Mansfield City School board considering new tax issue for November (2024)

MANSFIELD —Voters in the Mansfield City School district may have a new tax levy to consider in November.

It’s been more than a decade since voters approved new operating funds for the district in the form of an emergency levy, according to Richland County Auditor Pat Dropsey.

Now, school administrators and board members say more funding is needed.

Board President Chris Elswick said Tuesday the district needs new operational funding, despite ongoing cost-saving measures.

Interim treasurer Barbara Donohue agreed.

“Expenditures are outgrowing revenues,” she said. “There’s only so much you can cut without taking the district to the bare bones.”

Nevertheless, Donohue and Supt. Stan Jefferson said the district is continuing to review its budget and look for cost savings.

“What we’re trying not to do is (make cuts) where it will affect children in the classroom,” he said.

Board still discussing type, terms of levy proposal

The board still has to work out details of a proposed levy. How much revenue does it need to collect? How many years should it last? Should it be a property tax, income tax or both?

The board has been discussing the possibility of a new operating levy since March, according to vice president Linda Golden. Rebecca Princehorn of law firm Bricker Graydon met with the board Tuesday to discuss options.

Princehorn said the district could pass a property tax, an income tax or a combination of the two.

A property tax would be based on a dollar amount, with the collection rate (millage) varying each year. An income tax would collect a percentage of a taxpayer’s income at an unchanging rate.

If the board were to put an income tax on the ballot, members could choose either a traditional or earned-income issue.

An earned-income option would not tax pensions and social security income; a traditional income tax would.

Donohue said her personal recommendation would be a combination ballot issue — one that includes both a property tax levy and earned income tax. She said it would spread the cost burden among both property owners and renters, while minimizing impact on retirees.

According to Princehorn, Mansfield City Schools has never before put an income tax issue on the ballot.

Jefferson said about 200 Ohio school districts have an income tax in place, with a typical rate of between half a percent to two percent.

Princehorn said the deadline to file paperwork for a November ballot issue is Aug. 7. If the board chooses to put an income tax on the ballot, members will need to pass an initial resolution by July 25.

Rising property values haven’t resulted in increased revenues for district

While property values have continued to rise, public school districts haven’t seen much of an increase in funding as a result.

That’s due to House Bill 920 — state legislation from 1976 that essentially “freezes” the amount that can be collected on a voted property tax levy to the dollar amount collected in its first year.

As a result of House Bill 920, when property values go up, the millage goes down so the tax revenue on a property remains the same.

“Over time, it subtracts out inflationary growth from your tax base,” explained Rebecca Princehorn of Bricker Graydon law firm.

“Put another way, you’re only ever going to get what you got in the first year unless you have new construction. That’s why Ohio school districts are constantly having to go back to the ballot.”

Princehorn said income taxes have more potential for growth — if incomes go up, so does the district’s revenue.

“If you feel as though too much property tax is not appropriate for this district and you want to have more of a balance, an income tax is a nice complement to all property tax,” she said.

Retirement, health insurance costs driving district deficit

Tuesday’s discussion came on the heels on the most recent five-year forecast, which the board approved at a special meeting in May.

Ohio law requires school boards to file a five-year forecast with the state twice a year. These forecasts provide a glimpse at a district’s general operations, including projected expenses and revenue.

In November, former treasurer Tacy Courtright projected the district would operate in a deficit through fiscal year 2028. The most recent five-year forecast projected even larger deficits, with the exception of fiscal year 2024.

Those increases were driven almost entirely by a single line item —employees’ retirement and insurance benefits.

Health insurance costs have been a financial pain point for the district for years, and Mansfield isn’t unique.

In a 2024 survey by the EdWeek Research Center, about 75 percent of district leaders said health insurance costs had increased since the 2022-2023 school year. More than a third of respondents said costs went up by more than 10 percent.

“We’re an older district,” Elswick said. “We’re spending about $1.2 million in claims every month.”

Mansfield City Schools offers its employees health insurance through a self-funded plan. It’s also part of a consortium that provides stop-loss coverage through its previous insurance broker, Gallagher.

District exploring options to exit stop-loss consortium

At a May board meeting, Joe Turi of Keystone Insurers Group briefed the board on its stop-loss situation on behalf of the district’s current insurance broker, Roby Foster Miller Earick.

Turi said the Gallagher consortium is doing what it’s designed to do — spreading risk across multiple large employers —but its clients aren’t healthy, which has led to high rates.

“The risk in the consortium, the morbidity level, the level of sickness, is kind of high across the board, including here at Mansfield,” Turi told the school board.

Turi, who said he did not represent the district when it joined the consortium, said Mansfield’s contract with the consortium has no end date, which is atypical.

“I’ve read the contract and unfortunately, the termination clause to get out of that consortium requires written permission by all of the members,” he said.

“When I’ve done (consortium agreements for clients) in the past, we do it for three years.”

Elswick said the board entered the consortium under the advisem*nt of former treasurer Robert Kuehnle. He also said the district is currently exploring its options for a better deal.

“We were in an insurance consortium forever. Robert (Kuehnle) took us out of that insurance consortium because he said he could do a menu that would be better, cheaper. He was wrong,” Elswick said.

“He put us in the stop loss with Gallagher. It has not turned out well for us. We’re now looking into the ability or legality of getting out of that.”