Lessons in School Finance

Treasurer Todd Tolson explains what Passage of Issue 4 means
In the words of Peter Parker’s Uncle Ben, “With great power comes great responsibility,” and we feel a similar accountability with the passage of Issue 4. So how will we manage the responsibility of additional resources from taxpayers? Our goals for this levy are to continue to offer maximum services to our students, staff, families and community, and to make this levy last as far beyond the promise of 2023 as possible.

1)      Staff contracts: part of the planning behind Issue 4 was the ability provide fair and equitable wage/benefit packages to our hard-working and dedicated staff. Staff base salaries had been frozen for 10 years with no cost of living increases. Please be aware that increases in staff salaries are tied to increased premium contributions for insurance benefits. Any wage/benefit packages agreed to will not jeopardize our promise for this levy to extend to 2023 and beyond.

2)      Grant funding: continue to seek non-taxpayer grants to help fund academic learning. We will continue to research grant opportunities to provide additional funding at all educational levels. This year we have been awarded two new grants through the Ohio Department of Education. As other opportunities present themselves, we will work tirelessly to obtain new monies.

3)      Private funding: continue to seek non-taxpayer support to fund athletic facility upgrades. As of the writing of this article, $1.9 million has been committed to these projects over the next 3 years. By June 30 of this year, we will have received $800,000 which will exceed the cost of the newly approved Fieldhouse project at Memorial Stadium.

4)      Spending: we will continue to be diligent in evaluating all expenditure of district funds to ensure responsible purchases that will benefit our students. Constant review of vendor contracts for best pricing is a must.

We thank you for your support of our district and students. We do not take the passage of this levy lightly and understand it comes with great expectations that we manage these resources wisely and make it last to 2023 or beyond.

from Treasurer Todd Tolson

School Finance 101 – How it works in North Canton: State Funding

School funding in Ohio comes from two primary sources: The State of Ohio, and the school district’s local taxpayers. This article will focus on our funding from the state.

The State of Ohio’s General Assembly, charged with developing a thorough and efficient way of funding local schools, sets a budget every two years to determine the level of funding each district will receive. Ohio's school funding is a multi-tiered model with many funding components. The base component is the "Opportunity Grant" and the level for the 2016-17 school year is set at $6,000 per student. Unfortunately, the state does not fund this component at this amount. They determine what percentage to fund each district on a State Share Index (SSI), based on calculations using district property valuations, median income, and student count. North Canton’s SSI this year is 45.0% and, as a result, we will receive $2,700 per student for our "Opportunity Grant." Additional funding components are in areas such as Transportation; Special, Career Technical & Gifted Education; K-3 Literacy; Economically Disadvantaged; and Limited English Proficient. The final components, considered "bonus" funding, are available to districts with high third grade reading scores and graduation rates. We anticipate receiving a total of approximately $15.1 million from the state, or roughly $3,330/student, which represents about 35.1% of our spending needs this year.

School Finance 102 – How it works in North Canton: Local Funding

School funding in Ohio comes from two primary sources: The State of Ohio (School Finance 101 in Oct 2016 Viking Vision), and the school district’s local taxpayers. This article will focus on our local funding.

Our local funds come from tax levies which have been approved by taxpayers who reside inside our district boundaries. When a district needs additional monies to run their day-to-day operations, they need to place a new operating levy on the ballot. New levies typically sustain a district 4 - 5 years before either another levy must be requested or spending reductions need to be made.

When levies are approved, the amount of money generated will remain relatively constant for the life of the levy, except for new construction. This is due to a House Bill (HB) 920, a law passed in 1976. This bill eliminates large increases in property tax billings due to large, inflationary increases in property values. HB 920 adjusts voted millage annually so as property values increase, millage rates decrease so no additional dollars will be generated for school districts. This reduced rate is called “Effective Millage.” Currently, the voted millage for North Canton Schools is 80.9 mils, and the effective millage is 40.6 mils.

Now, you may say that in the past your tax bill increased without a new levy, and it possibly can happen even without passage of a new levy. Every six years, the Stark County Auditor must perform a reappraisal of all property values in the county. In between each reappraisal, a “computer update” of valuations is performed based on sales of properties. Here is a scenario of what can happen with these valuation changes. We can see an average increase of values of 8% for our district, but in one neighborhood the increase is 10% and in another the increase is only 5%. The outcome, because of H.B. 920, is an increase in the tax bill in the 10% neighborhood and a decrease in the neighborhood whose values only increased 5%. The net effect is the district received no additional dollars. Another reason for an overall tax increase could be from a new levy of another agency, such as the city, township, library or parks system.

 School Finance 103 – What is an Audit?

The Financial Audit Group of the Ohio Auditor of State’s (AOS) office is responsible for conducting financial audits of all public entities as required under Ohio law. Generally, the AOS is required to perform these financial audits at least once every two fiscal years; however, many audits are performed annually. The office must review the methods, accuracy and legality of the accounts, financial reports, records and files of all public entities. It is the responsibility of the Financial Audit Group to determine if the entity has complied with the law, rules, ordinances and orders pertaining to the office. Each fiscal year, the AOS releases approximately 4,000 financial audits.

Audits generally begin with an entrance conference between the lead auditor, audit manager, treasurer, superintendent and school board members. At this meeting the objectives, scope, types of records to be examined, estimate of the time required to complete the audit and cost are reviewed. Once audit field work begins, regular communications occur between the lead auditor and treasurer to keep everyone fully informed of issues and audit progress.

Audit field work includes testing for compliance with district policies and applicable laws, as well as examining the effectiveness and existence of internal control procedures. The audit process ends with an exit conference, which is held to review the audit report, field work results and any recommendations the AOS makes to strengthen the district’s financial operations.

Each year the AOS issues an “Auditor of State Award” to entities that meet the following criteria of a “clean” audit report:

• The entity must file timely financial reports with the Auditor of State’s office in accordance with GAAP (Generally Accepted Accounting Principles);

• The audit report does not contain any findings for recovery, material citations, material weaknesses, significant deficiencies, Single Audit findings or questioned costs;

• The entity’s management letter contains no comments related to: Ethics referrals, questioned costs less than $10,000, lack of timely report submission, reconciliation, failure to obtain a timely Single Audit, findings for recovery less than $100 or public meetings or public records

• The entity has no other financial or other concerns

The audit of the North Canton City School District for 2016-2017 has been completed with great success, and we have again received the “Auditor of State Award.” I am very proud of the staff in the treasurer’s office for their diligent work every day to ensure the safeguarding of all district resources. I appreciate every staff member’s compliance with board policies and procedures. This total team effort shows the dedication to the students and families of this great district. — SOURCE: HTTP://WWW.AUDITOR.STATE.OH.US

 School Finance 104 - How to Calculate Millage on a Levy

Local Property tax levies are always computed in mills. One mill costs the property owner $1.00 for every $1,000 of assessed taxable valuation each year, or .001. Taxable valuation is 35% of the Stark County Auditor’s (SCA) appraised valuation for the property. For example, the taxable value of a home appraised by the SCA at $100,000, is $35,000. To determine the cost of a mill for a homeowner, based on a $35,000 taxable value, you multiply the value times a mill (.001), and the cost would be $35 for each mill. 

You can find the SCA’s assessed valuation of your property on the SCA Real Estate Search page (http://ddti. starkcountyohio.gov/Search.aspx). You can search by property owner name, address or parcel number. Once you have found your property, click on Valuation. You will then be able to see the Valuation Data of the property. This will include the SCA appraised value of the Land, Building and Total, as well as the 35% assessed (taxable) value of each
 

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