School funding worries: Area treasurers, superintendents decry policy change

Yahoo

10-05-2025

May 10—BATH TOWNSHIP — The Bath school board adopted a resolution Wednesday opposing a provision of the Ohio House's two-year budget bill that would cap public K-12 school cash reserves at 30% of operating expenses.
Supporters of the proposed cap on cash reserves, also known as carryover balances, say schools are carrying too much cash from year to year, which they believe should be returned to taxpayers.
Opponents say capping cash reserves will hamper long-term planning and result in uneven tax rates, with tax rates rising and falling from year to year based on a district's operating expenses and cash balance.
The carryover balance cap would affect more than 500 school districts in Ohio, according to the Ohio School Boards Association, which opposes the measure.
Bath's concerns
"It would be a loss of local control," said Bath schools Treasurer Joel Parker, who intends to testify before the Senate next week in opposition to the carryover cap.
The resolution adopted Wednesday says Bath schools "has taken a conservative approach (to) fiscal management to always be prepared for unforeseen circumstances and excellent bond rating to maximize utilization of taxpayer money and should not be punished for this."
The board cites its aging infrastructure, inflation and "unfunded mandates," which require a "well-defined plan for short-term and long-term spending." Such spending is "not flat by design," according to the resolution.
The Bath school board is asking lawmakers and Gov. Mike DeWine "to allow local school districts to manage their districts by funding all schools fairly and continuing to allow management of taxation levels and cash balances at the will of local residents."
Parker said he'd like to see lawmakers remove the carryover cap from budget discussions so lawmakers can work on property tax reform separately.
Lima's losses at $8.2 million
Lima schools could lose as much as $8.2 million in the first year if the proposal is approved, though that figure could change if the school board takes action and based on the timeframe the legislature uses to calculate district spending and reserve balances, Treasurer Heather Sharp said.
Sharp said the district's cash balance exceeds operating expenses by 44%. That's down from last year's 68% rate, she said.
"We are on the right trajectory in terms of lowering our cash on hand," Sharp said.
Spencerville's $5 million cut
Spencerville Superintendent Brian Woods said his district could lose as much as $5 million in existing funds if the proposal prevails. The district's cash balance reached 71% of operating expenses as of last June.
"This is deeply concerning, as we have a carefully planned, multi-year capital improvement plan that relies on these funds for essential, long-term investments," Woods said. "A cap would not eliminate the need for these projects — it would only eliminate the funds we've responsibly saved to complete them.
"The result would force us into an impossible position: either allow our facilities to deteriorate or return to voters to request additional funding. Neither option makes sense when we already have taxpayer-approved dollars set aside for these needs."
Deficit spending in St. Marys
St. Marys Superintendent Bill Ruane said his district plans to use its cash reserve, which is roughly 62% of the previous year's expenditures, to cover a deficit projected by the district's five-year forecast.
"Instead of hiring and creating new positions and using money received during COVID, we offset current expenses to build a healthy cash balance to ensure long-term fiscal health, which under this proposal would be erased," Ruane said.
He estimates the district could lose $8.8 million in local revenue if the cap is approved.
Budget debate
Lawmakers are still drafting the state's biennial budget, which will determine school funding for the next two years.
In addition to the debate over carryover balances, lawmakers are debating the future of the Fair School Funding Formula, a bipartisan formula introduced in 2021 to comply with Ohio Supreme Court rulings, which found the state relied too heavily on property taxes to fund public K-12 schools.
Gov. Mike DeWine's version of the budget retained the formula but froze cost inputs at 2022 levels.
The House version of the bill would increase public K-12 school funding by $226 million using a different formula, but would cap carryover balances at 30% of annual operating expenses.
Both bills would increase funding for private school vouchers.
The Senate is now working on its version of the bill, which must be reconciled with the House and signed into law no later than June 30.
Biggest change in policy
Ottawa-Glandorf Superintendent Don Horstman described the carryover cap as "the biggest change to public school tax policy in 50 years" written "in less than a week," the superintendent said during an April town hall in Ottawa.
Horstman said it took years of delayed maintenance and an income tax levy for his district to go from having 45 days cash on hand, far below the recommended 90 days cash, to having a $10 million cash reserve, or six months cash.
"We were derided by some of the current House leadership for not being more frugal and keeping cash on hand for economic emergencies we were experiencing (in 2008)," Horstman said at the town hall. "Now some of these same leaders are attacking districts for being good stewards."
Ottawa-Glandorf schools would lose an estimated $6.9 million in revenue the first year if the 30% carryover cap is approved, Horstman said during a town hall meeting in April. "That is devastating to a school district," he said.
The district's $10 million cash reserve balance is enough to cover six months of expenses.
The cash balance took years to build: Ottawa-Glandorf once held as little as 45 days cash when it passed an income tax levy in 2019, far below the recommended minimum of 90 days cash balance, Horstman said.
The district delayed maintenance projects, but now plans to use its reserves to replace a 25-year-old HVAC and roof at the high school, as well as decades-old parking lots, tennis courts, stadium lights and other projects, Horstman said.
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