'A lot of unknowns' as school districts navigate tax laws

For the first time this year, Ohio school districts must submit a three-year budget forecast to the state in February. Meanwhile, school district treasurers, county auditors and state officials are still trying to figure out the implications of several property tax-related bills Gov. Mike DeWine signed at the end of 2025. In April, Findlay City Schools will receive the first collection from the new 1% earned income tax which voters approved in a May 2025 levy. However, it isn't clear how much this will be, either. "There's a lot of unknowns right now," said Pam Harrington, district treasurer, at Monday's school board meeting. School officials have been receiving calls about the earned income tax after taxpayers recently received letters from the Ohio Department of Taxation informing them of the new tax starting in 2026. A spokeswoman for Findlay Mayor Christina Muryn said the city, too, has received these calls, but this is a Findlay City Schools tax and the city is not managing it. The income tax went into effect Jan. 1 and will not affect the tax filings people are currently submitting for income earned in 2025. As an earned income tax, it is a tax on money earned from wages, salaries, tips, other employee compensation, and self-employment income, tips, other compensation, and self-employment income from sole proprietorships and partnerships to the extent included in Ohio adjusted gross income. Other forms of income, such as retirement income, unemployment compensation, Worker's Compensation, lottery winnings, interest, dividends and capital gains are not subject to the earned income tax. Employers should be withholding the earned income tax from employees' income this year. The school district expects to receive the first collection in April, but is unsure how much that will be. School districts previously needed to submit a five-year forecast to the state in May of each year. Beginning in 2026, they must submit a one-year budget and three-year forecast in February. "House Bill 96, which was the biennium budget, significantly changed so many variables to this forecast," Harrington told the school board Monday. "Daily, legislation is still being introduced regarding state and local property tax calculations which may materially impact the district's fiscal health." School districts and other officials across the state are still sorting through what all these changes mean. "Recent legislation adopted by the Ohio General Assembly, including House Bills 186, 335, 129 and 309, introduces new limits and adjustments to how property tax revenues are calculated and collected by school districts, with the intent of moderating revenue growth associated with rising property values," the Ohio Association of School Business Officials (OASBO) said in a statement. The OASBO notes that the changes are still being implemented, with the Ohio Department of Taxation working through technical and administrative details, and county auditors awaiting guidance. "In addition, several of these bills were enacted in close succession, and questions remain regarding how certain provisions interact with one another," the statement continues. "Further guidance or technical changes may be needed as implementation continues." School district treasurers are therefore doing the best they can to forecast what their budgets might look like for the next three years, but these forecasts may be revised, the statement continues. Locally, Harrington said she and assistant treasurer Kristin Johnson are creating the best forecast they can. They expect to revise it this spring when they have a better picture. "The deadline moving up by several months for submission of this forecast is problematic for creating the best projections possible," Harrington said. In addition to not knowing how much the district will receive in taxes, they are also still determining staffing for the 2026-2027 school year, she said. Harrington said, however, that the earned income tax levy passed by voters will make a real difference. "The district's long-term financial stability is primarily dependent on our income tax revenue growth, thanks to our community," she said. It will take about 18 months before the district receives the full benefits of the income tax, she said. Her forecast expects the district to return to positive operating margins beginning in 2027, with cash reserves strengthening significantly by 2029. "The combination of modest property tax growth, stable state funding, controlled expenditures and the phased implementation of our income tax revenue positions the district to move from short-term financial pressure into long-term fiscal stability," she said. "Treasurers across the state were put in a challenging position" having to give this report earlier in the year, said Superintendent Andy Hatton. Most school districts – including Findlay City Schools - have not yet had their tax meetings with county auditors, for example. Hatton said professional organizations are still putting together webinars and other educational resources to help Ohio's more than 600 school districts better understand how recent legislation will affect their finances. This education will take place throughout February and March. But with this initial look at a financial forecast, "We think what the board of education's going to have to be mulling over, in the coming couple of months, is the timeline of what comes back and when," Hatton said. School officials had told the community that, with the passage of the levy, they would be reinstating some things that had been cut for budget reasons, he said. It is expected to take 18 months before the district receives the full amount from the earned income tax, so they will need to determine a timeline, he said. Hatton expects to have more detailed recommendations for the school board this spring, but urged all board members to meet with Harrington and Johnson to go over any questions so everyone has the best information possible as they make these decisions. School board president Laura Eier, a member of the district's finance committee, also said the district still doesn't have the answers as to how the new legislation will affect them. "It's new to us," she said. "Be patient. Everyone here is working hard to try to make the best of this situation and to look forward with the best intent."