In 1976, the Ohio legislature enacted House Bill 920, which requires the effective millage of voted property tax levies to be reduced in proportion to rising property values, to protect property owners from paying more taxes on a given levy than they originally approved.  The law was subsequently incorporated into the Ohio Constitution as Article XII, Section 2a(C)(2):

The Ohio Revised Code, Section 319.301 contains the procedures for determining the tax reduction percentage, but also provides a partial exemption for school district levies.  Paragraph (E)(2) of that section prevents school levies from being reduced below "two percent of taxable value," or 20 mills.  Known as the "20 mill floor," that provision partially protects school districts from facing a fixed income while costs rise over time.  Voters could approve additional levies beyond those 20 mills, but the reductions would then apply again until the effective millage was gradually reduced back to a total of 20 mills.

In addition to the House Bill 920 reduction, the effective millages for emergency levies are also reduced in proportion to new development, so that the dollar amount collected remains the same even when the overall size of the tax base expands.  Effective millages for construction bonds are reduced as necessary to limit the amount collected to the principal and interest due on the construction bond.

A renewal levy extends the duration of a previously-approved levy, rather than letting it expire.  The effective millage continues to be reduced year after year as described above, so renewal levies do not generate more income for the taxing authority even if property values have risen or new development has expanded the tax base.

A replacement levy in effect resets the effective millage of a previously-approved levy to its original level.  If a levy was originally approved at 5.9 mills for example, but had been reduced to 4.0 mills over time, replacing it would set the millage back up to 5.9 and apply it to the new property values and the new size of the tax base.  After that, it would begin to be reduced again as described above.

The county auditor administers the reductions.  The following documents show the effect of those reductions over time, for Beavercreek levies:  

• Tax reduction factor report for Beavercreek property tax levies, 2007 (Adobe Acrobat document)
• Effective millage rates for all Beavercreek property tax levies, 1998-2007 (Adobe Acrobat document)
• Effective millage rates for all Beavercreek property tax levies, 1998-2007 (Microsoft Excel spreadsheet)

You can look up the current effective tax rates for your property or any other property on the Greene County website.  Click on "Auditor - Real Estate Information," look up the property you want, and click on "Tax Dispersal/Levies."  For more information, contact the Greene County Auditor's Office.

Ohio's school funding system rests upon the principle that the state and local school districts should share the cost of public education.  The state determines the amount of its share using complex rules described in Ohio Revised Code section 3314.08.  The basic state formula is as follows:

Formula Average Daily Membership x  Base Formula Amount Per Pupil x  Cost of Doing Business Factor =  Estimated total cost for a given school district

Estimated total cost for a given school district -  Local contribution = State funding for a given school district

Phantom revenue:  The state's calculation of the local contribution amount assumes that as the total assessed property value in a community goes up, school district property tax revenues will also go up, so the state's share of the total cost can therefore go down.  But as outlined above, revenues from voted levies do not go up.  The state reduces its support by an amount of extra local tax revenue that taxpayers do not pay and school districts do not receive.  That problem is known as "phantom revenue."

Ohio Supreme Court ruling that the system is unconstitutional:   In "DeRolph vs. State of Ohio," a coalition of more than 500 local school districts sued the state, charging that the state's funding system was not "thorough and efficient" as required by Article VI, Section 2 of the Ohio Constitution. The case worked its way to the Ohio Supreme Court, which heard variations of the case four times between 1996 and 2002, with the Ohio Legislature attempting to fix the system in between each hearing.  The Court's final ruling reaffirmed its first ruling, finding that the system is still not thorough and efficient for a variety of reasons, including the following:

• Insufficient funding for an adequate education
• Insufficient funding for school building construction and repair
• Insufficient funding for state-mandated programs
• Too much reliance on local property taxes
• Structural deficiencies, such as the phantom revenue problem

For information on the current status of the Legislature's efforts to comply with the Supreme Court's direction, contact Representative Kevin DeWine at district70@ohr.state.oh.us, or via mail at:

The Honorable Kevin DeWine Ohio House of Representatives 77 South High Street Columbus, Ohio 43215-6111

The school funding system and court case are more complex than I've outlined here.  See the following for additional information:

• Ohio Coalition for Equity and Adequacy of School Funding
• Governor's Blue-Ribbon Task Force on Financing Student Success
• Beavercreek School District website (click on Administration --> Treasurer --> Understanding School Finance)