MORROW, OHIO – L M District to seek 1% earnings tax
In a message to the public, the Little Miami School District explains why they have proposed to place a 1 percent Earnings Tax on the November ballot.
LITTLE MIAMI FINANCIAL OUTLOOK
Despite significant cuts in state funding, Little Miami Local Schools remains committed to fiscal stewardship while fulfilling its central mission of providing an excellent education to the district's students.
For this reason, the Little Miami Board of Education recently took steps to place an issue on the November 2008 ballot.
"Little Miami has some financial challenges as we look ahead to plan for the district's future," said Shaun Bevan, Treasurer.
Although the Board of Education has been proactive in helping alleviate the tax burden on homeowners and in implementing cost saving measures, cuts in state funding mean Little Miami will lose $17.53 million over the next four years compared to projected state funding. During that same time period, district enrollment is expected to grow by about 800 additional students and two new buildings will open.
In 2006, the board discontinued collection of the emergency operating levy - which was passed in 2002 and was to expire in 2007 - one year early. This levy generated approximately $3 million annually for the district. By rolling back the operating levy early, the district is operating at the 20-mill minimum tax rate allowed in Ohio to qualify for State funding and at the lowest rate historically for the district. Under the former governor's budget, this meant that part of the $3 million formerly collected by the operating levy would come from the state, rather than from the local taxpayers.
"However, the Governor and Legislature's new state biennial budget that went into effect July 1, 2007 really hurt Little Miami's financial outlook," said Mr. Bevan. "Projections estimated the district would receive an increase of more than $3 million in state aid this fiscal year - aid that has now been cut by the state biennial budget."
Little Miami is functioning at the lowest effective operating millage rate that it has in the last 13 years and at a lower operating millage than any other district in Warren County. The district's per pupil expenditure is more than $750 less than the statewide average - a savings of approximately $2.83 million to our taxpayers. At the same time, the district has implemented strategies to reduce expenditures.
"Approximately 83 percent of the budget is salaries and benefits," explained Mr. Bevan. "Both of these areas have been targets of proactive financial planning."
The board worked with teachers to develop an innovative plan that included major restructuring of health care coverage and salaries. The district's healthcare plan rates were increasing 21 percent. Teachers accepted a new plan to offset this tremendous cost to the operating budget and actually reduced premiums by 39 percent by implementing a health insurance plan with a Health Savings Account. The district's 10-year savings in healthcare premiums will be $13.9 million.
The teachers also adopted a new salary schedule with savings of more than $200,000 over the typical teacher's career. Due to rapidly growing enrollment, the district anticipates hiring eight additional teaching positions each year. This equates to a savings of $1.6 million.
Other cost-saving measures include:
- Refinancing the bond issue to a lower market interest rate - savings of $1.46 million.
- Redesigning transportation - savings of $400,000-$500,000 by reducing mileage and minimizing bus purchases.
- Replacing leased copiers with more cost efficient copiers - savings of $146,000 off the lease price, $30,000 in interest, and more than $25,000 a year in operational costs. This means the new fleet paid for itself in the first year.
- Eliminating two administrative positions for the 2008-2009 school year - savings of $180,000.
- Implementing a new phone system - savings of about $45,000 annually.
Little Miami Schools also formed a citizens' Business Advisory Council to help ensure high quality, cost-efficient operations.
"These community members are evaluating the district's operations and helping us improve our efficiency as we strive to be the best stewards of our community's tax dollars," said Mr. Bevan.
The Little Miami community has sent a strong message that the district should move away from reliance on property taxes and find ways to alleviate the tax burden on senior citizens.
"Most school levies in Ohio are good for only a short period of time and then must be replaced so that school district expenses can keep up with inflation," Mr. Bevan explained. "The result is a vicious cycle with districts asking tax payers to support issues every 3-4 years. Little Miami is working to break that cycle."
The school board is planning to place a 1 percent Earnings Tax on the November ballot. This measure would provide a sustainable source of revenue for the district that is not tied to property value and is equitably applied to all district wage earners. Additionally, it would provide tax relief for the retired, the elderly, those receiving investment earnings, and those on pensions, unemployment, disability, Social Security or other fixed incomes.
"The benefits of an earnings tax are tremendous - this provides the district with the best chance to stay off the ballot longer term, it taxes only wages and self-employment income, and it is arguably the fairest form of tax," Mr. Bevan said.
Due to the amount of time for revenue collection, Little Miami has only one opportunity to pass the earnings tax.
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