May 2025 - Capping school districts’ reserves will hurt public schools, won’t provide targeted tax relief

Oct 15, 2026

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Argument against a proposal to cap Ohio school districts’ end-year cash reserves and automatically reduce property tax rates when reserves exceed a 30% threshold. The analysis contends the rule would create arbitrary, uneven, short-lived tax relief, cutting revenue streams for nearly 80% of districts regardless of local property-tax needs or voter approval. It argues districts’ rollover balances are not linked to property-tax conditions and warns the cap could be used to divert school budgets toward long-term income tax cuts.

LanguageEnglish

CategoryHealthcare

FormatPDF

Pages6

Reading Time15 min

AccessFree to download

May 2025

Impact on public schools and targeted relief

How the 30% cap would operate

Why rollover balances are not the problem

May 2025 Capping school districts’ reserves will hurt public schools, won’t provide targeted tax relief Bailey Williams To be effective, property tax relief policy must actually reach the taxpayers who need it, while protecting the schools, libraries, local governments, and other entities that rely on property tax revenue to pay for their vital public services. Many communities in Ohio have seen historic rises in property values coming out of the COVID-19 pandemic. While these value increases have not led to one-for-one increases in property taxes, some communities and some property owners across the state do need property tax assistance to better manage these unprecedented changes. A proposal by state legislators to tie school-district cash reserves to property tax reductions is neither effective nor responsible. It should be rejected. With no ties between a school district’s cash balance reserves and the property value situation within their jurisdiction, this policy uses arbitrary standards to offer uneven and unpredictable property tax refunds to one group of Ohioans, while ignoring the needs of a similarly situated group of Ohioans, all hinging on school district budgets regardless of how well they are managed. Under the proposal—included in the House version of H. B. 96, the bill for the state operating budget—should a school district see their end-year cash balance exceed expenditures by 30% or more, the corresponding County Budget Commission will lower that district’s property tax rates “so as to reduce collections by the amount of the excess carry-over balance.”1 Where applied, the policy would result in a one-time decrease in property tax rates to the degree the district’s rollover balance exceeds the cap. This makes this property tax assistance temporary: Once schools work their way below the cap, they will no longer have their rates lowered by the Commission. In reality, school districts’ rollover balances are neither the problem nor the solution. The House-passed budget uses some Ohioans’ legitimate need for property tax relief as 1 Bill Analysis of H. B. 96, As Passed by the House. “School district reductions for excess carry-over.” Pg. 504. Ohio Legislative Service Commission. April 25, 2025. cover for legislators to raid public schools’ budgets to pay for decades of fiscally irresponsible income tax cuts. This cap on school district cash reserves will impact the overwhelming majority of school districts. Of the 606 districts subject to the 30% cap, 481 of them would have the property tax rates they rely on slashed by their County Budget Commission. This means almost 80% of Ohio school districts will see their main revenue streams cut, regardless of whether there is a need for property tax relief within the district, regardless of the needs of the students within the district, and regardless of whether the voters in the district have approved increases in taxes that might result in temporary increases in rolloverbalances. There is a variety of reasons a district might carry over a balance above the proposed cap, including best practices for stewarding public funds.2 Supporters of the cap ignore this logic, insisting that school districts must be gaming the property tax system to pad their cash reserves.3 If that were true, school districts subject to the cap would be the ones experiencing the greatest growth in property values and taxes. However, based on data from the Ohio Department of Education and Workforce and the Ohio Department of Taxation, whether one uses property values, taxes, or millage rate changes, there is simply no link between a district’s roll over balance and their property tax situation. As in many states, some properties in Ohio have seen historic rises in property values since the COVID-19 pandemic.4 As counties rotate through their scheduled six-year appraisals, some areas have seen double-digit increases in countywide property value. These atypical increases in pr

FAQs

What is the core problem with capping school districts’ cash reserves?

The proposal would reduce property tax rates in ways that are uneven, unpredictable, and not actually tied to which taxpayers need relief, while weakening schools’ revenue reliability.

How does the proposed 30% threshold affect property tax rates?

If a district’s end-year cash balance exceeds expenditures by 30% or more, the County Budget Commission would lower the district’s property tax rates to reduce collections by the excess carry-over amount.

Why does the analysis argue the cash reserve cap is not linked to real property tax conditions?

It states there is no link between a district’s rollover balance and its property-tax situation, citing data showing atypical increases in property values do not translate into one-for-one increases in property taxes due to policy factors.

Oct 15, 2026

Upload by Fahsai