financial information, Operating levies, Property taxes

It may have slipped under the radar, but Milford Schools hit an important anniversary in May. It has been six years since the district required an operating levy. That’s the second longest stretch in the district’s history and tied for the longest in the past 30 years.

Operating levies are an unfortunate fact of life for many Ohio public school districts. In Ohio, schools are financed through a combination of federal, state, and local funds. The state funds come from the Ohio Department of Education (ODE). Local funds usually come from income taxes or property taxes, which are voted on in community levies. Most districts can’t avoid operating levies, but they can minimize the frequency of levies with disciplined fiscal management.

Why do Ohio schools need operating levies?

Operating levies became a regular occurrence when Ohio enacted HB 920, a state law that freezes a school district’s income on voted mills. By law, all local governments can levy up to 10 mills without a vote. A mill is equal to one-thousandth of a dollar. Anything beyond ten mills requires a levy. This law applies to all local government organizations, which is why you often see levies for schools, parks, fire/EMS, and more.

However, HB 920 created a challenge for Ohio school districts. The law freezes a school district’s income on all mills above the 10 mill limit. That means that most of a school district’s property tax revenue does not increase as property values rise. When your home is assessed at a higher value and your taxes increase, very little of that increase goes to Milford Schools.

This stagnant income creates challenges because school costs rise over time. Inflation drives up the costs for materials. Utility and maintenance costs may rise.  Costs for labor, healthcare, and other benefits generally increase from year to year. Eventually, the district has to propose an operating levy to see an increase in property tax revenue from voted mills. On average, Ohio public school districts ask their residents for additional funds every three years.

Fortunately, districts have some control over the process. They can operate in a fiscally disciplined manner and minimize costs. A prudent approach can stretch the life of operating funds and delay the need for a levy. Below is an overview of how long Milford has gone in between past operating levies:

 

Milford Operating Levies Through History

Milford Operating Levies Through History

Milford went seven years without a levy after the passage of HB 920. The district also went six years without a levy from 1997 to 2003. However, those were very different times. The district had several failed levies over that period, which resulted in cuts to programming and transportation.

This six-year period from 2013 to 2019 is a different story. The district hasn’t put a levy on the ballot. There haven’t been cuts to transportation, staff, or extracurriculars. On the contrary, the district has improved performance, expanded its activities and extracurriculars, and even built a sizable surplus - all without proposing an operating levy.

How has Milford made the 2013 operating levy last so long? Through a combination of prudent fiscal management and additional revenue from various sources, like the state and a renegotiated agreement with Union Township.

Extra revenue has been helpful,  but disciplined spending has also had major impact on the lifespan of the last levy. Over the past six years, Milford has made a conscious effort to do more with less.

 

 

Milford Performance and Spending

Milford Performance & Spending

According to Ohio School Report Cards, Milford spends less per student than the average Ohio district with between 5,000 and 9,999 students. Milford ranks 33 out of 45 similarly sized districts in terms of per-pupil spending, and is well below the state average:

Milford spending per student: $9,078

State average spending per student: $9,353

However, even with less spending, Milford still outperforms its peer districts in terms of student performance. The district ranks in the top 20 percent of districts with between 5,000 and 9,999 students in terms of overall academic performance.

When will Milford have another operating levy?

It’s inevitable that the district will need an operating levy at some point in the future. The question is when. It’s difficult to pinpoint the exact date of the next levy. However, the district can use spending projections to estimate that the next levy will likely arrive sometime in the mid-2020s. At that point, more than a decade will have passed since the 2013 levy.

In a recent school board meeting, Treasurer Brian Rabe stated that Milford would be in deficit spending in 2021. This means the district will be spending more than it receives in revenue. Deficit spending usually happens because expenses increase but the “outside” portion of tax revenue remains flat. 

“Nearly 95 percent of districts in Ohio will be in deficit spending by 2021,” Mr. Rabe said in the board meeting. “This isn’t an issue specific to Milford.”

If a district has no surplus cash available, they’re usually forced to consider a levy as soon as they hit deficit spending, if not earlier. Fortunately, Milford has accumulated a significant cash surplus, which can be used to offset spending deficits. That surplus may help delay an operating levy for several more years.

The district’s goal is to continue operating in a fiscally disciplined manner. That means being innovative and efficient in how we educate students and manage our facilities. The district is always on the search for new ideas on how to maximize student performance in a way that protects the budget and the community’s tax dollars. We look forward to celebrating many more anniversaries without a need for a new operating levy.