AUSTINTOWN — The education portion of Ohio’s $86 billion fiscal 2024-25 budget presents new challenges for Mahoning County school districts, which may be exacerbated by an expected increase in property taxes.

Austintown Local Schools Treasurer Blaise Karlovic said he understands why many are concerned.

“This budget is the most volatile I’ve ever worked with. As enrollments decline, funding will not be guaranteed the same way it was under old funding models,” he said.

The budget has been criticized by public school advocates for diverting money to charter and community schools. It also adjusts the funding formula based on income and property valuations that Karlovic said are overly inflated.

But Karlovic said his focus is on the positive aspects of the budget and making the formula work for Austintown.

“It’s going to make us work harder to entice our kids to continue to attend Austintown schools, and to ensure we have the tools to offer the quality education our board is concerned with providing,” he said.

POSITIVES

The biggest positive for Austintown and other districts is that the new formula increases per pupil funding by about 11 percent. The state average is now $8,131 per student compared with $7,352 under the old formula. That does not mean Austintown receives that amount for every student.

Ohio’s funding formula considers factors such as the federal adjusted gross income of a district’s tax base, along with property values and other metrics, then awards each district a corresponding percentage of the state average. For Austintown, that amount traditionally has been around 50 percent, Karlovic said.

The increased average results from a change in the data the state uses to calculate the figure.

When the Fair School Funding Plan was passed in 2021, Karlovic said it included some equitable improvements based on socioeconomic data that helped schools fund special education and gifted education programs, and provided transportation supplements and line items for career and technical training. However, the plan was based on fiscal year 2018 data sets.

“It wasn’t realistic for what districts were encountering, especially after COVID when inflation and supply chain issues were impacting the costs of services and supplies districts had to purchase,” he said. But the new state budget uses data from fiscal year 2022, which accounts for all of those factors. “That’s a win for us,” he said.

Karlovic said he is not naive about the negatives in the bill, though.

NEGATIVES

Though students leaving the district for charter and community schools are no longer a line item on Austintown’s budget under the new plan, directly funding those schools may make them more appealing, and every student that leaves is still taking funding dollars out the door with them.

But Karlovic said he hasn’t worried about it in the past and does not intend to worry about it now.

“If kids want to leave your district for those programs, they’re going to do that anyway,’ he said. “My focus is that I have 4,000-plus kids here, so how do we continue to provide them the best education possible?”

Nor is the potential fallout of anticipated property tax increases lost on Karlovic.

‘Property values and property taxes are a lot higher than communities and school districts ever anticipated,” he said. “As property values go up, the formula means the state views your district as wealthier, and so they reduce the amount of state funding you receive.”

Mahoning County Auditor Ralph Meacham has issued statements recently bracing homeowners for property tax increases of up to 30 percent, though Karlovic said he does not expect Austintown’s taxes to increase quite that much.

Karlovic said a major concern with increased property taxes is that many residents do not understand how those increases actually affect school district funding through existing levies.

Property taxes only affect the 10 “inside” mills, which in Austintown are split between the township (4.9 mills) and the school district (5.1 mills). That inside millage will fluctuate with the rise and fall of property values and taxes, but the changes do not account for much in the total revenue schools receive.

Tax-rate changes do not affect school levies, which are considered “outside millage” and can generate only the set dollar amounts stated on the original levy request. If voters approved a school levy to generate $1 million a year for 10 years, it will never generate more than that, regardless of any changes in property taxes.

Karlovic said district officials understand that if property taxes increase at the expected amount, it is unlikely voters would approve a new school levy for any amount should the district need to place one on the ballot. He said that means the responsibility lies with him and the school board to make the available funding work, and he likes their chances.

“I’m excited to start to model how it will impact us,” Karlovic said. “Being able to model this formula and forecast it out allows us to make good proactive decisions instead of reactive decisions.”

He said Austintown already has a good track record of financial decisions. Karlovic said the district has cut $3.5 million from major renovations to its athletic facilities. That and other decisions mean Austintown will be able to pay off a bond that matures in 2030 as early as 2028. That kind of budgeting will be even more important with the new funding reality, he said.