Kathryn L. Sines, Treasurer/CFO Cuyahoga Falls City Schools

Chief Financial Officer,
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How Do Schools Raise Additional Funds?

The property tax is the main funding mechanism available to school districts to increase revenue. State law makes a distinction between operating funds and capital improvement funds. Proceeds from an operating levy can be used for any legal expenditure by a board of education. Most of the funds derived from an operating of running a school district, such as salaries and benefits for personnel, textbooks, classroom supplies, utilities and repairs. Following are the types of operating levies:

• Regular operating levy for current expenses - A millage rate is submitted to the voters for approval, not a dollar amount. The millage rate will be adjusted as property values change pursuant to HB 920. This levy can be voted in for one to five years or for a continuing period of time.

• Emergency Levy - This type of levy is submitted to the voters as a dollar amount. For example, "The emergency levy will raise $1,000,000 per year." An emergency levy can only be voted in for a period of time from one to five years, and expires after the time has elapsed unless renewed by a vote of the public.
 
• Incremental Levy - This can be either in terms of millage incremental or dollar incremental. In these instances, millage rates or dollar levies are phased in over a numbers of years up to five. Millage incremental levies can be for a continuing period of time or one to ten years in duration. Dollar incremental levies can have a duration of one to ten years.

• Capital involvements can be funded in two forms - Permanents improvement levies and bond issues. All funds received by school districts from permanent improvement levies and bond issues must, by law, be used for the purposes intended and cannot be used for operating expenses of the districts.

• Replacement Levy - A replacement levy can replace all or a portion of an expiring levy. It is used when the effective rate had been lowered and can restore the rate of the tax to its original rate, thus generating increased dollars. A replacement levy can raise more revenue than the levy it replaces because the original levy may have been through one or more reassessment. With each reassessment, if the value of real property in the school district had increased due to inflation, the H.B. 920 tax credit factor will have been applied to the voted levy, reducing the effective mills.

• Permanent Improvement Levy - Permanent improvement levies for specific projects can last from one to five years. Permanent improvement levies for general on-going permanent improvements can be levied for a continuing period of time.

• Bond Issue - A bond issue is a tax, the proceeds of which can only be used to pay bonds and noted issued by school districts for the purposes of permanent improvements. Bond issues are normally used for building new or additions to buildings. However, proceeds of a bond issue cannot be used for operational costs of the new facility (ies). This is often a source of misunderstanding. People remembering a bond issue was passed for a new building can't understand why "the district built a new building without having the money to operate it."
 
Many times an operating levy must also be passed to help pay for the operational costs when the new building was necessitated by increased enrollment.