By: Amy Wendt
THE VILLAGE REPORTER
amy@thevillagereporter.com
On Monday, March 17 following its regular meeting, the Archbold Board of Education opened its doors to the public for a discussion with David Conley of Rockmill Financial Consulting about taxation policy and district revenue streams.
The series of six financial work sessions stemmed from talks leading up to the May 2023 election, when the board ultimately decided to put a five-year, $2.7 million emergency property tax levy on the ballot which district voters approved.
With the five-year levy in place, the board set out to explore long-term financial strategies, including developing a taxation policy and considering the implementation of an income tax to diversify the district’s income.
Conley, the president of Rockmill Financial Consulting based in Westerville, has specialized in government finance and taxation in Ohio since 1988 and has worked with over 400 governments and around 140 school districts.
His firm helps municipality’s structure taxation to fund operations, issue debt, and develop tax policies that align with their community’s financial needs.
“This is a process of education,” Conley began. He explained that the process begins with educating the board on existing taxes, how they function, and how they impact the community. Phase two is exploring alternative tax options and discussing their potential effects and benefits.
Following the work sessions, a written guide will be developed for the board to provide long-term direction, so the district has a framework for future tax policy decisions.
JANUARY WORK SESSION RECAP
Providing a recap of the board’s first work session in January, Conley shared that the group spent time reviewing the community’s background, and district demographics including population, wealth, and education indicators.
“Most of your demographic indicators were all positive,” Conley noted.
The community has seen slow but steady growth in education, income, population, and home values. The percentage of residents with bachelor’s degrees has increased, and family income has risen since 2010.
Conley shared that overall, the tax cost to live in the district is comparatively low. An affordability analysis was conducted comparing Archbold to 19 other regional school districts and showed that Archbold had the 5th lowest cost among the districts included in the study.
“Cost alone doesn’t tell the whole story because there’s a value aspect to that,” Conley continued. Archbold’s performance index score ranked third highest among those same districts in the comparison.
“In terms of the cost of your district to your residents, the value proposition is pretty strong, pretty good.”
Because the district came to voters for additional funds in the May 2023 election, the district is classified as having a shorter operating cycle.
Conley explained, “When we make the next ballot request, what we want to be able to say to the community, is that based on this next ballot request, from this point forward, we think we can go 10 years, 15 years, or 20 years.”
Another element reviewed was fund balances and it was noted that Archbold’s are relatively low compared to other districts in the area.
Archbold’s current revenue structure relies on real estate taxes as do many Ohio school districts. Conley noted that Archbold Area Schools has strong voter support at 82.35% whereas most other districts have a levy passage rate of around 35%.
“State lawmakers are saying school districts are to blame for the cost of taxation on its residents. The reality is that the state constitution is to blame. “
“Schools in general have a larger operating budget than any other government in the state…you have far more personnel than any other government so your budget by default is larger.”
Conley also touched on the fact that the district is on the 20-mill floor.
REFLECTION
Following the review of the January work session, Conley asked board members and administrators how they would feel about informing voters that the district would prefer the tax revenue to be continuous, eliminating the need to place a levy on the ballot every five years.
“If we could have that (revenue) on a continuing basis, that’s going to add stability to our funding sources so that’s the upside to that,” district Treasurer Joyce Kinsman offered.
“It’s much easier to make plans and to plan long term knowing that consistently we’re going to get those 3.8 million dollars.”
Kinsman continued, “Now, do we want that to grow? That’s probably a whole other conversation. But I mean, if we at least know we are going to get that (revenue), that would be helpful instead of the voter fatigue and going back all the time – having to have that angst of going back and asking again and again,” Kinsman added.
Conley then asked Superintendent Selgo if there were any advantages to the current system of coming back to the voters with a levy request every five years.
Selgo responded, “As a community member it would give you the ability to feel like ‘at least they’re asking.’ As a taxpayer, you get to continue that decision over and over again. It might be a burden to management, but it would be a benefit to the voter.”
Conley encouraged the board to think through their position on those questions as both a taxpayer and from an educator’s perspective.
CURRENT DISTRICT REVENUE
Archbold Area School’s revenue is primarily funded through property taxes, totaling $10,273,191, which accounts for 62.54% of the district’s income.
Of this, businesses contribute 46.63%, while individual and agricultural properties account for 53.37%, totaling $5,947,685, or 26.55% of receipts.
State funding provides $5,638,279, making up 34.32% of the total, while other sources, such as investment earnings and fees, contribute $515,848 or 3.14%.
According to Selgo, the latest projections indicate the district could see a decrease of half a million dollars in state funding.
Conley added that if state funding is reduced, the district would need to consider spending cuts, or it would have to ask voters for more money which would place additional burden on home and agriculture property owners under the current tax structure.
“I think that’s what the state wants,” Conley added. “I think the state wants to make you (schools) struggle and go back to the voters and ask them for more and more money.”
20-MILL FLOOR
Archbold School District is on the 20-mill floor. In 1976 the state legislature passed a measure through HB 920 to protect taxpayers from rising property taxes due to inflation-driven increases in home values.
Ohio requires all school districts to collect at least 20 mills in property taxes for operating expenses. No school district can drop below this amount, no matter how much property values go up.
When property values increase, Ohio law usually lowers the tax rate (millage) to prevent taxes from rising too quickly.
But once a school district reaches 20 mills, the tax rate cannot go any lower. This means that if property values keep increasing, your taxes will also go up because the tax rate stays locked at 20 mills.
For taxpayers, this means higher property values lead to higher tax bills. For schools, being at the 20-mill floor ensures they reach the minimum level of funding, but they don’t get automatic funding increases unless voters approve new levies.
RISING PROPERTY VALUES
Conley presented a graph showing home values in the district from 1983 to 2025. The data revealed a steady upward trend until the 2011 housing bubble when Ohio experienced its first decrease in property values. In 2017-2018 property values course corrected and continued to increase through 2024.
Conley explained that from 1984 to today, values have experienced an average annual increase of 4.85% despite the temporary downturn in 2011.
“The compounding effect of home values will amplify the impact of being at the 20-mill floor,” Conley explained, particularly for those on fixed incomes.
INCOME TAX
To ease the burden of rising property taxes, Conley suggested implementing an income tax as a potential way to diversify the school’s revenue stream and reduce the district’s reliance on property tax income.
Out of all Ohio school districts, 607 collect property taxes, while 212 impose an income tax. Among schools with an income tax, 148 districts tax all income, while 64 tax only earned income.
The key difference between traditional income taxes and earned income taxes is the taxable income.
Traditional income taxes generate more revenue for school districts by taxing a broad range of income sources, including wages, self-employment income, pensions, annuities, capital gains, and dividends.
Earned income taxes apply only to wages and self-employment income, excluding investment income, pensions, and other non-earned sources.
Both types of taxes exempt social security benefits, disability benefits, retirement benefits, welfare, child support, gifts, inheritances, and workers’ compensation.
Using income tax as a revenue stream for school districts offers inflation-adjusted revenue and the ability to diversify school district’s income streams.
Income tax also shifts tax responsibility to working families who utilize schools the most, rather than retirees. Unlike property tax, income tax does not include business taxpayers and offers flexibility in terms of duration. Income tax does not impact the 20-mill floor.
Conley emphasized that an income tax would increase costs for some residents while reducing the tax burden for others.
Summarizing the evening’s material, Coley noted, “You’re a low-cost district already…taxes have been low and are low.”
“You all have not been wasting taxpayer money and have been spending incredibly well and keeping it-keeping it well under the rate of inflation.”
He continued, “We’re at the 20-mill floor. There’s nothing we can do about that; it’s current state law. Except for creating a tax system that will help offset the pain of that.”
Conley proposed shifting a portion of the property taxes to an income tax to create some diversity in the way the taxes are collected.
“Our goal is to try to make sure that while staying affordable, we also try to blend that tax across different types of taxing instruments.”
“Imagine having an income tax that also grows as the community grows over time, you now have two revenues that are coming into the district that grow, hopefully with the rate of inflation, keeping you off the ballot for the next 20-30 years for an operating levy.”
At the next work session, the board will discuss property tax levy renewal strategies with Conley, explore options for converting to income tax, set general fund balance targets, and establish priorities for the use of excess funds.
Upcoming financial work sessions will be held at 7:00 p.m. on May 7, 2025, August 6, 2025, October 22, 2025, and December 10, 2025. All work sessions will be held in the High School Media Center and are open to the public.
