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Little Miami Local Schools is projected to lose $17.53 million over the next four years when district enrollment is expected to grow by 800 students and two new buildings will open. The shortfall is due to changes in state funding for schools due to Gov. Ted Strickland's biennium budget, according to the district.

"(We have) some financial challenges as we look ahead to plan for the district's future," said treasurer Shaun Bevan.

So the school board last week decided to ask voters to decide in November on a 1 percent earned income tax to help fund Little Miami schools.

The income tax would generate $6.3 million per year — more than double what was brought in by the emergency operating levy, the collection of which was discontinued in 2006 when the board decided to roll the levy back one year.

The cuts result in a significant difference from Bevan's previous projections.

"The governor and legislature's new state biennial budget that went into effect July 1, 2007, really hurt Little Miami's financial outlook," Bevan said. "Projections estimated the district would receive an increase of more than $3 million in state aid this fiscal year — aid that has now been cut by the state biennial budget."

Because it is an earned income tax, only earned wages and self-employment wages are taxed, leaving pensions, investment interest, Social Security and the like untouched, according to district spokeswoman Lisa Knodel.

"The benefits of an earnings tax are tremendous — this provides the district with the best chance to stay off the ballot longer term, it taxes only wages and self-employment income, and it is arguably the fairest form of tax," Bevan said. "Most school levies in Ohio are good for only a short period of time and then must be replaced so that school district expenses can keep up with inflation. The result is a vicious cycle with districts asking taxpayers to support issues every 3-4 years."

School board president Mary Beth Hamburg said she hopes the district can get away from that mold.

"The board is hoping that the earnings tax will allow the district to break the cycle of returning to the ballot every five years for approval of an operating levy," she said. "Historically, five-year operating levies are for a fixed dollar amount that becomes inadequate as district expenses continue to rise. The earnings tax will provide revenue that will grow as our expenses are growing."

Knodel said that it takes longer for full collection of an earnings or income tax than a regular property-based tax levy, so the district has only one opportunity to pass the earnings tax.

Hamburg added that the earnings tax will alleviate some of the pressures on senior citizens and other people on fixed incomes.

"The board is pleased that we are able to offer residents another option for funding schools that does not rely on property taxes," she said. "The earnings tax will not affect those on fixed incomes and be less of a burden for those with reduced or low incomes."

Because of changes in state funding for schools due to Gov. Ted Strickland's biennium budget, Knodel said Little Miami will lose $17.53 million over the next four years, during which time the district enrollment is expected to grow by 800 students and two new buildings will open.

The district has implemented several strategies to reduce expenditures.

"Approximately 83 percent of the budget is salaries and benefits," district treasurer Shaun Bevan said. "Both of these areas have been targets of proactive financial planning."

The board worked with teachers to develop an innovative plan to offset health care costs, reducing premiums by 39 percent, saving the district $13.9 million over the next 10 years.

The teachers also adopted a new salary schedule with savings of more than $200,000 over the typical teacher's career. Due to rapidly growing enrollment, the district anticipates hiring eight additional teaching positions each year. This equates to a savings of $1.6 million.

Other cost-saving measures include refinancing the bond issue, reducing transportation, eliminating two administrative positions and implementing a new phone system.

In addition, the district formed a citizens' Business Advisory Council to help ensure high quality, cost-efficient operations.

"These community members are evaluating the district's operations and helping us improve our efficiency as we strive to be the best stewards of our community's tax dollars," Bevan said.

Contact this reporter at (513) 696-4507 or rycook@coxohio.com.

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