Mentor Schools CFO Says Proposed State Budget Could Cost District More than $2 Million Next Year

Gov. John Kasich unveiled his proposed two-year state budget, and Mentor Schools would take a serious hit if it passes as is, school district CFO Daniel Wilson said.

First, the good for schools: Kasich's budget would slightly increase the state foundation subsidy that public schools receive each year, Wilson said. It would go up 2 percent next year and 1.5 percent the year after.

But that bump does not balance the losses the school district would suffer elsewhere.

First among the losses: school districts can no longer expect federal stimulus money. Mentor Schools received $1.1 million in stimulus funds this year, but Wilson said they expected that well to dry.

"We knew that was going away," Wilson said. "We planned for that to go away."

However, the district did not anticipate some of the other cuts Kasich proposed.

Schools receive funding from a commercial activity tax – CAT, for short. When the legislature introduced CAT in 2007 to replace personal property tax, they always planned to gradually decrease the percentage of it that goes to schools over time. By 2018, the schools would not receive any money from CAT.

Former Gov. Ted Strickland froze the percentage that went to schools. But Kasich suggested reintroducing the reductions, changing it so schools would receive money from CAT until 2021 but speed the initial reductions.

Consequently, schools would receive less money from CAT for a longer period of time.

For example, Mentor Schools originally would have received $8.6 million from CAT next year. However, under Kasich's budget, it would only get $6.7 million. Then, in 2013, the district would only get $3 million instead of the original $4.5 million, Wilson said.

Another cut that schools would face pertains to electric deregulation. When electric companies were deregulated in 2001, they were taxed less; and while lower taxes were good for the electric companies, they cut off a funding source for schools.

To help the schools with the loss in tax money, the state legislature said they would make up the difference; and they have since deregulation went into effect.

However, Kasich's budget would phase out that money as well.

In 2011, Mentor Schools received $733,000 from the state legislature to balance out the money lost from deregulation.

Under Kasich's budget, the district would receive only $273,000 in 2012 and $178,000 in 2013, Wilson said.

Overall, Mentor Schools would lose an anticipated $2,225,000 in funding in 2012 and another $1,821,000 in 2013, Wilson said.

Kasich's budget is more than 700 pages long and includes four pages of line items pertaining to schools alone. Consequently, Wilson is not done digesting the possible ramifications.

Moreover, this budget will be assessed by the Ohio House of Representatives and Senate before it is returned to Kasich for approval. That means the final budget will certainly be different from this version, and it is way too soon to say for certain what the new budget's impact will be.

"This is the first step in a long journey that many people expect to last until mid-June," Wilson said.