Gov. Mike DeWine last week used a line-item veto on an amendment to the state budget that would have cut millions from the Orange City School District by reducing its revenue from Hunting Valley taxpayers. Although the amendment did not go into effect, local leaders remain outraged at the village’s attempt to change their property taxes.
“This was the worst thing I have experienced in three decades of local government,” Orange Village Mayor Kathy Mulcahy said of the last-minute amendment. “I’ve never seen anything so sleazy and contrary to the social contract that we all share.”
Hunting Valley Finance Director Brian Coughlin said that the amendment would have decreased the district’s tax revenue from the village by $3.2 million per year, while Orange school district Treasurer Todd Puster said that the annual cut would have been closer to $6 million. Currently, Mr. Puster said the school district receives about $6.5 million in property tax revenue from Hunting Valley.
The amendment was introduced on July 16, then quickly passed in the house and senate before landing on Gov. DeWine’s desk for final approval.
The state was operating on a temporary measure that expired on July 17 because lawmakers failed to approve the final budget by the required June 30 deadline.
Orange school district covers eight communities including Hunting Valley, Orange Village, Pepper Pike,Woodmere and Moreland Hills as well as portions of Bedford Heights, Solon and Warrensville Heights.
Hunting Valley amendment
On July 16, a joint conference committee comprised of six senators and representatives met in Columbus to draft a final version of the state budget bill. State Sen. Matt Dolan, R-Chagrin Falls, who serves as the senate finance chairman, was a member of the committee. This provision, known as the “Hunting Valley amendment,” was introduced at that meeting. Other legislation, such as bills and resolutions, must have a primary sponsor. But according to state Rep. Juanita Brent, D-Cleveland, an amendment does not officially have a name attached to it, making the sponsor sometimes unknown. Rep. Brent represents several municipalities in the Orange school district including Orange Village and Pepper Pike.
Sen. Dolan stated that he was present at the conference meeting, but said that discussions about Hunting Valley’s share of the school district’s revenue have been going on for many years with no solution. Sen. Dolan said some of his constituents in Hunting Valley have approached him saying the amount of property taxes they pay to the school district is not equitable. Mr. Puster said that of the 2,000 students in the Orange district this past year, 27 were Hunting Valley residents.
Sen. Dolan, along with four other lawmakers, voted in favor of the amendments that were included on the final version of the budget bill. Rep. Phil Robinson, D-Solon, represents Hunting Valley but said that he found out about this ongoing issue between the village and the school district after the amendment was introduced.
“My Hunting Valley constituents reached out to me and others this spring. They said that there was a legislative fix,” Sen. Dolan said. “Hunting Valley is paying $212,000 per student and Orange spends $20,000 per student. They wanted to address the unfairness.”
Orange officials said that they don’t calculate the cost per pupil based on tax revenues from each municipality in the district.
Rep. Brent said that some village residents said that they did not want to pay property taxes for Orange because many children in Hunting Valley go to private schools.
“My parents always supported the levies but I went to private schools. We all have to support quality education,” she said. “For some people to feel like they don’t have to pay their share is not right. Our children are our future.”
According to Sen. Dolan, he was willing to move forward with a plan to redirect tax dollars if the new plan met three criteria. He said that the funding formula must have a “minimal” impact on the Orange schools, the tax dollars that exceed the cap must be redirected to the village and no other community or school district would see a tax increase. In January of 2018, the village hired the Batchelder Company, a lobbying firm in Columbus, to work on this initiative for $3,000 per month.
Mr. Coughlin, who said he had been leading this pursuit on behalf of the village, added that the formula in the amendment would have capped the cost per student at $98,356 per year for Hunting Valley property owners. The formula multiplies the number of students in Hunting Valley who attend Orange by four, then that subtotal is multiplied by $24,589, the cost per pupil. The total is $2.8 million, which is the amount that Orange would have received in tax revenue from Hunting Valley landowners.
The difference between that and the $6.5 million that Hunting Valley currently pays per year to the school district would be redirected to the village for road and infrastructure repairs, according to Sen. Dolan.
Mr. Coughlin said that the village would have placed a levy on the ballot for more than 20 mills to capture that revenue. He clarified that the amount that residents would pay in taxes would remain the same, but it would go to the village instead of the schools.
“The challenge we’ve had is Orange’s (school district) unwillingness to discuss this and their unchecked spending,” Mr. Coughlin said. “This was an initiative that was worked on with residents and council. Our position was that Orange wouldn’t be impacted by this legislation.”
The formula would essentially allow Hunting Valley to only pay for the number of students that it has in the district. The amount paid in taxes would change every year, depending on how many children were attending the Orange Schools, Mr. Coughlin said. The proposed amendment was written so that it could only apply to Hunting Valley and the Orange Schools, according to Mr. Puster. It would only apply to a village where the school district had at least 1,300 students, and Orange has 2,000 students.
“It was very apparent as I read it that it could only apply to Hunting Valley out of the five [communities] because of the valuations,” Mr. Puster said.
How school funding works
According to Will Schwartz, lobbyist at the Ohio School Boards Association, the formula could have impacted other communities and school districts even though it was only intended for Hunting Valley and Orange school district.
“One of our concerns was the uncertainty with whether that provision could apply to more communities and school districts around the state. That gave us concerns about not knowing specifically the reach that this provision could have,” Mr. Schwartz said.
He also explained that the other communities in the school district, including Moreland Hills, Orange, Pepper Pike and Woodmere, would be forced to pay more than their fair share in taxes due to the tax reduction in Hunting Valley.
Barbara Shaner, advocacy specialist for the Ohio Association of School Business Officials, said that school funding is directly related to property valuation, not the cost per student. Hunting Valley’s high property values combined with a low number of students in the district result in a disproportionate cost per student, but that is not how property taxes are calculated in Ohio, she explained.
A school district can pass a levy to cover operation costs, Ms. Shaner said, and the number of mills are levied against the property based on its assessed value, which is determined by the county auditor.
“There is nowhere in the state that currently pays per pupil,” she said. “One of the reasons we opposed this is that it would set a precedence to render the school funding formula ineffective because it’s set up purposively to collect revenue from properties based on their value. If we upset that apple cart, we won’t have a system that works.”
Orange Superintendent Lynn Campbell said that the district is choosing to move forward in a positive manner. He said that Orange still has students from Hunting Valley who are dedicated and happy to be a part of the district, and he is glad to have them.
“We don’t want to be divisive,” Dr. Campbell said. “By the nature of it, people are going to talk, but we don’t want to be the drivers of it.”
When OASBO reached out to Mr. Puster about this amendment last week, he immediately shared it with the school officials, who spread the word to the Orange community. The Board of Education members wrote individual letters to Gov. DeWine asking for a line item veto, along with a letter from the mayors of the other four communities. Orange school board President Beth Wilson-Fish thanked the district’s engaged and supportive community for helping to stop this amendment.
“We appreciate everyone’s efforts in rallying for the veto, including the parents, community members, elected officials and district support organizations. A lot of our organizations became involved,” Mrs. Wilson-Fish said. “We were so busy with lobbyists and legal counsel, and the community started talking. We want to say thanks to every single solitary person.”
Mayors weigh in
Each of the local mayors who are part of the Orange school district said that they are thankful for Gov. DeWine’s line item veto.
“The introduction of this amendment at the last minute of the budget process created an enormous challenge for the community to preserve the economic basis for our district,” Pepper Pike Mayor Richard Bain said. “We are grateful to the governor and his team for their engagement in listening to our arguments, recognizing the unlawful and inequitable nature of this amendment and exercising the veto in a very appropriate way.”
Moreland Hills Mayor Susan Renda and Woodmere Mayor Ben Holbert said that they are grateful to Gov. DeWine and Rep. Brent for quickly mobilizing local officials and keeping the community informed.
Mr. Coughlin also said that even though the school district would have lost revenue from Hunting Valley, it will receive revenue from Pinecrest, the new mixed use development in Orange Village.
Orange school officials said the district is set to receive about $325,682 in 2019 in tax revenue from Pinecrest.
Orange Mayor Mulcahy responded, saying, “I didn’t work on Pinecrest for 14 years to give a tax break to the wealthy residents of Hunting Valley who don’t want to support the public schools.”
Gov. DeWine’s line item veto essentially killed the amendment.
“This would result in the disparate collection of property taxes depending upon whether someone in an affected school district lives in a village,” Gov. DeWine said in his veto message. “It is inequitable to treat taxpayers with similar property values in the same school district differently as a result of where they live.”