2015 School Levy Update

Record Low Number of Levies and Record High Passage Rate

OEPI has been periodically tracking Ohio school levies over the past 15 years examining the results for trends and insights. Among the consistent findings from this analysis are the following:

• Operating levies are more likely to pass in Primary and General elections (May/March and November) than in special elections (February and August)
• New operating levies are less than half as likely to pass as are renewal and replacement levies
• Continuing property and income tax levies are less likely to pass (40%) than are term-limited property and income tax levies (59%)
• Income tax levies (both new and renewal) are less likely to pass than property tax levies by about 10 percentage points

This article follows up on this topic by providing initial analysis of 2015 Ohio school levy activity and passage rates.

The analysis in this article is based upon school levy data from the Ohio Department of Education, Ohio Secretary of State, Buckeye Association of School Administrators, and Ohio School Boards Association.

2015 School Levy Analysis

Table 1 below provides an overview of 2015 Ohio school levy activity. The levy totals include all school levies on the ballot in 2015. These include operating and capital (bond and permanent improvement) levies, and both property tax and school district income tax levies.

Table 1: 2015 School Operating & Capital Levy Results, by Election

      Table 1 shows that in 2015 there were only 217 total school levies on the ballot, of which 183 (84.3%) passed. The 217 levies on the ballot are by far the fewest since 1984 and the passage rate of 84.3% is by far the highest. In 2014, there were 317 total school levies on the ballot, 207 (65.3%) of which passed and in 2013, there were 351 total school levies on the ballot, 202 (57.5%) of which were approved by voters. The 317 levies on the ballot in 2014 were the 2nd lowest figure since 1984 and the 65.3% passage rate was the third highest. To place the levy activity in the past two years in a broader context, the average number of levies on the ballot from 1984 through 2015 was 441, of which 52.9% were approved.

Table 1 also shows that the overwhelming majority of 2015 school levies were placed on the ballot in the primary and general elections.

Table 2 explores the recent pattern of levy activity in more detail by providing a summary of the number and passage rate of school operating and capital levies on the ballot in Ohio from 2007 to 2015.

Table 2: Operating, Capital, and Total School Levies from 2007-2015

      The data in Table 2 show that the number of operating levies was relatively constant at around 250 per year from 2007 through 2009, increased to 317 in 2010, and has decreased each year since then. he number of capital issues has fluctuated over time, falling steadily from 2008 through 2011, remaining stable from 2011 to 2012, increasing slightly in 2013 and 2014, and then declining by nearly 40% from 2014 to 2015.

The 68 capital levies on the ballot in 2015 is by far the fewest since 1984 and the 91 and 95 in 2011 and 2012 are the 2nd and 3rd lowest totals in the past 32 years. While the decline in capital levies may be explained by a decrease in the number of Ohio School Facility Commission (OSFC) levies, the steady decline in operating levies from 2011 to 2015 is particularly surprising in light of the reduction of more than $600 million in tangible personal property tax replacement payments to Ohio school districts in the FY 12-13 biennial budget.

Table 2 also shows that the passage rate for capital levies was fairly consistent from 2008 through 2014 and then increased markedly in 2015 as the number of capital issues on the ballot decreased. At the present time, the change in the pattern of capital levies in 2015 is unclear and will require further research.

However, Table 2 also shows that the passage rate for school operating levies has increased each year from 2011 to 2015 at the same time as the number of levies on the ballot has decreased. While it might be tempting to conclude from this pattern that levies are more likely to pass when there are fewer of them on the ballot, this is not in fact the driving force behind the increase in passage rate of operating levies. It also might be tempting to conclude that the remarkably high 84.3% passage rate for school operating levies in 2015 is an indication of a sudden upsurge in community support for local school across the state. In fact, the increase in passage rates of Ohio school operating levies in recent years is due almost entirely to a far more pedestrian reason — an unprecedented decrease in the share of new vs. replacement levies on the ballot.

Consequently, Table 3 takes a closer look at operating levy activity from 2007 through 2014 by separating new levies (i.e. those that impose additional millage on local voters) from renewal and replacement levies. Renewal levies ask for re-approval of millage already in place, while replacement levies ask for restoration of a levy already in place to its original voted millage. Long-term analysis of Ohio school levies has suggested that new levies tend to pass at a roughly 37% rate, while renewal and replacement levies are approved roughly 85% of the time.

Table 3: 2007-2015 Operating Levies, New vs. Renewal & Replacement

The data in Table 3 shows that school operating levy patterns in 2015 deviate quite sharply from long-term trends. There were only 26 new school operating levies on the ballot in 2015 and these levies passed at a 65.4% rate, more than double the success rate of 2014 and prior years. At the same time, the number of renewal and replacement operating levies in 2015 remained fairly consistent with that in recent years, while the passage rate (94.3%) was slightly higher than normal. Thus a higher than normal passage rate for the comparatively few new school levies in 2015 combined with the fact that over 80% of the operating levies on the ballot in 2014 were renewals and replacements is responsible for the unusually high 89.3% passage rate of school operating levies in 2015

However, the most important single number in Table 3 is the 26 new operating levies on the ballot in 2015. This is by far the fewest number of new school operating levies placed on the ballot in the past 20 years (the next two closest years were 2014 with 67 and 2001 when only 82 new levies were placed on the ballot). In fact, from 1994 to 2013, an average 166 new school operating levies were placed on the ballot.

Furthermore, in the mid-1990s, roughly 82% of all operating levies on the ballot were new levies. By the mid 2000’s the percentage of new levies had fallen to roughly 2/3rd. From 2007 to 2013 the share of new levies on the ballot fell again to 58.0%. In 2014, the percentage of new levies fell below 35% and in 2015 it is below 20%. As a result, Table 2 clearly demonstrates that the overall 69.9% passage rate of school levies in 2014 was driven not by a sudden upsurge in voter support for public education in Ohio, but rather by the large share of renewal and replacement levies on the ballot and their historically consistent 87.8% approval rate.

While the trend is clear, the question remains as to what is driving the sharp and unprecedented decrease in new school operating levies over the past two years. One possibility is the elimination in HB 59 (the FY 14-15 biennial budget) of the 10% and 2.5% rollbacks on new and replacement levies beginning with the November 2013 election. The impact of the elimination of the 12.5% in rollbacks on a property taxpayer is that the cost of a levy of a given millage amount will now be higher because the taxpayer is paying 100% of the cost of the new tax instead of just 87.5%.

While it is tempting to blame the marked decrease in new levies on the elimination of the rollback, it seems unlikely that the desire to spare property taxpayers a relatively small increase in their tax burdens would trump school districts needs for additional revenues.  In addition, the school district income tax levies never received the rollback and were therefore unaffected by this policy change, however school district income tax proposals have also been down over the past two years.

An alternate possibility is that Ohio school districts were waiting to place levies on the ballot in 2016 because it is a Presidential election year and turnout at both the March primary and November general election will likely be much higher than in 2015. However, if the number of new school levies on the ballot on 2016 remains at the level of 2015 then it will certainly seem like a fundamental change in Ohio school funding will have occurred.

Elimination of the February Special Election

One perhaps little known aspect of the FY 16-17 Biennial Budget (HB 64) was the elimination of the February special election. Because the February special election is not held in Presidential election years when the primary election is moved from May to March, the impact of this change on Ohio’s local school districts will not be felt until 2017.

The impact of the removal of the February election as an option for districts to place school operating or capital levies on the ballot is also minimized by the infrequent use of the February election in recent years. Table 4 shows that only a small fraction of school levies have been placed on the February ballot in recent years. This is particularly true since 2010 when the fraction of levies placed on the February ballot has been 3% or less than the total number of levies in the year.

Table 4: Operating & Capital Levies by Election, 2007-2015

* In the Presidential election years 2008 and 2012, the March Primary election took the place of the February and May elections.