A lose-lose proposal from the Ohio House
New analysis from Policy Matters Ohio exposes the flawed reasoning behind a key component of the Ohio House’s school-funding plan. The proposal to tie school-district cash reserves to property tax reductions is neither effective nor responsible, says Bailey Williams, Policy Matters researcher and author of the brief.
“There is no clear connection between a school district’s cash balance reserves and the property value situation in their jurisdiction,” Williams said. “The policy uses arbitrary standards to offer uneven, unpredictable property tax refunds to one group of Ohioans, while ignoring the needs of a similarly situated group of Ohioans, all hinging on school district budgets regardless of how well they are managed.”
The brief compares two groups of Ohio school districts: The large majority (79%) of affected districts with cash reserves over the proposed 30% cap, and the 125 districts with reserves at or below that level. From 2020-23, both groups saw similar changes in property values, property tax revenue, and average millage rate. Despite these similarities, the House proposal would result in very different outcomes.
“Whether looking at property value, revenue, or millage rates, the House’s proposal for property tax relief fails to target those who need it, while also harming public school districts that the House plans to shortchange in other ways as well,” Williams said. “In reality, school districts’ rollover balances are neither the problem nor the solution. The House-passed budget uses some Ohioans’ legitimate need for property tax relief as cover for legislators to raid public schools’ budgets to pay for decades of fiscally irresponsible income tax cuts.”
As a better-targeted, more effective proposal, the brief highlights and recommends a property tax circuit breaker, like the one in the bipartisan S.B. 22. “The state must prioritize spending on programs that support long-term economic prosperity: schools, childcare, and the health of Ohioans,” Williams said. “Some Ohioans also need targeted property tax assistance to weather this atypical inflationary rise in values. The Senate has the perfect opportunity to do so by replacing the arbitrary cap on rollover balances with the Circuit Breaker.”