East Knox board puts $12.5 million in fund amid tax concerns

Editor’s Note: This article has been updated to remove an incorrect statement regarding tax collection from regarding House Bill 96. The correct statement is “No taxes would be collected for operating funds. The only taxes that would be collected would be for the levies approved that fund the bond retirement funds and the permanent improvement funds.” The previous statement said, The district wouldn’t receive any tax money besides the emergency bond levy passed in 2017.

HOWARD — The East Knox Board of Education took action last week to prevent the possible loss of general operating funds.

The board transferred $12.5 million into its capital projects fund to prevent a reduction in property tax collection that could take place under Ohio’s proposed biennium budget, known as House Bill 96. 

Every two years, Ohio legislators pass a biennium budget that outlines how state funds will be spent for the next 24 months. But these budgets can also include other provisions, like one that would reduce property taxes in school districts with a carryover of 30 percent or more in its general fund.

“While I do understand the need for property tax relief, our district is looking at a rough estimate that would lose $16 million as it’s proposed,” Treasurer Jessi Busenburg said. 

That’s because certain school property taxes would not be listed in tax bills, state Rep. Mark Hiner said at Thursday’s meeting. 

The proposed state budget calls for any balance the district had over 30% of the previous year’s operating expenses to be credited toward future property tax relief bills, Hiner said. 

The Ohio House proposal regarding the state budget specifically addresses the fiscal year-end operating expenses and operating cash balance of a district, Busenburg said.

“The biggest complaint my office gets is rising property taxes,” Hiner said to the board. “We’ve had huge increases in Knox County.

“We need to find balance somewhere,” Hiner said. 

Taking away local dollars

Proponents of the proposal say it will provide property tax relief to property tax owners in light of increases in valuations seen over the last couple of years, Busenburg said.

“The thing I want to say specifically about our district is the property tax values have resulted in about $1.5 million straight property tax increase (and expected) $1.1 million the next year,” the treasurer said.

“The proposal is looking at the fiscal year-end expenditures, capping what we’d be able to keep in our reserves (…) that would amount to a loss of $16 million to our school district over a two year period.” 

The district would be left with a 30% balance of our previous year in operating expenses.”

‘Let’s see what comes out of the wash’

Hiner asked the board not to vote on the resolution as the bill will likely see changes at the Senate, the House and at Gov. Mike DeWine’s desk before signed into law. 

“I ask you not to do this yet,” Hiner said. “Let’s see what comes out in the wash.” 

The statehouse budget takes effect July 1.

Nevertheless, the board chose to approve several fund transfers. These transfers moved money out of the district’s general operating fund into other funds that don’t count towards the 30-percent carryover limit.

The board approved a termination benefits fund, which was previously in the general fund, moving $350,000 into it. The district typically puts $50,000 annually in the fund since 2017, when the district was in fiscal emergency, Busenburg said. 

The board also moved $12,500,000 into the capital projects fund from the general fund. This can fund building improvement projects like upgrading HVAC systems. 

According to a fund document, other potential capital projects expenses could include technology equipment and building repairs.

Busenburg said the board can transfer these funds back into the general fund in the future.

According to the fiscal year 2025 forecast approved at Thursday’s meeting, the district has forecasted $7.9 million fund balance after the transfers to specific funds outside the general fund.

“This is our only opportunity to take action based on how it’s written now,” Busenburg said. 

Later in the meeting, the treasurer said the district is looking at what property tax relief “we could give to the taxpayers once the budget is passed.” 

Busenburg said the county auditor, Sarah Thorne, could stop collecting taxes on the emergency levy — if it’s renewed before it expires in 2026. The board would likely make that decision on an annual basis.

It generates $1.2 million per year, Busenburg said.