As the Senate prepares amendments for the main mid-biennium review, one proposal in flux would alter the amount and order in which schools are granted construction funding from the state.
The proposal, which was introduced as stand-alone legislation, HB 504, and has also been incorporated into the main MBR, HB 487, and the general tax MBR, HB 508, would eliminate consideration of tangible personal property in the calculation of Ohio School Facilities Commission projects.
It would also allow schools in the OSFC’s Expedited Local Partner Program an opportunity to choose between the lesser of the local share from the original signed project agreement or the current share calculated on the most recent equity list, according to the commission.
HB504 sponsor Rep. Matt Huffman (R-Lima) said his bill was incorporated into the main MBR in a form that would only affect a few districts. That language was originally meant to be amended out of the bill before it left the House, he said. The Senate is scheduled to caucus on HB487 amendments Tuesday and will likely decide the fate of the provision then.
Meanwhile, House Bill 508 includes a more comprehensive approach to the issue, he said, and is his preferred vehicle for the proposal. The language would also be protected from a line-item veto by the governor, which has been an issue in the past.
Similar language was passed by the legislature on two other occasions only to be line-item vetoed by former Gov. Ted Strickland and as recently as last year by Gov. John Kasich, HB 153).
An OSFC analysis shows the different bills would impact a different number of districts. House Bill 487 would decrease the local share for six districts, costing the state $74.9 million, while House Bill 504 would reduce it for 44 school systems, at a state cost of $271.7 million. Under House Bill 508, 208 districts would face an increased local share, 78 would remain unchanged and 44 would have a decreased share, creating a state impact of $42.1 million, according to OSFC.
“(The bill is) going to help locals versus the state, but it’s essentially a fairness thing. Let’s not use a fake number in calculating the true wealth of a local school district,” Rep. Huffman said.
Tom Ash, director of governmental relations for the Buckeye Association of School Administrators, said the language is needed to address the phase out and elimination of TPP taxes going to school districts. The Ohio School Boards Association and Ohio Association of School Business Officials also back the proposal.
“The OSFC formula takes a look at the district’s taxable wealth as the principal criteria in deciding how much the state and local shares of construction projects should be,” he said. “So therefore, these districts that have a lot of tangible personal property, their percentage of state and local money does not reflect the taxes that those districts will collect because they’re not going to collect on the tangible personal property values, which are part of the formula that put them where they are.”
The legislation would alter the position of some schools on the equity list that determines the order in which schools will be offered OSFC funding for construction projects. The language would also recalculate the ratio of state and local share for a small number of schools’ projects, Mr. Ash said.
“It will change the calculation for those districts that have more than 18% of their property values tied up in tangible personal property for which they will not collect taxes,” he said.
Rep. Huffman said the concept for the bill was brought to him by Bath Local Schools in his district, which has high personal property tax value because of the Ford Motor plant there.
“Back when we used to have personal property tax in the state of Ohio, a lot of school districts got a lot of money from that if they had a heavy industry … and because of that personal property tax, they got paid a lot of money, and when we started the school ranking system back in the ‘90s how much you got (from the state) depended on your local revenue,” Mr. Huffman said.
“The personal property tax went away in 2005, but the ranking as well as the percentage that the local districts paid were still stayed in place.”
Mr. Huffman said his vetoed attempt five years ago would have affected more districts’ position on the funding schedule than presently because many have had their projects funded in the interim.
“It would have affected a lot of districts; people jumping up and going back,” he said. “Well there’s less of that now because a lot of school districts have built, so even though some people may go up two or three, overall it’s good for the school districts because they’re going to be paying a less share, the districts that have this high phantom personal property tax number in it.”
OSFC Executive Director Rick Hickman said in a letter to legislators that the commission is concerned the legislative change would create winners and losers as it would move districts around on the equity list.
“Districts that we have been working with in planning stages to prepare them for a conditional offer of funding would be bumped out of our reach and replaced with districts that we have not yet begun any type of pre-planning phase,” he wrote.
Mr. Huffman said the whole concept of the ranking system is the creation of winners and losers.
“Somebody’s going to be ranked ahead of somebody else, and if we’re going to do it, let’s do it based on real data,” he said. “Before it was like, well, we’re going to rank everybody by how tall they are. The tall guy’s all the way in the back and a bunch of these guys are standing on two or three telephone directories, and let’s take the telephone directories away so that it’s actually everybody’s height.”
Mr. Ash also said the legislation would not have a huge effect on schools’ placement on the equity list especially because as some schools defer their projects, it is possible for those districts that are lower on the list to have their projects considered earlier than expected.
“The principal benefit is it corrects what was probably … an unintended consequence of tax reform in 2005 and, quite frankly, it’s one of those issue that you say, boy this doesn’t seem fair,” he said.