Investing in Our Public Schools: Southwest Local School District

Superintendent Hamstra, Members of the Southwest Local School Board, and Treasurer Lowe:

When my husband and I moved to Harrison twenty-five years ago, having the opportunity to raise kids in a great school district was a big part of that decision. Our love for Southwest Local Schools remains just as strong as when our boys started at Whitewater Valley Elementary. I also remain a firm supporter of our public schools and steadfast in advocating for their adequate funding.

What has dramatically changed over those same 25 years, especially recently, are the property values and property taxes across the county. I have heard from many constituents about the 30% increase in residential property values in Hamilton County following the 2023 reappraisal. Our county is scheduled to go through another property revaluation this year, the results of which will hit tax bills in January 2027.

After hearing some of the disinformation being told regarding property taxes and the state’s contributions to school funding, I requested clarification and further information regarding state and local revenue sources for Southwest Local School District from the Legislative Service Commission (LSC). LSC is a non-partisan agency that provides the Ohio General Assembly with drafting, research, budget and fiscal analysis, training, and other services. LSC staff members include attorneys, budget analysts, economists, research associates, and support personnel. Within LSC, is the Legislative Budget Office (LBO) which is staffed by budget analysts and economists. LBO and its staff “monitor, forecast, and report on state revenues and expenditures and provide members and staff of the General Assembly with independent information about the state budget and other important fiscal issues in state and local government.” 

The following information comes directly from the memo I received from LBO regarding how the major sources of state and local revenue for Southwest Local School District have changed since fiscal year 2020 and how they are projected to change through fiscal year 2027. LBO provided the following table which summarizes the district’s state aid, property taxes levied for current (operating) expenses, and school district income tax revenue over that period. These sources provide the district with about $33.6 million in FY 2020 and are estimated to provide about $48.2 million in FY 2027, an increase of about $14.7 million (44%) over the eight-year period.

State Aid

As shown in the table, Southwest LSD’s total state aid (foundation aid plus additional aid) grew from about $13.3 million in FY 2020 an estimated $17.2 million in FY 2027. Over the full period, total state aid is estimated to increase by about $3.8 million or 29%. 

Foundation aid begins to decline in FY 2025 primarily due to increases in the district’s local capacity, i.e. growth in the property valuation and income measures the school funding formula uses to gauge a district’s ability to raise revenue locally. Because a district’s state share is, in effect, the complement of its local capacity, a higher measured local capacity reduces the state-funded portion of a district’s foundation aid, all else equal. For FY 2026 and FY 2027, the most recent operating budget established the performance supplement, which, along with increases in preschool special education and special education transportation funding, contributes to the increase in the district’s additional aid in FY 2026 and FY 2027.

Property Taxes

As shown in the table, the district’s operating costs amounted to $23.5 million in each FY 2026 and FY 2027. Due to property tax reform legislation, the district’s property tax revenues for current expenses are expected to remain generally flat.

While H.B. 186 provides a “retrospective” tax credit for FY 2025 to qualifying property owners in school districts like Southwest LSD that underwent reappraisal or update in TY 2023, it also provides a temporary state payment to school districts subject to the retrospective tax credits that prevents the tax credits from reducing the real property taxes from falling below the taxes in TY 2024. H.B. 186 is not expected to lead to a net revenue loss for Southwest LSD for TY 2025. The effect of H.B. 186 and H.B. 335 is, without voter approval of new levies, to keep the district’s property taxes for operating expenses at the TY 2023 level plus some growth tied to inflation and any new construction. 

Prior to enactment of the recent property tax reforms, Southwest LSD’s property tax revenues had been growing, particularly in FY 2024 and FY 2025 as a result of the district’s reappraisal in TY 2023 and its status on the 20-mill floor. The district’s real property value grew by nearly 31% from TY 2022 to TY 2023, with similar growth in the district’s property taxes for operating expenses (29%). 

Income Tax Revenues

As shown in the table, the district’s income tax revenue grew from about $4.9 million in FY 2020 to about $7.1 million in FY 2026, an increase of about 44%, with a small dip in FY 2024. The FY 2020 through FY 2026 amounts are actual distributions reported by the Ohio Department of Taxation. The FY 2027 amount of about $7.6 million is an LBO estimate, projected based on the historical trend of the district’s income tax distributions from FY 2020 to FY 2026. Over the full FY 2020 through the FY 2027 period, income tax revenue is estimated to increase by about $2.7 million, or roughly 54%.

I believe we all share the same mission: thriving schools, safe and strong communities, and a fair and predictable tax system. I remain committed to working together as we head into the next budget cycle and work toward this shared goal.

Sincerely, 

Cindy Abrams

State Representative

29th Ohio House District