Public Education Matters

Various student voices 0:08
Public education matters. Public education matters. Public education matters.

Jeff Wensing 0:14
This is Public Education Matters brought to you by the Ohio Education Association.

Katie Olmsted 0:26
Thanks for joining us for this edition of Public Education Matters, frankly, what is probably one of the most important editions of Public Education Matters, you're going to get from us this season, because we are talking about an existential threat to the future of public schools and so many other important services in our state. I'm your host, Katie Olmsted, and I'm part of the communications team for the Ohio Education Association and the nearly 120,000 public school educators OEA represents in communities across the state, in every single one of those communities, property taxes fund public schools and other essential services from roads and parks to libraries, police and fire departments and so much more. And there is a campaign underway right now that would eliminate property taxes in our state without any other funding mechanism to fill that huge funding hole. The result, if that gets to the ballot and passes, would be catastrophic for our schools, for our students, for our communities, for our economies. About 50% of school funding in Ohio comes from property taxes right now. Think about that. What does that look like for your public school if 50% of its funding just disappeared, what will Ohio look like with massive layoffs, school closures and consolidations, gutted public services and actually increased costs for everyday Ohioans across the board, we need to be talking about this, and we need to be telling everyone we know not to sign the petition, so this measure does not go on the ballot. Step one in that, for a lot of us, is a better understanding of all of this ourselves. For that, we bring in OEA's Director of Government Relations to help break it all down. Take a listen.

Dan Ramos 2:25
Hi, I'm Dan Ramos, the Director of Government Relations for the Ohio Education Association, going to talk to you today about issues related to property taxes and the petition to potentially eliminate them and the impact of that.

Katie Olmsted 2:38
And there is so much to talk about around these issues. Big thing is that that petition that's happening right now, but also I am hoping to talk to you about just property taxes in general, so that people have a better understanding of it. Because I think that's one of the things we're seeing is going on is that people don't understand how our property taxes work and how they fund our schools. So big picture. Immediate thing going on is that petition. What's happening with that?

Dan Ramos 3:04
Yeah, so if you're not familiar, there's a group of citizens in Ohio that have been circulating a petition to place a constitutional amendment on the ballot since last year that would effectively eliminate the ability for Ohioans and for local local taxing authorities to place property taxes on ballots, and it effectively would eliminate all property taxes that are currently levied in the state of Ohio, if, if they were to be successful in collecting enough signatures, and then it passes on the November ballot this year, and that would have a immediate and detrimental impact, not just to public schools, but to the local services that Ohioans across the state rely upon. But you know, obviously, you know, for our members and the students they serve, this would be, you know, devastating to Ohio schools, regardless of where you are in the state, regardless if you are wealthy or a you know, you know, financially a needy district, if you're urban or rural, if you're suburban, all schools have some form or fashion levies on the books to help fund, you know, the their operations. You know, and Ohio's public schools actually account for the largest amount of property taxes. When we look at the total amount of property taxes levied every year, it's approximately 20, $20 billion in in the full tax year of 2024 was about $24 billion and in that year, Ohio schools raised approximately $13 billion to help fund you know, everything from you know, staff, you know your your costs are associated with payroll and the like, to programs to facility operations and if property taxes would be eliminated. It would be catastrophic, catastrophic. This would mean that, you know, our estimates, nearly half of public school employees could potentially face cuts in you know that that is devastating, not just to not just to the schools where they work and the individuals they serve, but to those families and to those, you know, to our members, we've, we've run some analysis, and that would be approximately, you know, 130 plus 1000 individuals impacted, if they are, if they are rift or cut. That would increase the unemployment rate in Ohio by 50% so that's, that's a huge impact, not just on public schools, but then on the economy districts that are already struggling with local revenue, and that are, you know, in economically disadvantaged areas would be, it would be dramatically impacted. And you know, for those districts, they are already struggling to have, you know, put, you know, property taxes on the ballot. It is highly unlikely that they be able to replace it with an income tax. But then also, on the other side of the spectrum, school districts that are wealthier, in particular are wealthy inner city and our wealthy suburban districts, who actually draw a smaller portion of state funding from the fair school funding plan, usually make up the majority of their funding through local property taxes, and they would automatically have to figure out a way to, you know, in some cases, plug a 60% budget gap, which would just be, you know, devastating. And the result would be, you know, larger class sizes, you know, eliminated programs. And you know, probably some of the the worst, what we would see are school districts that couldn't open their doors because they couldn't make payroll, they would have to close. They would see large, significant loss of staff. We'd have a lot of conversations about school consolidation, which then becomes problematic, because in Ohio, that has to go through the legislative process, and then, you know, needless to say, you know, this would also have a massive implication on school districts meeting their contractual obligations that they have with, you know, our local associations, other unions that represent staff and their contractual obligations on the bond front as well, especially if they have bonds for facilities development. So needless to say, Katie, if you know Ohioans did eliminate property taxes, it would be a devastating impact to our public school system in the state.

Katie Olmsted 7:37
I feel like there's not a word strong enough, devastating. Doesn't feel like it's that. And even on that consolidation front, you know, we hear from people who are like, well, then just consolidate the schools. And it's not just about, you know, now you won't have your team to root for for your Friday night football, although that's a big thing for a lot of people. The logistics when your kid's going to be on the school bus for two hours to get to school, because the entire county is now one school, your child's education will suffer if we provide that at all, if the schools can open, and because there is no replacement funding mechanism in this one, right? It's now going to be up to the state how to figure it out, and we, I think we can say a pretty safely. You know, I don't particularly like the idea of our state lawmakers having all the control over everything our schools do, because so far, they have done a not great job of actually funding our schools to start with, which is kind of how we started here in the first place.

Dan Ramos 8:34
Yeah, so this is, this is kind of a, you know, 30 plus year saga that we're seeing now the impact of what we have seen over over the this period. And I'm going all the way back to the DeRolph decisions by the Ohio Supreme Court that that in 1997 and from 97 to the early 2000s those four rulings essentially said that the Ohio School funding system at that time was unconstitutional because it relied too much on property taxes, essentially disadvantaging school districts that are, you know, you know that would need to raise millage by double or triple digits in order to compete with a school district that is wealthy, that would could put half a mill on the ballot and, and essentially fund their schools for years. So what we have seen since that timeframe is essentially, you know, kind of a inverse, inverse, you know, inverse numbers on two ends, first and foremost, you know, we have seen the significant increase in the reliance on property taxes since that amount so according to the Ohio Department of Taxation, in 1997 class one properties which are residential and businesses, which is the lion's share of what makes up our property tax pool raised approximately $7.17 billion. Um, that number has increased by a factor of about 183% in, you know, by the year 2023 where the same, you know, class one properties raised approximately $20.2 billion so you're talking about a massive growth of even when the state has said, you know, the state Supreme Court has said, you know, over reliance on property taxes is unconstitutional, and it's not because, you know, school districts are rolling in windfalls, right there. They have done this. They have put more ballot, more more money on the ballot at the local level. Because the other number I'm going to I'm going to point out has decreased, and that is the state share of funding. So we, you know, look at when we, when we, when we're doing the school funding formula at the state in the state budget. The big number to look at is, you know, the the state share index. And this is essentially an average across the 611 school districts of how much of the, you know, the responsibility is on the state of Ohio. And then the, obviously, the other one is the local, the local share, and that is made up predominantly of property taxes. So in 1997 that state share index was approximately 44% so the state picked up, on average, 44% of the cost to educate our students, and the other two components of that

Katie Olmsted 11:27
Unconstitutional.

Dan Ramos 11:27
Unconstitutional, unconstitutional at that time, that's not enough.

Katie Olmsted 11:29
Bare minimum, not good enough was, was, yeah.

Dan Ramos 11:35
Exactly, exactly, and because of chronic underfunding, even if even be even, even, even though we in the in 2021, we've we were able to secure the fair school funding plan, which gets us the closest to a an answer to the constitutional question, because it's an evidence based, cost based system, fully, if it was implemented fully, that's exactly fully funded, big, giant asterisk, and unfortunately, the legislative leaders in the in the in the General Assembly, over that period of time, have consistently decreased the state's obligation, not just to schools, but to the local government fund, the library fund, to all these local entities. But when we look at public schools, the that number that number that was about 44% in 97 has dropped to about 37% right now and then, by the end of this biennium, which we are currently in, will be approximately 32% so we are well lower than 10% than when the state the state Supreme Court said that over reliance on property taxes is unconstitutional.

Katie Olmsted 12:42
And keep in mind also, over the past several decades, that what who's paying those property taxes has also changed pretty dramatically. It used to be, you know, not exactly a 50/50 share, but a pretty close 50/50 share of businesses and residential property taxpayers, and because of our state's tax breaks for the the businesses and all of those policies coming down from the state level, the amount that is property tax funding for schools, a larger amount of that is paid for by you and me and the other homeowners.

Dan Ramos 13:16
That's exactly right. Yeah. And over, over the over, in particular the early 2010s we saw a lot of rollback of property taxes and taxation on business activity and corporations, in particular Ohio, which has essentially pushed that burden further onto the homeowner and the property owner to pick up the to pick up the tab. I mean, over this period as of tax year 2024 according to the Tax Foundation, Ohio actually has the eighth highest rate of property taxes in the country. And when you think about the other states on that list, I mean, you're talking about big states like New York, California, Texas, Ohio is the eighth largest of all 50 states because of this ballooning. And when you look at, when you look at 2024, you know, in collections of all types of revenue from the state and local level, you know the, you know, real property taxation. It, you know is, it was the lion's share, largest by miles. It was $21.4 billion the next largest was the state sales tax, which generated $14.3 billion so just put that in the perspective. You know, local property taxes way outstrip all other revenue sources in the state, and this is why eliminating it is problematic. And we're not saying, and I'm not saying that property tax owners don't need relief. They do, you know. And I think, I think, you know, we have really seen the strain put on property owners. I mean, I myself, you know, my property tax bill is going up. I live in Cincinnati, and, you know, because we want to make sure we have the best public schools we can we constantly are are passing renewals and levies to make sure that our schools receive the funding that the state is clearly not giving us in order to in order to send our kids to good public schools here in Cincinnati Public Schools.

Katie Olmsted 15:12
I'm an Olentangy mom, and I mean, I think it's 70% of our funding is property tax. I will say our property taxes are pretty high. The valuations around here have really ballooned, like everybody else's. But it wouldn't have to be that way if the state actually did its fair share. And I will say Olentangy to me, does a very good job of keeping costs low. It's a huge district, and they have pretty low costs. It's just how much of that is coming out of my property taxes for what the state should be paying, because I'm already paying the taxes to them, and they're just not using it to fund our schools.

Dan Ramos 15:46
Exactly, exactly, you know, and you know. But here's the bottom line is, you know, we have been pushing in the General Assembly for targeted property tax relief, obviously, through things like, you know, an expanded homestead tax exemption as well as there's a proposal out there called the circuit breaker, which would, if you know they increased by a certain amount, would refund back in a targeted manner.

Katie Olmsted 16:11
The answers can't have that. That's saying the state will actually correct help. The state will do its job.

Dan Ramos 16:18
Do its job, and support and support now, but what isn't the answer is completely eliminating property taxes. Because what it's going to do, I mean, the proposal out there, you know, you know, it might sound good, it might, it might feel good to have an immediate tax relief, but the the impact would be devastating for for everyday Ohioans, for the services we rely upon, to keep us safe, to keep us healthy, to educate our kids, you know, and ultimately, too, it would potentially lead to increased taxes in other ways. So, you know, one of the things that the amendment doesn't do is it does not provide a mechanism for replacement. So, you know, one, one thing that would have to happen is, you know, to replace that 20, approximately $20 billion a year the state would have to raise income taxes, which currently Ohio is one of the lowest income tax rates at 2.75% approx. And by a study done by the Tax Foundation, the you know, effective tax rate, income tax rate, income tax rate for Ohioans would have to increase to about 15% and that would make us the highest tax rate. Income tax rate in the country and the state sales tax would have to increase to approximately 20% those two things would have to occur in order to make up for the gap. That loss, that a loss of approximately $20 billion a year. And when you ask the circulators like, what's the what's the replacement to because if you don't do that, then you have to make massive cuts across the board and all of these different services, they have no answer. They can't answer that question.

Katie Olmsted 17:52
I see a lot of people online who say, well, then go ahead and increase the sales tax, which right now in Ohio is like 5.25% plus counties and transit authorities can add a little bit on top. Remember, schools can't levy sales taxes. That's not an option for schools. Nope. So you're paying an average across Ohio was about 7.24% in sales tax, and we're talking upwards of 20% and and the memo from the Office of Budget management said, and we might have to expand what you're paying sales tax on, so like your groceries and all of those things may end up being sales tax, and that end up costing a lot more than any of the savings that I'm going to have. Try buying a car. Try buying try living your life.

Dan Ramos 18:35
Well, yeah, living in Cincinnati, yeah. We hear the story from a state like Kentucky. You know, in order to register your vehicle every year, my brother in law owns a business in central Kentucky, and he had to get rid of the fleet of cars that he had, because it was approximately $10,000 to register his vehicles annually. And that that that is a massive cost to to, you know, everyday individuals, and it's going to impact working families. It's going to impact the middle class more, especially as we're in an era where the cost of everything's rising because of inflation, because of, you know, you know, the cost of energy, things like that. It's really going to put an additional strain on on everyday Ohioans.

Katie Olmsted 19:19
Same every day, and say they're getting priced out of their homes because of the the property taxes are going to correct, not be able to to live their everyday lives. This is not the answer. This doesn't solve this. And we know the state No, that's right, so we're just going to be making the slashes straight across the board, and not just schools. Let's talk about some of those other services.

Dan Ramos 19:40
Yeah, definitely, you know. And I think, I think the one thing that you know obviously devastating schools is a direct impact on members, but it's ultimately, ultimately to make us less safe. You know, one of the things that you know that is that is true, is that property taxes account for in some communities, the the only source but a primary source for our first responders, our emergency services, our EMS services, our 911, services. And you know, eliminating property taxes is going to have a dramatic impact on those services, in particular, if you're if you live in a township, because townships are prohibited under law. And you know, from from increasing sales or income taxes. So you know, those communities are going to see, in many communities across the state are going to see, you know, longer wait times in responses when they call 911, for, you know, emergency services and first responders. And that could lead to, you know, somebody that you know, normally would receive an EMS to their home within minutes to maybe provide critical life saving first first aid. We can see increased deaths. You know, you know, we, I was talking to a colleague who, you know, you know, does work in townships, and they indicated that they don't, you know they're going to go from a police force of about 10, you know 10, 10 cars, 10, you know 10 vehicles in their township that they fund themselves, to then having to borrow and having to get into an agreement with the County Sheriff's Department where they're going to give them two, I mean, so that that's going to make our community significantly less safer. You know when we have, when we have, you know, the loss of these services. And an estimated, and we're estimating in the coalition that we're working with is estimating about 32,000 public safety and first responder personnel could be, could be, you know, cut, and that's going to have a massive, massive impact on on the safety of our community.

Katie Olmsted 21:40
You can't protect all those jobs and not just have a devastating effect on our entire state and our economies and our ability to be a state where anybody wants to live.

Dan Ramos 21:50
Well, right? Exactly, exactly.

Katie Olmsted 21:52
It's more we need those social services. Sorry, now I'm on my soapbox. The more now you're fighting have lost their jobs, who now need those safe, social safety nets and all of the services that our property taxes fund, we won't be able to fund those.

Dan Ramos 22:05
Well, that's right. And I think, you know, the kind of the third prong of this, you know, this impact, is that it's going to have a, you know, immediate and dramatic impact on the most vulnerable in our communities. And I'm talking about senior citizens that rely on public services to have in home care, transportation to and from appointments, you know, meals delivered to their homes. You know, obviously, you know, a large portion of you know, senior citizens don't also qualify for Medicaid. And some of these, you know, some of our local property taxes, you know, fund critical public health services that they rely upon at the local level, those would be cut and gone, and we'd have to figure out ways to gap fund, but those would be immediate impacts to Ohio, to Ohio senior citizens. We have approximately 117,000 Ohioans that have developmental disabilities that receive services from county boards. And those county boards, on average, receive 75 to 85% of their funding through local property taxes. And those would you know, you're going to leave. Then those individuals without critical services that they that they rely upon, to you know, have, you know, have a have a dignified life, and stay in their home, or stay in their communities that they grew up in. The other, the other big impact, obviously, would be, you know, there's, you know, there's about $400 million in voter approved levies that impact, that support, you know, county based mental health and addiction services. And as we know, we have been in a massive opioid crisis in the state of Ohio, so that will have a devastating impact on, you know, providing those services, you know, and they are already strained. Additionally, we have about $628 million that the state uses, or that is used from local property taxes to draw down Medicaid matching funds to help pay for critical services at the county level. And the way Medicaid works is, if you don't put if you don't spend that money, you don't get the money from the feds. So not only would be, would would we have, you know that $628 million evaporate from local property taxes, but then we we'd lose out on the federal match. So that's a double cut. And then there are approximately 13,000 at risk kids that you know due to, you know, no, no, you know, fault with their own you know, are coming from broken homes or in the foster care system, or, you know, in Children Protective Services. And those services are funded largely, approximately 95% by voter approved property tax levies. So we're talking not just about our schools and our safety services, but we're talking about a you know, really hurting the most vulnerable in our communities without any answer, without any replacement, without any ability to support these individuals.

Katie Olmsted 25:03
And I don't think people know that. I mean, I, I feel like I in by virtue of the job that I have. Know more about property taxes than the average Joe, and I still don't understand a lot of the property tax stuff. I have to have it explained to me over and over again. And I I don't think a lot of people understand what their property taxes do. I don't. I don't think they understand how we ended up here and what needs to happen from here. And so they're like, Oh, I'd love not to pay my property taxes. They sign the petition, and they don't realize the absolute devastation.

Dan Ramos 25:38
Right.

Katie Olmsted 25:39
I mean, I don't even have like I said. I don't have a word strong enough to be like, this is not going to be the answer friends. So we need to talk about this, and we need to talk about it with anybody who will be talking about it with us, and we're doing that. So what? What can OEA members expect exactly see and hear, and how can we get people talking about this?

Dan Ramos 25:59
Yeah, so OEA has launched a campaign called Protect Ohio Schools, and this is our effort to educate members that you know. The goal is simple and straightforward, educating members about the devastating impact that abolishing property taxes would have on public schools, on and other essential services that we rely upon in our in our in our communities, and then, you know, working with those members to, you know, have an active discourse with their friends, their colleagues, their family and their neighbors, all in an effort to ensure that our members and those other individuals that they have the ability in the relationships with do not sign the petition. So, you know, and we're doing that in many ways. Members, you know, probably received a mailing that that OEA put out, you know, at the beginning of this campaign that that kind of goes over the highlights that those top three issues that we talked about, asking them to go to our website, which I'm assuming we're going to link into the show notes here, the Episode notes and on that website, members will have the the opportunity to, first and foremost, we want them to sign a decline to sign pledge, you know, telling us that they are willing to stand up for the essential services, for their schools, and not sign the petition. We also will have, we also have on the website a toolkit that contains talking points, FAQs, a guide on, you know, if a if a signature gatherer approaches you, what you can say and what you what you can ask them. We also have in there sample email, sample social media posts that members can use. And Katie, you know, you can use this as well. We have a FAQ on how public schools are funded from, you know, the state to the local level that talks about the ins and outs of it. I'll try to boil it down to a smaller document. Unfortunately, it's still three pages long, because our public school funding system is is very complex, but it tries to boil down the relationship between the state and local and why we're seeing an increase in local property taxes, and what are the different kinds of property taxes, and what's an inside mill versus an outside mill, and how those things interact with each other. So hopefully, that could be, hopefully that's a useful tool to help explain and educate our members on on that. We also want members to share what this would do to their classrooms and the P and the students they serve and their and their colleagues. So we've set up what's called a soapbox link where members can record a video. We will, you know, OEA will get a copy of that video. We can clean it up, and members can use that on can use that on social media. And then you've heard me say this a couple of times. We are OEA is a part of a co a larger coalition of about 50 organizations across the state that range from the local government organizations school business organizations, like superintendents, the treasurers, the school, school board members, interesting. And this is, this is where, you know, things like this create interesting allies, labor and business together, working together on this, because we know, we know that the impact on this will be devastating, not just to, you know, the services, but to the economy of Ohio. You know progressives, liberals, you know conservatives, you know middle of the road, individuals all coming together under a coalition called the Ohioans to Protect Public Services. And we're, we're working with them to ensure that, you know, they're, they're, you know, carrying the narrative on public education, but we're also working together to make sure that we're educating everyday Ohioans on on the negative impact of this amendment as well. So be on the lookout for additional communications from OEA. We are going to do a regular email series. We also will have a series of town halls, where members can, you know, hear from OEA directly, ask questions, get updates. Our first town hall is on Thursday, April 30th, at 5pm Katie, if you can, there's an RSVP link for these. So if you can, put it in there, in the notes too that would be great. The more the merrier on that call so that we can talk about, you know, why this is the, not the approach we should take in dealing with, you know, property tax reform and giving Ohioans relief so.

Katie Olmsted 30:33
And that's the thing property tax relief is, is needed, and it targeted relief for people who need it is absolutely should be a priority, but we cannot do that at the expense of our schools and our services and our economies and our communities, and this is not the way. Dan, thank you so much for helping us all understand it.

Dan Ramos 30:52
Thank you, Katie. I appreciate it. Let's let's make sure every member knows what's at stake here.

Katie Olmsted 31:01
Dan mentioned a lot of OEA resources that are available right now to help have these conversations and educate our friends, neighbors and colleagues about what is at stake. The links are in the show notes for this episode, and as promised, there's a link to register for the upcoming virtual town hall in there too. Make sure you subscribe to Public Education Matters, wherever you get your podcasts, so you can stay up to date on all of this and all of the other big issues facing our schools, students and communities every day. Because in Ohio, public education matters.

Transcribed by https://otter.ai