Understanding Your Real Estate Taxes and other impacts on ...

<strong>Underst<strong>and</strong>ing</strong> <strong>Your</strong>
<strong>Real</strong> <strong>Estate</strong> <strong>Taxes</strong>
<strong>and</strong> <strong>other</strong> <strong>impacts</strong> on
SMFCSD funding
$
An informational guide provided by
www.smfcsd.org

Fall 2008
Dear Stow-Munroe Falls Citizen:
This brochure has been prepared by the Stow-Munroe Falls City
School District in order to help you underst<strong>and</strong> real estate tax definitions,
how to calculate your taxes, how much of those taxes go to
Stow-Munroe Falls, <strong>and</strong> <strong>other</strong> valuable information impacting our
district.
We hope that you find this information useful <strong>and</strong> invite you to
contact our offices should you have any questions.
Sincerely,
Stow-Munroe Falls Board of Education
Denny J. Mariola, President
Dick Spangler, Vice President
Pat Matthews
Karen S. Powers
Karen Wright
Dr. Russell D. Jones, Superintendent
Catherine M. Bulgrin, Treasurer/CFO
Thomas G. Adams, Business Manager
4350 Allen Rd., Stow, OH 44224
330-689-5445
http://www.smfcsd.org
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School Finance Definitions
<strong>Underst<strong>and</strong>ing</strong> school finances can be difficult because of the terminology
used to describe the process. The following terms are some of the
most common ones used.
Market Value - Term used representing the County Auditor’s appraised
value of a home; this appraisal is adjusted every three years.
Assessed Value - Term representing 35 % of a home’s market value
that a homeowner is assessed to pay taxes.
Millage – The unit of value representing the rate used to calculate property
taxes in Ohio. In cash terms, it is one-tenth of a penny (.001). One mill produces
10 cents for every $100 of assessed value (.001 x 100 = 10); or, $1.00 per $1,000
of assessed value (.001 x 1,000 = 1 ).
Outside Millage - The total millage approved by voters, also referred to
as voted mills.
Inside Millage – Mills that, under the state constitution, local governments
are permitted to share, aka unvoted mills. They may tax up to 1% of a
property’s assessed value or 10 mills (.010) without the vote of the people. Out
of the 10 unvoted mills, Stow-Munroe Falls City School District’s share equals
5.4 (.0054). Of that, 4.74 mills (.00474) are targeted for general operations <strong>and</strong>
0.66 mills (.00066) are targeted for permanent improvements.
Effective Millage - The rate of taxation, expressed in mills, multiplied
by the assessed value, raises the same dollar amount that was voted. Since 1976,
House Bill 920 prohibited an inflationary increase in the amount of taxes levied
against real property. In <strong>other</strong> words, as property values increase, the taxes
charged may not be increased; therefore, the millage multiplied by the new value
must be reduced so that the dollars received by the District are equal to the dollar
amount the voted mills would have generated. This reduced millage rate is
referred to as ‘effective’ mills <strong>and</strong> is less than “voted” mills.
Rollback – Under Ohio law, a 10% reduction is applied to Class 1 property
that is reimbursed to school districts by the State. An additional 2.5% reduction
is applied to owner-occupied residential property that is reimbursed by the State.
For owner-occupied property, the total reduction ‘rollback’ is 12.5%.

School Finance Definitions - continued
Homestead Exemption - The Homestead Exemption refers to
the reduction in taxes for senior citizens <strong>and</strong> permanent <strong>and</strong> totally disabled
Ohioans, reducing their property tax burden. The tax exemption is limited to
homestead owners that, defined by Ohio law, own a dwelling <strong>and</strong> up to one acre
of l<strong>and</strong>. The value of the exemption may not exceed the value of the homestead.
This amount is reimbursed to school districts by the state.
General Operating Fund - Public purpose fund used for general
operating purposes that include, but are not limited to, salaries, benefits, utilities,
textbooks, supplies, repairs, equipment, etc.
Permanent Improvement Fund - Fund used to account for
capital outlay that include building improvements, buses, fixed assets, equipment,
<strong>and</strong> textbooks.
<strong>Underst<strong>and</strong>ing</strong> <strong>Your</strong> Property <strong>Taxes</strong>
Calculating <strong>Your</strong> <strong>Real</strong> <strong>Estate</strong> <strong>Taxes</strong>
Property taxes levied on Class 1 <strong>and</strong> Class 2 real property (buildings
<strong>and</strong> grounds held by for-profit businesses <strong>and</strong> individuals) <strong>and</strong> tangible personal
property (business machinery, equipment <strong>and</strong> inventory) produce the majority of
the School District’s local revenues. <strong>Taxes</strong> are determined based on 35% of the
market value of your home <strong>and</strong> property. This is known as the assessed valuation
<strong>and</strong> is the only portion that is subject to taxation. <strong>Taxes</strong> are calculated by
multiplying the fair market value of the homeowner’s property by the County
Auditor’s assessed valuation rate of 35%. For example, if a home has a fair market
value of $100,000, the homeowner is taxed on the assessed value of $35,000.
The School District is paid taxes from the County Auditor when they
are collected. Tax bills are generated bi-annually with collections for the first
half of the prior year taxes assessed in the subsequent January; <strong>and</strong> the collections
of the second half of the prior year taxes assessed in the subsequent July.
Sample Tax Calculation
Fair Market Value of Home $100,000.00
x Assessed Value Rate x 35%
= Taxable Rate $35,000.00
x Effective Millage Rate x .03365 SMF’s residential tax rate
= Total <strong>Taxes</strong> $1,177.75 (tax year 2007)
Less State Credits (12.5%) – $147.22
Total Annual <strong>Taxes</strong> Owed $1,030.53

Stow-Munroe Falls City School District
Voted/Effective Mills
Type of Levy Month/Year Voted Outside Millage Effective Mills
Continuing 1976 & Prior 21.54 11.9352710
Continuing Additional Nov. 1977 6.00 3.3247500
Emergency (Current Expense) Nov. 2005 4.88 * 4.8800000
Emergency (Current Expense) Nov. 2007 7.67 ** 7.6700000
*Emergency Tax Levy voted for a five-year period generates $4.6 million,
expiring December 2010.
**Emergency Tax Levy voted for a five-year period generates $7.3 million,
expiring December 2012.
Unvoted Millage - Mills that, under the state constitution,
local governments are permitted to share (unvoted mills).
Inside Millage = 5.4 for Stow-Munroe Falls City School District.
Mills voted/unvoted for Stow-Munroe Falls City
School District
Current Total SMFCSD mills:
40.09 General Operating Mills (Voted) = .04009
4.74 General Operating Mills (Unvoted) = .00474
0.66 Permanent Improvement Mills (Unvoted) = .00066
45.49 Total Mills = .04549

How much am I paying in property taxes to the
Stow-Munroe Falls City School District?
Approximately 60% of your property taxes go to the Stow-
Munroe Falls City School District. Summit County receives 22%.
If you are a resident of Stow, the City gets 17%. (Those who live
in a home within the SMFCSD boundaries, but outside the city
limits, pay the same taxes for the School District but pay their local
government taxes for Hudson, Kent or Cuyahoga Falls.)
Sample of your tax bill
A mill (.001) produces $1.00 for every $1,000 worth of property
it is levied against.
Tax District Stow-Munroe Falls City School District
Tax Distributions
For Tax Year 2007 / Collection Year 2008
Municipality
SUMMIT COUNTY
S-MF CSD
STOW CITY
S-MF PUBLIC LIBRARY
Residential
Agricultural
Commercial
Industrial
Other
Rate Tax Rate Tax
12.395457
33.650021
9.500000
.927222
$390.46
$1,059.98
$299.25
$29.21
12.940177
33.650023
9.500000
.938525
$452.91
$1,177.75
$332.50
$32.85
TOTAL 56.472700 $1,778.90 57.028725 $1,996.01
DISCLAIMER
Tax calculation is based on property value of $100,000. The total
amount may be a few dollars off because of rounding. Special assessments
are not included.
Residential tax without 2.5% discount.
Source: Summit County Fiscal Office

Millage Adjustments
H.B. 920 effective millage adjustments
In Ohio, the tax rates charged to the property owners may change
when the tax base increases or decreases. The new assessed value
is multiplied by the number of mills that will generate the voted
dollar amount. In <strong>other</strong> words, the amount of money a school
district may collect cannot exceed the dollar amount that was
originally generated when the levy was voted. This occurred when
Ohio passed House Bill 920. As the value of your home increases,
the adjustment to the millage tax rate reflects a decrease; <strong>and</strong>, viceversa,
if the value of your home decreases, the adjustment to the
millage tax rate increases. This adjustment to the millage is known
as ‘effective’ mills <strong>and</strong> results in the school district collecting only
the same amount as the year it was voted. Therefore, the millage
rate multiplied by the assessed value may be lower than the millage
tax rate that appeared on the ballot <strong>and</strong> was voted. A negative impact
to the School District occurs when the community’s valuation
overall increases, the District may not receive more than the voted
dollar amount, when that happens the “effective” millage rate is
decreased resulting in taxpayers actually assessed at a lower rate.
The County’s triennial valuation update is scheduled to occur in
calendar year 2008. First-half taxes for calendar year 2008 will be
billed <strong>and</strong> collected beginning in January 2009. Second-half taxes
for calendar year 2008 will be billed <strong>and</strong> collected beginning in
July 2009. The School District’s fiscal year begins July 1 <strong>and</strong> runs
through June 30 of the following year.
Inside millage is not reduced as a result of
inflation or deflation nor subject to the
H.B. 920 adjustment.

Millage cannot be adjusted below 20 mills
Laws in Ohio guarantee a minimum of 20 mills for
School Districts (excluding emergency levies <strong>and</strong> bond retirement
levies). This is referred to as the “20 mill floor.” The
Stow-Munroe Falls City School District is considered on the
“floor.” That means that whenever the “effective” millage drops
below 20 mills, the property owner is taxed at 20 mills of their
assessed valuation.
Some levies are not calculated as part of the minimum
millage, such as emergency levies. These levies are voted for
a specific period of time <strong>and</strong> bring the stated dollar amount
requested from the voters. The millage rate is reduced or increased
to produce the same dollar amount annually. No reduction
factor exists for emergency millage.
Other types of levies not impacted by the reduction factor:
• Income Tax levy
• Bond levy

The School District Resources
The Stow-Munroe Falls City School District (SMFCSD)
receives money from Local, State <strong>and</strong> Federal sources. The majority
of revenues the District receives come from the local <strong>and</strong> state
sources. The local source comes from property taxes <strong>and</strong> the state
source comes from the State of Ohio. In fiscal year 2007, SMFCSD
received 58% of its revenues from property taxes <strong>and</strong> 39% from
state sources.
Federal sources provide federal financial assistance in the
form of grants to be used for restrictive purposes. The State also
provides financial assistance in the form of grants to be used for
restrictive purposes. State law m<strong>and</strong>ates that all grant dollars be
accounted for in separate funds <strong>and</strong> cannot be co-mingled with the
District’s general operating funds.
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Where the Money Goes
Education is heavily reliant on people.
In 2007, 84% of our resources were spent on wages <strong>and</strong>
benefits with 16 % spent on instructional supplies for the
classroom, custodial <strong>and</strong> maintenance supplies, utilities,
fuel, textbooks, county auditor <strong>and</strong> county treasurers’ fees,
debt <strong>and</strong> capital outlay, etc.
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Other factors that affect
School District Funding
The State requires Boards of Education to function like a “business.”
The business of schools produces an ‘intangible product’ unlike
a business that produces a saleable product for distribution <strong>and</strong>
profit. Also, where a business may sell its product for an increased
price to cover its cost <strong>and</strong> create a profit, schools must rely on
the local community’s taxes <strong>and</strong> the state for funds to operate. In
order for schools to increase their revenues, they are faced with the
dilemma of asking the constituents to increase their property taxes
to cover our cost of living <strong>and</strong> cost of doing business increases as
well as covering additional expenses, some of which are indicated
below.
Over the years, the legislature has passed many m<strong>and</strong>ates that
are either unfunded or under-funded by the State, causing the
local community to bear the costs. Some of these are:
Collective Bargaining (1983)
Charter Schools (1992)
Fingerprinting <strong>and</strong> background checks (1993)
EMIS (1998)
No Child Left Behind (NCLB) (2001)
Teacher Certification law changing to Licensure requiring
MA degree that could be a permanent certificate
requiring a BA degree
Increasing the number of High School Credits needed for
graduation (1950, 1960, 1998, 2003)
Special Education m<strong>and</strong>ates
12

The Legislature also passed HB 920 (1976) that eliminates the
growth in real property taxes, as well as HB 95 (2000) that began
phasing out tangible personal property tax owed by businesses
<strong>and</strong> HB 66 (2005) that accelerated the phase out to zero by 2010.
The state is holding districts harmless for the first five years of the
phase-out of the Tangible Tax by reimbursing districts for their loss
of revenue. However, beginning in 2012 through 2018 the state
will gradually eliminate the reimbursements forcing the District to
go to the voters to replace those dollars. The cost of this tax loss
to the Stow Munroe Falls school district is $4 million or 8% of
the district’s revenue source.
Over the past several years, the state has eliminated the Cost of
Doing Business Factor. This was a multiplier on the foundation
money from the state that was used to equalize the cost of inflation;
it varied by district. This eliminated approximately $750,000
from the State’s funding to the Stow-Munroe Falls City School
District.
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Who determines how much I pay in taxes?
1. The State Legislature determines the level of state
aid given to schools by setting the amount of homestead
credit <strong>and</strong> “inside” millage.
2. The Summit County Auditor assigns each piece
of property a market value <strong>and</strong> classification such as residential,
agricultural, etc.
3. The Stow Munroe Falls School Board determines
the needs of the district to provide each student with
an adequate <strong>and</strong> efficient education <strong>and</strong>, if need warrants,
they ask for tax dollars to meet those needs. The County Auditor
determines the mills needed to raise the dollars – hence
a levy is placed before the voters.
4. The Voters must approve a levy request at the ballot
box for it to be implemented.
How does the School District determine
how much to levy?
The district must address increasing costs when current
revenue sources are flat-lined. The only authority to increase
revenues the School Board has is through a property or income tax
levied on the constituents. There is no authority to ask for a sales
tax. The Treasurer by law must submit a five year forecast twice a
year to the Ohio Department of Education. The Five-Year Forecast
is used as a management tool to determine the Districts future revenues
<strong>and</strong> expenses with assumptions that are based on historical
trend <strong>and</strong> available information at the time of the projection. Available
information would include, but not be limited to, the state of
the economy, current market conditions, <strong>and</strong> local economic indicators.
Current budgets are evaluated addressing the basic needs of
the students <strong>and</strong> their education. Calculations of levy amounts are
modeled into the forecast to determine how many mills should be
levied to stave off future deficits. By law, schools are not allowed
to operate with a deficit or close their doors <strong>and</strong> cease operation.
14

What is the future of my property taxes
paid towards Schools?
The Stow-Munroe Falls City School District is rated an
Excellent District for providing programs <strong>and</strong> services to our students
that result in their achieving success in college <strong>and</strong> in future
careers. Our “Cost-per-pupil” rate of $8,796 for fiscal year 2007
is lower than similar districts that pay $9,050 annually per student
<strong>and</strong> is less than the state average cost per student of $9,623. (Taken
from Ohio Department of Education District Profile Report formerly
known as the CUPP Report)
Based on the current school funding structure in Ohio, it
will be necessary for schools in Ohio to continually ask for tax
increases from its constituents in order to continue doing business.
The Stow-Munroe Falls City School District’s revenue remains
flat-lined until the passage of a new levy. As costs increase, new
levies must be proposed in order to meet its daily operations.
Fiscal Year 2007
Estimated Daily Cost to Educate a Student
$60
$50
$49.18
$40
$30
$20
$21.19
$10
$-
Daily Cost
to Educate
a Student
Resident
Share
of Daily Cost
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Stow-Munroe Falls City Schools
4350 Allen Rd.
Stow, OH 44224
1909 2009
SMFHS
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