Solon Schools Could Lose $3.5 Million In 1 Year

UPDATE: An earlier version of this story said Solon Schools would lose $8.3 million in one year. The district will lose $3.5 million in one year and $1.2 million a year after that, eventually resulting in a loss of $8.3 million a year.

SOLON, OH - The Solon Schools returned to Columbus this week to argue against the total loss of the Tangible Personal Property (TPP) tax. The district says the loss will result in a loss of $3.5 million in one year, and $8.3 million over several years.

Solon has been working with other districts that will be impacted by the loss of TPP through the Coalition for Fiscal Fairness in Ohio (CFFO). The district described TPP as "critical" to how Solon Schools are funded.

Members of the CFFO testified in Columbus this week before the House Finance Committee, voicing concerns about the phase out of TPP. Besides expressing dismay at how the loss of TPP funding may hurt school districts, Solon Schools Treasurer and CFFO President Tim Pickana offered solutions to help districts better thrive following the loss of TPP funding.

“We emphasized to the legislators the need to slow down and reassess the dire impact current law regarding the TPP phase out will have on our communities,” Pickana said in an emailed statement. “Our testimony to the House Finance Committee members provided important reminders and context about the significant losses the phase out creates and the impending increased tax exposure to our residents and businesses.”

Pickana added that highly-impacted districts have pledged to work with lawmakers to craft a solution.

“Our districts have made significant expenditure cuts to deal with TPP funding losses already enacted. These include reductions in staffing and employee benefits such as health care coverage, as well as pay freezes,” he said. “We respectfully ask the legislators not to make the mistake of believing that the TPP loss districts are ‘rich’ and can easily absorb these crushing losses. We are talking about annual losses in the millions of dollars. These highly impacted districts will not be able to simply make sufficient reductions or pass additional millage through levies to maintain the integrity and quality of their educational programs.”

The district previously submitted testimony to the Ohio House Finance Subcommittee on Primary and Secondary Education on March 7 discussing the damage of TPP reimbursement's disappearance.

History of TPP

The TPP taxes originally impacted business equipment and inventory. The loss of TPP reimbursement funding will impact communities in Ohio that have historically been considered "economic drivers" or have a large base of businesses.

Ohio's Congress voted in 2005 to repeal TPP and replace it with the Commercial Activities Tax (CAT). The repeal and replace was designed to make the Buckeye State more attractive to businesses. The CAT now generates an average of $1.6 billion for the state annually.

“The purpose of eliminating the TPP a decade ago was revising the tax structure, not reducing revenues to schools,” Pickana explained. “Yet as current law stands, our schools and communities face a devastating TPP funding phase out that will leave gaping budget holes in its wake. We ask the legislature to work with us in changing the phase out in law to solve the TPP problem without sacrificing the financial solvency of our districts.”

The loss of TPP would mean major losses for Solon Schools. In one year the schools would lose $8.3 million or $1,800 per student due to TPP phase out. That's 13 percent of the district's annual budget.

“If allowed to stand, current state law enacted in 2015 as part of the last biennial budget, creates a “fiscal cliff” on July 1 this year,” said Solon Superintendent Joseph Regano. “The Solon Schools will lose an additional $3.5 million in TPP funding. In real terms, this means the Solon Schools will receive only $4.825 million in TPP funding next year – a staggering loss for us of $5.875 million a year since 2011.”

Photo from Amanda Mills, CDC