Working for Our Future: by Dr. Jack Thompson & Lew Galante
We continue to monitor and advocate for the issues impacting the future of our school district’s financial stability. Now that Governor DeWine has taken office, our focus turns to gaining legislative support to include language in the upcoming budget bill that would ensure our school district remains financially solvent for years to come. Below are the talking points we are using to convey our position to those in Columbus who will have a say in Perry’s financial future.
Our school district is experiencing a devastating reduction in funding through no fault of our own—a reduction unprecedented in the history of Ohio school district funding! How did it happen? Our district is a casualty of the national energy policy debate relative to how energy producing assets are valued in the marketplace. The Perry Nuclear Power Plant, owned by First Energy (the largest taxpayer in our district), was allowed to de-value their tangible power generation assets from $162 million to $77 million by the Ohio Department of Taxation over the past two years. This resulted in an annual loss of over $4.8 million of local tax collections. (To date, the state has been able to replace over $2.3 million of these losses.) Additionally, the reappraisal and the reduction of the real property value of the Perry Nuclear Power Plant has resulted in an increase to the effective outside millage rate for commercial properties in the Perry community of over 24%.
Over the past two years the school district has reduced staffing in every area: Administration, Teachers, Transportation, Maintenance, Food Services, Custodial, and Student Support Personnel. In addition to the personnel reductions, the district has reduced budget purchases in each of these areas. These personnel and budgetary reductions total over $1.2 million. Furthermore, due to the deregulation phase out and the valuation reductions over time, the district has reduced its overall general fund budget (adjusted for inflation) by over 10% in the past 10 years. The Lake County Financing District, which provides over $900,000 annually, will be up for a renewal next year, but we have to do more. These revenue reductions cannot be overcome by budget cuts and local levies.
Ohio currently has many school districts across the state being reimbursed from an older tax collected at the local level through Tangible Property. These reimbursements for schools have become known as Tangible Personal Property (TPP), which are currently being phased-out by Senate Bill 208. A few budget cycles back, the state combined the nuclear power plant deregulation reductions with the phase-out of the Tangible Personal Property reductions.
Out of nearly 100 school districts still receiving this reimbursement statewide, only 2 school districts (Perry School District and Benton-Carroll-Salem School District in Northwest Ohio) are receiving reimbursements from a public utility reimbursement.
During the electric utilities deregulation process in 2001, nuclear plants had taxes assessed at 88% of the value of electric generation equipment on site. This was reduced to 25% during deregulation and our two school districts lost millions of dollars overnight. When passed, the state of Ohio agreed to reimburse us through the proceeds from the Kilowatt Hour Tax to help keep our school districts operational and held harmless. Unfortunately, changes have since been made to phase out these funds, which have put our school district on course to lose over $400,000 each year until the year 2030. Our District cannot sustain such losses.
The General Assembly must take action to freeze the phase out of the dollars lost through deregulation for the two school districts that have a nuclear power plant within its borders. We are simply asking for our reimbursement levels to return to the Fiscal Year 2017 amounts. This amendment was actually passed in both the Ohio House and Ohio Senate during the 2015 budget, but was vetoed by Governor Kasich. School districts with Nuclear Power Plants do not have the capability to grow property valuations to offset severe revenue losses.
In addition to the freeze above, the district is seeking an adjustment and reauthorization to ORC 3317.029. Originally conceived last year, this reauthorization provided relief from public utility tangible valuation losses that were not covered in ORC 3317.028. The current language provides relief for a district that suffers a tangible public utility valuation decrease from 2016 to 2017 of 50%. While Perry Local suffered significant losses (30%+ losses in 2017 and 2018), the district did not meet the 50% threshold in either year. However, when combining the two years we would easily meet the 50% threshold. An adjustment in the language that states “from 2016 to 2017 or 2018” would cover the Perry Local Schools in the ORC 3317.029.
We feel that a freeze of Public Utility TPP and the adjustment of 3317.029 is necessary to stabilize our finances as the possible closure and possible further de-valuation of the Perry Nuclear Power Plant continues to be in the offing.
What can you do?
Contact your legislative representatives and let them know how critical it is to carry these solutions to Columbus and do whatever it takes to get them passed into law.
Representative Jamie Callender
77 S. High St.
Columbus, OH 43215
Senator John Eklund
1 Capitol Square
Columbus, OH 43215