Budget Commission Regular Meeting – November 20, 2023
Meeting Details: The Geauga County Budget Commission met in Regular Session on Monday, November 20, 2023 at 10:00 am in the Appraisal Conference Room at 231 Main Street, Chardon, Ohio. This meeting was in person with a virtual option via MS Teams. Observer Note: The location of this meeting was changed from the Auditor’s Conference Room to the Appraisal Conference Room at the last minute to accommodate the large number of meeting attendees.
Meeting Attendance: Prosecutor Jim Flaiz, Treasurer Chris Hitchcock, and Chief Deputy Auditor Ron Leyde (substituting for Auditor Chuck Walder, who attended virtually).
Staff Attendance: Deputy Auditors Tammy Most and Kristen Sinatra and Fiscal Office Manager Pam McMahan.
County Staff: Geauga County Budget and Finance Manager Adrian Gorton (virtual), Geauga Public Health Board President Carolyn Brakey (virtual), and Geauga County Assistant Prosecutor Kristen Rine (virtual).
Others in Attendance:
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Berkshire Local Schools: Superintendent John Stoddard, Treasurer Beth McCaffrey, and Board Members Bryan Wadsworth (in person) and Mary Hipp (virtual)
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Cardinal Local Schools: Superintendent Jack Cunningham and Treasurer Terry Armstrong
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Chardon Local Schools: Superintendent Michael Hanlon, Treasurer Deb Armbruster, Board President Keith Brewster, Board Member Karen Blankenship, and Teacher and Chardon Education Association Member Shalyn Swick
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Kenston Local Schools: Superintendent Steve Sayers, Treasurer Seth Cales, and Board Members Neysa Gaskins and Tom Manning
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West Geauga Local Schools: Superintendent Richard Markwardt, Treasurer Karen Pavlat, Board Member Bill Beers, and Teacher Dan Reich
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Journalists: Anne Wishart of the Geauga Maple Leaf (in person) and Anastasia Nichols of the Geauga Times Courier (virtual)
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Other Attendees: Anne Thomas of the Ohio Education Association, Attorney Peter Zawadski (school district not identified), AuburnCC (Auburn Career Center; virtual), and this observer (virtual)
The meeting was called to order at 10:07 am.
Meeting with Geauga School District Officials
Geauga School District Officials were invited to attend this Budget Commission meeting to discuss the tax consequences of the property revaluation. Mr. Walder opened the meeting by noting that all inside millage windfall beneficiaries have received letters from the Budget Commission explaining that Geauga taxpayers are facing a $9.6 million property tax increase due to the increase of County property values, which rose by 30% on average; he went on to state that Geauga schools districts will be receiving $4.3 million of this tax increase. Mr. Walder said that the Budget Commissioners have asked all inside millage windfall beneficiaries to consider reducing other taxes, such as levies, to offset the increase in inside millage.
Mr. Walder said that two of Geauga’s school districts, Berkshire and West Geauga, will fall below the 20mill floor. Cardinal is estimated to stay just above the 20mill floor, and Kenston and Chardon will be well above it. Observer Note: The 20mill floor means that all Ohio School Districts are guaranteed at least 20mills of funding by law. If a school district’s funding level drops below the 20mill floor, a property tax increase (i.e., increased collection of existing levies) is instituted by the State for residents of those districts to get funding back up to the required level. The 20mill floor was discussed in some detail at the November 6 Budget Commission meeting. Mr. Walder estimated that this adjustment to increase the funding of West G and Berkshire would result in an approximately $5 million tax increase in addition to the overall school district inside millage windfall of $4.3 million. He opined that “this is going to have a pretty catastrophic effect on some of the voters and some of the taxpayers in the County.” Mr. Flaiz confirmed that the Budget Commission cannot reassess school districts’ financial needs and/or reduce collection on any school district levies until the 2024 School Budget Hearings in the spring. Mr. Walder agreed but noted school districts could voluntarily agree to suppress levy collection before the tax rates are sent to the State for final approval in December. Mr. Flaiz observed that many townships are doing this, and Mr. Walder specified that 75% or more of Geauga local government entities are suppressing levy collection to offset the increase in inside millage. He noted that the County is doing this as well.
Mr. Walder said that his office asked the State to estimate what the tax increase will be for residents of West G and Berkshire in order to raise those districts up to the 20mill floor, but the State refused. Therefore, the Auditor’s staff created their own estimates, which came in at an increase of $4.4 million for West G taxpayers and an increase of $1.4 million for Berkshire taxpayers; these amounts are in addition to the inside millage windfalls these districts will be receiving. For both districts, getting back up to the 20mill floor will result in a tax increase of about 4mills.
Mr. Flaiz expressed his surprise at learning that the revaluation affects the 20mill floor and noted that emergency levies, permanent improvement levies, and bonds are not a part of the 20mill floor calculation. Mr. Walder explained that schools are guaranteed funding of 20 calculated effective mills, and he noted that in these calculations “the value of one mill increased, in most cases around 30% (the average County property value increase).” He also stated that both West G and Berkshire have funding sources that are not a part of the 20mill calculations: West G has two emergency levies and some inside millage that goes to a permanent improvement fund that are not counted, and Berkshire has a bond and a permanent improvement levy that are not counted. Mr. Flaiz expressed particular concern about West G’s 1mill of inside millage that they’ve shifted to the permanent improvement fund. He said that another Budget Commission was successfully sued by taxpayers for allowing a school district to use this strategy to drop below the 20mill floor.
Mr. Walder noted that West G anticipated approximately $1 million of deficit spending in their most recent annual budget. He opined that “while a $1 million deficit spending pattern is not something you would want forever, you certainly can endure it for a period of time when you have $28 million in unencumbered cash.”
Mr. Walder stated that “right now, the economy is such that people are getting squeezed from all directions, gas prices, food prices, everything you can imagine is going crazy. Home prices went crazy along with it…. I just don't want to see the schools get sideways with taxpayers, because you will have events that are going to require you to go back to the taxpayers and say, we need more money to do something. And I think that trust and good will is imperative to be successful…. (Taxpayers) were expecting a more reasonable increase … but this unexpected, unvoted tax increase, although lawful, it is, I believe, excessive, and it should be tempered, either by law or by our actions.”
Mr. Hitchcock specified that any action taken to reduce taxpayer burden must occur by December 8-11 before tax bills are finalized. Reviewer Note: Mr. Hitchcock was not clear as to whether the date was December 8 or 11. He stated that there is unlikely to be any remediation by the State Legislature in a timely manner and shared that both his office and the Auditor’s office have received hundreds of phone calls from taxpayers who are unhappy with the tax consequences of the revaluation. Mr. Hitchcock said that “we as the Budget Commission are trying to expeditiously provide an avenue for some common sense, and, if we don't, if the taxpayers don't see that, I think there's going to be real taxpayer trouble down the road. It shouldn't happen. It need not happen. But we all need to be working together, aiming in the same direction to benefit our taxpayers.”
Mr. Flaiz made clear that ultimately it is up to the School Boards to decide whether or not they want to voluntarily reduce levy collection. He then opened the meeting to questions and comments.
Kenston School Board Member Tom Manning asked what happens if schools suppress their levy collection now and then there’s a recession and property values go down in the future. Mr. Flaiz clarified that they have been recommending only suppressing collection for one year and then reevaluating the situation in the hopes that the Legislature will act by then. Mr. Walder added that they are advocating offsetting only about 90% of the windfall amount, which means entities will still get 10% of the increase. He stated that one school district “... made the comment that this windfall for lack of a better word of inside millage was insignificant to their budget. And I guess I would argue if that is a true statement, if it is, in fact, insignificant to your budget, why wouldn't you return it to the taxpayer because it's got an insignificant effect on your budget? You can't argue both of them. You can't say it's significant now when you're getting it, but it wasn't significant when the taxpayers asked for it to be returned. And I think that's what taxpayers are having trouble aligning. It's like a double talk, and I think we need to be truthful and honest with them.”
Anne Thomas of the Ohio Education Association said that the schools could do a great deal with the increased tax dollars in order to help regain ground lost during COVID. She hypothesized the money could be used to educate students, increase school safety, and better support mental health. Ms. Thomas stated that “it’s not a windfall for the schools, this is money that is very much needed.” She expounded that “it's about what those dollars are going to do for kids and for your society and for your County going forward. What can we do to bring kids up to where they need to be because of what they've lost over the past 4-5 years? So please don't just make it about taking money from the taxpayers. You have to deliver the proper message of what schools are doing. And I didn't hear any of that today.”
Mr. Flaiz noted that the conversation of what schools could spend a windfall on was “a great conversation, but that's not a conversation with us. That's a conversation with the other people in this room.” He asked Ms. Thomas where specifically the windfall money should be spent, and she replied “services.” He asked her “what services aren't the kids getting up here? Because the schools have a lot of money.” Ms. Thomas answered mental health and tutoring services. Mr. Flaiz noted that Geauga already has one of the highest mental health levies in the state. He advised Ms. Thomas to “go to the School Board meetings and beat up on them if you think they should spend their money. They have the money to spend. That's what this meeting’s about- they have the money to spend. Now they're getting a windfall.”
Mr. Walder said that Geauga’s five school districts combined have $90 million of unencumbered cash, with $60 million of it belonging to two school districts (West G and Chardon). He asserted that “I would argue that is not educating kids, that is not providing more mental health services. That is holding money in a bank account. I mean, they broke up General Electric for doing exactly that.” He went on to state that “none of these school districts budgeted for this money. So to say not having it causes a catastrophic loss of some student benefit is really not produced in the data that's been presented. I don't want to make this an emotional argument. I think it's got to be a factual argument. I mean, factually, the taxpayers are speaking. Whether you choose to listen to them or not is up to you. If you're only going to listen to the group that you're serving, then that's your prerogative. But … the Budget Commission has to look at the taxpayers. Our body’s goal is to protect the Treasury. It's not to look after interest groups in what they want to hold back as far as money is concerned.”
Attorney Peter Zawadski commented that Geauga’s problem of having so much money is a good one. He said that he thinks property values have gone up so much because people want to live here, raise their families here, and send their kids to Geauga schools. He said this is a “testament to all the people in this room who have been managing and administrating the schools.” He went on to state that “I think that over the course of decades here, if you just leave it to professionals to do their job, I think all this will work out, but you have to leave it to these people.”
Mr. Manning asked how many people are likely to appeal their property valuations based on what has happened in the past as well as how many appeals are generally successful. He expressed concern that reductions in property valuations after any school district levy suppression has occurred could cause schools to collect less than anticipated. Mr. Walder explained that this will not occur because of a process called tax equalization. To explain what tax equalization is, he gave an example of a property owner’s appeal resulting in a decrease in property valuation of $100,000; this tax consequence (inside millage and new levy tax dollars) then gets shifted to everybody who didn't appeal. Mr. Walder said that “if you appeal, it may affect you to the positive, but it may affect your neighbor to the negative, because it has to be paid by someone and it gets shifted to those values which are not being reduced.”
Russell resident and Geauga Public Health Board President Carolyn Brakey commented that her petition to “stop this tax hike” has 1,422 signatures from Geauga residents. She stated that she has “gotten emails from widows and the elderly and, you know, people that are working three, four jobs, just to make ends meet, to pay their, you know, their food bill and their grocery bill. And they really can't afford this tax increase.”
At this point, the School District Officials departed, and the Budget Commissioners moved on to their regular business.
The following Revenue Certifications were approved:
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Thompson Township - Amendment #7. $372,637.69 in the general fund, $1,724,853.51 in special revenue funds, $140.56 in debt service funds, and $1,647.28 in special assessment funds for a total of $2,099,279.04. Appropriations do not exceed revenue.
Thompson’s amendment certified a slight increase in special revenue funds and a slight decrease in special assessment funds with a net total change of $0.
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Bainbridge Township - Amendment #9. $3,582,291.06 in the general fund, $20,205,848.78 in special revenue funds, $2,517,027.18 in debt service funds, $809,796.35 in capital project funds, $10,798.02 in special assessment funds, and $537.99 in fiduciary funds for a total of $27,126,299.38. Appropriations do not exceed revenue.
Bainbridge’s amendment reflected an increase in their special revenue EPA fund.
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Montville Township - Amendment #2. $290,411.65 in the general fund, $1,773,640.19 in special revenue funds, $100,000.00 in capital project funds, and $214.61 in fiduciary funds for a total of $2,164,266.45. Appropriations do not exceed revenue.
Montville’s amendment certified increases in both their road and bridge special revenue fund and their capital project fund.
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Geauga County - Amendment #15. $51,157,857.46 in the general fund, $130,907,593.51 in special revenue funds, $6,279,092.87 in debt service funds, $1,254,159.50 in special assessment funds, $28,273,104.47 in capital project funds, $18,189,863.82 in enterprise funds, $1,206,807.93 in internal service funds, and $3,757,550.66 in fiduciary funds for a total of $241,026,030.22.
Geauga County’s Amendment reflected an increase of $18,319.48 in special revenue funds.
Other Business:
Discussion:
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Local Government Resolutions to Reduce Levy Collection Update - Ms. Sinatra told the Budget Commissioners that many local government entities have reached out to the Auditor’s Office regarding reducing their levies to offset their inside millage windfalls; an exact number was not provided. She noted that they are anticipating getting the certified levy results from the Board of Elections soon, and she asked if they can go ahead and provide amended rate resolutions to those entities requesting them. Mr. Walder said that they could as long as they were done carefully. Ms. Sinatra said they would only do this for Resolutions that they know were prepared by an Assistant Prosecuting Attorney.
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20mill Floor Discussion - Mr. Hitchcock asked if the 20mill floor calculations were being done internally (by the County). Mr. Walder responded that the State makes those calculations and his office’s 20mill floor numbers are only their best estimate. Mr. Hitchcock stated that he felt it was important for the public to be made aware of the increased taxes they will have to pay due to the 20mill floor “as soon as humanly possible.” Reviewer Note: The 20mill floor property tax increases will only impact property owners in the Berkshire and West G school districts. Mr. Walder said that they may be able to publish a summary of their calculation estimates, which he noted was an increase of approximately $5 million dollars when West Geauga and Berkshire are combined. Mr. Flaiz observed that having all the School District Officials attend the meeting served to “put everybody on notice, hey, here’s what the numbers are.” Mr. Walder explained that he doesn’t want to try to anticipate what the school districts are going to do, but now he will “be able to point to this meeting and say, you know, we appealed to their sense of fairness.”
Public Comment
This observer requested a copy of the meeting sign-in sheet.
The meeting was adjourned at 11:05 am.
More Information and Posted Minutes: Available on Auditor website
Next Meeting: December 4, 2023 at 10:00 am in the Auditor’s Conference Room at 215 Main Street, Chardon, Ohio.
Observers: Sarah McGlone
Reviewer: Gail Roussey
Submitted 11/20/23
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