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School Board Discusses Redirecting Tax Revenue




The Archbold Area School Board was introduced to a plan to reclassify some of its property tax revenue as permanent improvement funds.

David Deskins, district superintendent, told board members during the Monday night, July 21, meeting the goal of the move would be to create a permanent improvement fund.

Permanent improvement funds can only be spent on items that have a projected life span of five years or more. Such items include anything from textbooks to school buses to buildings, as long as it lasts five years or more.

Creating the permanent improvement fund, “is a better method of managing our resources. It’s a better way to chart and monitor our dollars,” Deskins said.

The district has a need for a permanent improvement fund, he said.

“As the board has heard and seen over the past few months, permanent improvement needs have become a significant expenditure for the district,” Deskins told board members.

“Our buildings are no longer new, and while they are expertly maintained, they are beginning to show their age and will begin to require more and more maintenance and upkeep.”

The school district has spent about $700,000 on permanent improvements in the last two years, he said.

Reclassifying

To create a permanent improvement fund, Deskins and Christine Ziegler, district treasurer, propose reclassifying a portion of the district’s inside millage.

A mill is one one-thousandth of a dollar ($.001), or one tenth of a cent. Property tax rates are expressed in mills; on a ballot, it is phrased as $1 per $1,000 of assessed valuation.

There are two types of millage, called inside and outside.

Inside mills are the property taxes assessed against property owners without being approved by a vote of the public. Most of this millage has been in place for decades.

Currently, the Archbold Area School District collects four unvoted “inside” mills, which are allocated for general operating expenses. Money generated by the four inside mills goes to the district general fund.

Deskins and Ziegler are proposing taking part of that fourmill property tax and reallocating, or reclassifying, it from general operating expense to permanent improvement.

To do so requires a public hearing and a vote of the school board.

Ziegler said for the change to take affect in time for next year, the board must notify Nancy Yackee, Fulton County auditor, by the end of September.

To hold the required public hearing, legal notification must be published in a newspaper “of general circulation” in the school district, so timing is critical.

From General Fund

Deskins said, currently, permanent improvements such as building repairs, new school buses, parking lot paving, etc., comes from the district general fund.

Reclassifying some of the inside millage for permanent improvement reduces general fund income, but the general fund doesn’t have to pay for the improvements, so there is effectively no change.

One side benefit is because permanent improvement money is not used to compute a district’s per-pupil cost, that cost is lowered.

The per-pupil cost is supposed to represent the amount the district spends to educate one student for one year, but since each district handles its books differently, Ziegler said it’s not a good way to compare school districts.

For example, Archbold has been funding permanent improvements out of its general fund, which inflates the cost per pupil. When compared to districts that do have permanent improvement funds, Archbold per-pupil costs look higher.

Another benefit of reallocating inside mills is that inside mills are allowed to increase with inflation.

Ohio law does not allow revenue collected by a voted property tax to grow as property values increase. Inside mills are not restricted, so as property values go up, revenue generated by the inside millage also increases.

Bonds

Deskins and Ziegler also propose rolling back the millage rate collected to repay bonds that were issued when buildings were constructed or renovated.

Money generated by such millage can only be used to retire bonds. When a tax to retire bonds collects more than needed, the millage rate is rolled back, or reduced.

The district has cash on hand, and some bonds are coming up on their retirement dates; in other words, they’ll be paid off.

The net effect will be a reduction in the millage rate for voters, and hopefully, lower taxes.

But…

Unfortunately, there are several factors that impact the proposal that are not under the control of the school district.

For example, Fulton County is going through reevaluation. If property values go up, taxes could increase.

Plus, at the state level, what if legislators decide to change the phase-out of personal property taxes, the tax on business equipment and inventory? And what is the future of the Commercial Activity Tax?

All of the factors could drive up property taxes, effectively negating any benefit from a rollback.

Deskins said as he has looked for ways to improve the school district’s financial bottom line, “I have taken some risks.

“In this case, the risks don’t outweigh the potential benefi ts,” he said.

The board took no action on the proposal, but it will be discussed at the August meeting, set for 5:30 pm, Monday, Aug. 18, at the Archbold High School media center.


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