Treasurer Dale Weber briefed Board of Education members at their Monday meeting on Lorain’s options. Weber said a decision is needed by early July whether to put a levy on the ballot.
Weber said an earned income tax levy of 0.25 percent would raise about $1.3 million annually and cost a worker earning $50,000 annually an additional $125 yearly. A 1 mill property tax increase — would raise $557,000 annually. It would cost the owner of a $100,000 home an additional $30 to $35 annually.
An earned income tax would exclude capital gains, dividends, pensions and Social Security, which could make it popular with elderly voters who wouldn’t be affected by it. Weber said about 190 Ohio school districts, including Oberlin and Wellington, rely on income tax levies.
Weber said after the meeting that the deficit is primarily due to Lorain losing students to charter schools, open enrollment and vouchers. Lorain, which has an approximately $93 million annual general fund budget, will lose $25.4 million in state taxpayer money due to shrinking enrollment. The 6,600-student district has lost about 3,500 students in the last decade.
Weber said other factors include about $5 million in delinquent taxes owed the school district by local taxpayers and the Legislature’s cap on funding to school districts in the biennial budget.
Lorain received $67.4 million in state money in 2013-14, but would’ve received $76.2 million without the cap.
Weber emphasized “step increases” — incremental raises partially based on academic qualifications and seniority — were not a major factor in the deficit. Weber said the increases, about $639,000 this year, were factored into his five-year forecast.
“I don’t think that’s the issue,” he said.
While undecided on whether to propose a levy this November, board members expressed support for an earned income tax to relieve pressure on homeowners. A permanent earned income tax levy failed in 2011 while a property tax levy passed in 2012. However, it was the first new levy passed since 1992 and came in a presidential election year when voter turnout is usually high.
Board member Tony Dimacchia said a 1.5 percent earned income tax for a set number of years is “something we need to consider.”
Dimacchia said the district needs to increase enrollment but said shrinking enrollment is due to an unfair advantage the Republican-majority Legislature gave charter schools. Charters, which are predominantly nonunion and pay teachers less than public schools, are privately run but publicly funded.
While Lorain Schools were placed in academic emergency and taken over by the state last year due to low test scores, Dimacchia said many charter schools are underperforming. The Ohio Department of Education’s 2012-13 report found the “absolute achievement” of charter students was “poor,” with 60 percent of charter schools receiving a D or F grade. About 40 percent of charters are on academic watch or in academic emergency.
“They’re not failing because they’re educating kids well or have good practices. They just aren’t working,” Dimacchia said. “Hopefully the community understands what those schools are about and what they do.”