Detailed information about Ohio s school income tax can be found here:

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1 FAQ s Chardon Schools Issue 4 on the May 4, 2010 Ballot Is there a new tax being proposed to fund our schools? Yes. It was determined by a majority vote of the Chardon School Board, with supporting research conducted by the Treasurer s office, that an earned income tax, combined with the current revenue generated from property taxes, would offer a fairer and more equitable means to provide the schools with financial stability. The School Board has placed Issue 4 on the May 4, 2010 ballot. Why is there also a 1 mill reduction in property taxes? School income taxes can only be levied in one-quarter percent increments. In the Chardon district, a.75% tax would not generate enough income, while the 1% tax will generate slightly more than the district s needs. That is why the ballot issue also calls for a 1 mill reduction in current property taxes paid. This combination provides the district the conservative revenue necessary to balance our budget well into the future. Detailed information about Ohio s school income tax can be found here: Why is the District on the ballot this May? School levies are a fact of life in Ohio because legislation which freezes property tax revenues to schools. Unlike income and sales taxes, which rise with inflation, school property tax is frozen at the last dollar amount approved by the voters. School districts must therefore pass levies to keep even with rising costs. While every effort is made to keep our district s costs down, manage expenses and make realistic projections with consideration of the concerns expressed by the community, the state and federal governments continue to saddle school districts with several unfunded mandates that continue to increase operating costs locally.

2 Below are graphs showing the district s income and expenses:

3 Below is a graph of the district s current five-year forecast which is required by the state of Ohio. As you can see, even with the planned reductions, we show a negative balance starting in FY Public school districts are required to operate in the black, so it is necessary to go to voters to request additional funds. What is the district doing to reduce costs? Our residents and businesses are tightening their belts and we know that our community expects the school district to do the same. The district has taken measures to control and contain spending. Regardless of the proposed levy, the district will be making cuts amounting to $1.25 million; approximately $180,000 reduction in administration, $250, 000 in reductions at the elementary level, $275,000 at the middle/high schools, $150,000 in extra-curricular fees and $95,000 in transportation.

4 What will I see on the ballot in May? The district is requesting a 1% tax on earned income and self employment income only. This type of tax effects people who earn wages or are selfemployed S corporations and reside within the Chardon Local School District. Income from Social Security, pensions, stocks, interest or other sources are not taxed. Additionally, the ballot issue calls for a reduction of 1 mil of current property tax millage. On $100,000 dollars of market value, a one mil reduction would be approximately $30 per year. The school board decided that funding our school district through an earned income tax is the most equitable way to bring financial stability to the district. While it will mean more taxes for some residents and less for others, it removes the burden of total reliance on property tax alone. Example: Earned Income School Tax $25,000 $250 $50,000 $500 $100,000 $1,000 $200,000 $2,000 Is there an alternative to a tax levy? No, there is no alternative at this time. Currently it is the responsibility of each community to adequately fund their public school system. However, the good news regarding this type of local taxation is that revenues raised can be locally governed. This strategy of using both income tax and current property taxes is intended to relieve the reliance on property tax levies alone and provide some relief to those on low or fixed incomes. The only other alternative is to fund our schools as we have been, solely with property taxes.

5 How do Chardon s school taxes compare to other districts? Below is a school millage comparison for area districts. As you can see Chardon s millage is slightly below average for this area.

6 How do we compare to other districts in terms of our cost per pupil? The below graph illustrates that the Chardon Schools cost per pupil of $9891 is below the state average, and below that of many neighboring districts. Quality results on a tight budget. Do we need to pass this now? A 1% earned income tax would generate approximately $4.5 million for the district. The collection of income taxes is slower than for property taxes. The full collection of earned income tax is estimated to be realized approximately 18 months after collection begins in January 2011 If the earned income tax does not pass we will need to be on the ballot more often in an effort to stabilize the district s financial forecast for a five-year period of time which is required by the State of Ohio. A diversified tax will stop the over reliance on property tax as the only local means to help fund our schools. April 9, 2010