Lakewood School Levy Madness
The Lakewood Board of Education’s recent approval of a motion to place a new 3.9 mil operating levy on the May 2013 ballot is yet another example of a well-intended effort to treat the symptoms, not the problems we face in funding public education.
Funding the increased cost of education through property tax increases is becoming a short-sighted and reactionary solution to the problems of ever-increasing expenses coupled with declining tax collections and State of Ohio funding. Nonetheless, justifications abound. Superintendent Patterson has proclaimed, “It is needed to maintain excellence.” Co-Chair of the levy campaign committee Christina McCallum has said she believes, "the levy is essential.” Who are we to believe? As recent as June 7, 2012, in a Sun Press cover article titled “Schools Revise Financial Forecasts, Lakewood Treasurer Rick Berdine is quoted as saying, “for fiscal years 2012 through 2016, real estate taxes which had been predicted to increase to 8% will not change.”
Additionally, Superintendent Patterson’s statement that the 3.9 mills is the smallest Lakewood school operating levy request in decades, may be true but irrelevant. Since 1998, annual mill rates have increased 28%, from 120.8 to 154.6. Residential property market values have increased on average 25% and reduction factor credits have decreased 6%. Compounding these percentages, net property taxes have increased approximately 59% for this period. It really doesn’t matter to Lakewood homeowners how big or small each levy has been or when each occurred. What matters is they are writing increasingly larger checks each year to pay their property taxes, and beginning to wonder if they will be priced out of their homes when decisions are made to retire.
Lakewood property taxes, currently 2.96% of market appraisal value, are among the highest in the nation. Lakewood and other Cleveland ring suburbs also have lower than national average property values coupled with extremely high delinquent payment ratios.
Also, in Lakewood, the ratio of dwelling values to students is against us. Let’s compare a 20 unit apartment building valued at $500,000 to an upscale home valued at $500,000. Both dwellings have the same property tax liability. The home has no children in residence. The apartment building has 35 children, all enrolled in the Lakewood school system. We compound this problem by recognizing that Lakewood has over 45% residential rental property, a characteristic of many ring suburbs. And, for the most part, renters don’t have a dog in the fight. They get to vote on levies, but are cognizant of the fact rents in Lakewood are for the most part inelastic to increases by landlords.
I commend those who are striving to think outside the envelope in tackling the ever-growing problem of funding public education. It’s time, however, to look at changing the game, not the rules to the game. Everyone should pay their fair share of the tax burden, not just property owners.
Managing Partner-Edgewater Financial Services Lakewood Ohio Retired VP Finance & CFO AGA/Linde Healthcare Region North America