CHUH Schools Would Lose $3.8 Million Over 2 Years in Tangible Personal Property Tax Phase-out

Numbers released from the Ohio Office of Budget and Management Tuesday about Gov. John Kasich's two-year budget proposal provided more details about state support to schools at the district level.

While state money for the Cleveland Heights-University Heights School District would increase by 2.5 percent, Kasich's plan to accelerate the phase-out of the tangible personal property tax would cause the district to lose almost $4 million over the next two years. 

Tangible personal property tax revenue to schools and cities, which includes taxes on equipment, inventory, furniture and other property owned by businesses, is set to be phased out gradually starting in 2014 and by 2018. However, Kasich’s budget plan proposed that the revenue be phased out by 2016, beginning with the 2012 fiscal year.

The $18 million the district received from the state in 2010 would remain intact under Kasich's plan. However, the district received 4 percent of its revenue from TPP taxes in 2010, according to documents from the Ohio OBM, and it would lose about $1.9 million each year over the next two years with the phase-out.

Taken with the 2.5 percent increase, the CHUH School District would lose about $3.5 million over the next two years in the proposal. That reflects a 16 percent reduction of its total state revenue of $22 million, said he feared but anticipated earlier this year. 

 by the district’s chief financial officer, Scott Gainer, is one way the school district is working ahead of the cuts, Heuer said.

 at the end of this year and will receive two payments of $28,000, which is more than double what was offered in the previous program, Gainer said by email.

“If 30 people leave and we replace them with beginning teachers, then we’ve essentially saved $1.2 million. Over time, this savings will be compounded every year, amounting to a multimillion-dollar savings to the district,” Heuer said in earlier emails.

However, depending on how much is cut, the district may not be able to fill all of the positions opened by the retirements, Heuer said. Also, many of those who opted to retire chose to return next year at a reduced salary and on a limited contract as part of the incentive.

The good news is that if the cuts remain in the 15 percent range, layoffs would be unlikely.

“We have targeted a 10 percent reduction in spending by each department in the district during this school year for supplies, materials and purchased services,” he said by email. “Unless the state revenue reduction is much worse than anticipated, we will not have to cut programs or personnel.” 

Beachwood Patch editor Nikki Ferrell contributed to this report.