MOUNT VERNON — Voters in the Mount Vernon School District will consider a 1% earned income tax levy when they go to the polls on May 5.
If approved, the levy will generate approximately $6 million annually. The district will use the money for the first 30 years to cover its share of the $138 million master facilities plan.
The plan includes consolidating six elementary schools to four, including building three new, and major renovations to the high school.
“This proposal represents a significant opportunity for the Mount Vernon community to partner with the State of Ohio to address long-standing facility needs across the district,” Superintendent Bill Seder said.
“Through the Ohio Facilities Construction Commission partnership, approximately $40 million of the total project cost would be covered by state funding that would not be available without local support.”
Why an earned income tax levy?
Seder said that in light of increases in property values and their corresponding tax impacts, the Board of Education evaluated the district’s revenue structure.
“We recognized that 100% of our local funding has historically been tied to property taxes, which places the full burden on property owners regardless of income,” he said.
As part of its evaluation, Seder said the board explored alternative, more-balanced revenue options. That included traditional income and earned income tax models.
“Ultimately, we selected the earned income tax because of its fairness and its impact on our community, particularly our residents on fixed incomes,” he said.
“We have a strong and valued retiree population in Mount Vernon who have generously supported our schools over many years. Choosing an earned income tax allows these individuals to continue supporting our schools without placing additional financial strain on their retirement income.”
An earned income tax does not apply to Social Security, pensions, or retirement investment income, which Seder said was an important consideration in the decision-making process.
“More broadly, an earned income tax aligns taxation more closely with a resident’s ability to pay, while helping protect those on fixed incomes and ensuring the responsibility for funding our schools is more balanced across the community, not just on homeowners,” he said.
Why 30 years?
Seder said that when the board selected an earned income tax as the funding mechanism for the project, Ohio law limited it to a maximum of 30 years.
“The board chose to use the full term to keep the annual tax burden as low and stable as possible for our community,” he said.
Seder said the OFCC’s 36% share of the cost represents local tax dollars coming back to Mount Vernon. However, the OFCC only covers state-approved project costs.
“There are also locally funded components that are either required by OFCC or prioritized by our community, such as items the state does not fund at the same level, including spaces like an auditorium and other district-specific needs,” Seder said.
“As a result, the district’s total local investment is close to $100 million spread out over 30 years.”
Seder noted the district’s share is not a one-time payment. Similar to a home mortgage, it is financed over time. That means the total revenue collected must cover borrowing costs and interest over the life of the levy in addition to construction costs.
“Using the full 30-year term allows the district to manage those costs responsibly while keeping the annual tax rate lower and avoiding the need to return to voters for additional funding in the future,” the superintendent said.
Seder said the 1% was “carefully calculated” to align with the annual payments required to finance the project and that it will take the full 30 years to pay off construction costs.
Does the district have other levies in effect? if so, what are they and how do they differ?
The district has an operating levy to supports day-to-day operations, including staffing, transportation, and educational programming.
It is based on property values and paid by property owners regardless of income.
In contrast, the earned income tax levy is based only on wages and earned income and is specifically intended to address long-term facility needs, such as new construction and major renovations, rather than daily operations.
However, Seder said that if the earned income levy projections fall short amount of projected revenue, the district will use general funds to pay the debt.
Conversely, if collections exceed the projected amount in any given year, the district could use the funds for operating expenses.
What happens if the levy does not pass? What’s the plan?
Seder said that if the levy fails, the district would not be able to move forward with the current master facilities plan in partnership with OFCC. That would likely result in losing significant state funding of about $40 million.
Additionally, the district would continue to use aging facilities, with increasing maintenance and repair costs, and brings up the need to revisit options.
Options include:
• Re-evaluating the ballot issue and potentially returning it to voters.
• Reconsidering the current elementary configuration (including the possibility of two larger elementary buildings as permitted by OFCC rather than three smaller schools).
• Scaling back elements of the plan, such as not including high school renovations.
The OFCC will not allow the district to address only a portion of the elementary buildings.
For example, the district cannot replace or renovate two schools and leave the remaining buildings unchanged.
“To access state funding, the elementary project must be addressed as a complete system,” he said.
Seder also said it is significant that the OFCC will not provide funding to renovate a building if the renovation cost exceeds 66% of the cost to build new.
OFCC evaluations showed that the cost to renovate the district’s five elementary buildings averaged close to 90% of the cost of building new.
“This was a significant factor in the committee’s recommendation, as investing nearly the same amount into aging facilities would not provide the long-term value, efficiency, or learning environment that new construction offers,” he said.
To learn more about the levy, visit the district’s website. Click on “Our District” and select “Levy Information” at the bottom of the drop-down menu, or scroll down to “District News” and select the article “Investing in Mount Vernon City School.”
