School Property Tax Burden by Payer Type — Ohio, 1975–2024
% of total school property taxes paid by each category | Source: Ohio Dept. of Taxation / OEPI calculations
Residential & Agricultural
Business (Commercial Real)
Business Tangible Personal Property
Public Utility Tangible Personal Property
DeRolph v. Ohio: Court-Ordered Reform vs. Today's Reality
At DeRolph (1997–2002)
~40–44%
State share of K-12 funding
Ohio Supreme Court ruled school funding unconstitutional 4 times. State was ordered to fix "overreliance" on local property taxes. Ranked ~35th nationally in state share.
➔ State share fell
since court order
Today (2023)
~30–32%
State share of K-12 funding
Ohio fell to 45th nationally — 11.2 percentage points below the national average. The problem DeRolph identified has grown significantly worse.
Executive Summary: Key Legislative Turning Points
Nine key decisions — made over 50 years — shifted more than $1 billion in annual school funding responsibility from businesses to homeowners and farmers. At the same time, more than $1 billion in state education dollars was redirected toward private school vouchers.
1976 — The Protection That Had a Flaw
HB 920: Ohio's Inflation Shield
A 1976 law designed to protect homeowners from rising property taxes — but with a critical loophole called the "20-mill floor" that left two-thirds of Ohio school districts fully exposed to the post-COVID housing surge.
Gov. James Rhodes signed HB 920 because home prices were rising fast and homeowners were seeing bigger tax bills every year. The law created rules that stop school districts from automatically collecting more money just because home values went up. Instead, if home values rise, the tax rate drops — so the total bill stays about the same. The unintended consequence: Ohio now holds more school levy elections than any other state (12,560 from 1976–2022; only 52.9% approved). The law also created the "20-mill floor" — a point below which this protection no longer applies. Districts below that floor have no shield when property values spike. By 2023, 409 of 612 districts (66.9%) were below this floor.
1997–2002 — The Court Said Fix It
DeRolph v. Ohio: Overruled, Then Ignored
Ohio's highest court ruled four times that the state's way of funding schools was unconstitutional — because it leaned too heavily on local property taxes. Instead of fixing the problem, the state cut income taxes, reduced school funding, and let things get worse over the next 25 years.
The Ohio Supreme Court ruled that Ohio's school funding system was unconstitutional — meaning it violated the Ohio Constitution. The court said the state relied too much on local property taxes to pay for schools. Wealthier areas could raise more money than poorer ones, which wasn't fair. The court ordered the state to fix this. It ruled against the state four times between 1997 and 2002. The state never fully fixed the problem. In 2002, the state paid about 44% of all school costs and ranked around 35th among all states. By 2023, Ohio's share had dropped to about 31% — placing it 45th out of 50 states, more than 11 percentage points below the national average. The problem the court identified has grown larger, not smaller.
2005–2019 — The Business Tax Bargain Schools Lost
TPP Elimination & the CAT Promise
In 2005, Ohio eliminated the property tax that businesses paid on their equipment and machinery. The state promised to replace that money for schools. It did — for a while. By 2019, the replacement payments stopped entirely. The gap left behind was filled by homeowners and farmers.
Before 2005, Ohio businesses paid a property tax on the equipment, machinery, and goods they owned — called the Tangible Personal Property tax (TPP). In 1991, this tax made up 19.2% of all school property taxes. In 2005, HB 66 (Rep. Bill Harris, Gov. Bob Taft) began phasing it out. By 2011, businesses paid zero.
To replace the lost school funding, the state created a new business tax called the Commercial Activity Tax (CAT) and promised to pass some of that money to schools. But the replacement payments were much smaller than the original TPP revenue — and by 2019 they stopped completely. By 2023, only 13% of CAT revenue went to schools; 85% went to the state's general budget. The gap left by the eliminated business tax was picked up by homeowners and farmers. Business's share of school property taxes fell from 52.5% in 1991 to 30.1% in 2011.
2009–Present — A Smaller Prize Than Promised
Casino Taxes: $66 Per Student Per Year
A 2009 ballot measure promising casino tax revenue would transform school funding delivered roughly $66 per student annually — about enough for one textbook — far short of the $412 million originally projected, with excess funds funneled to county general funds rather than education.
Ohio voters approved four casinos in 2009 after being told that 34% of casino tax revenue would go to schools. Early estimates said that could mean up to $412 million a year. It didn't work out that way. Casinos brought in less than expected when they opened in 2012–2013. By 2023–24, the average school district gets only about $66 per student per year from casino taxes — roughly the cost of one textbook — against operating costs of more than $14,000 per student. Sports betting, approved in 2023, directs 98% of its revenue to education and brought in $193.8 million in its first year — real money, but not enough to change the big picture. More than half (51%) of casino tax revenue actually goes to county general funds based on local population — not to schools specifically. Policy Matters Ohio found that casino revenues fall far short of replacing what schools lost from earlier state tax policy changes.
2005–2025 — Two Decades of Rate Reduction
Income Tax Cuts: Who Benefited?
Over 20 years, Ohio repeatedly cut its state income tax. The result: the state brought in less revenue, paid less toward schools, and left more of the cost to local property taxpayers — while the tax cuts provided little or no benefit to the seniors and lower-income homeowners who struggle most with rising property tax bills.
In 2005, Ohio cut income tax rates by 21% across the board. More cuts followed in nearly every state budget after that. The FY2024–25 budget set a flat income tax rate of 2.75% for most Ohioans — costing the state more than $1 billion per year in revenue it no longer collects. That lost revenue mostly benefited Ohio's higher earners. Social Security is not taxed in Ohio. Most seniors were already paying at or near 2.75%, so the flat rate gave them little to no savings — even as their property tax bills were rising fast. From 2005 to 2025, state revenue grew only 48.3% while the general cost of living rose 66.5%. That gap meant the state had less money to send to schools each year — pushing more of the cost onto local property levies. The legislature also turned down a proposal (SB 271) that would have capped property taxes at 5% of income for households earning $60,000 or less, at an estimated cost of $820 million per year.
2013 — A Quiet Change That Compounds Over Time
HB 5: The State Stopped Paying Its Share
Before 2013, the state of Ohio helped pay part of every homeowner's property tax bill through a subsidy called a "rollback." Starting in 2013, any new levy passed by voters permanently lost that state subsidy — meaning homeowners pay the full amount with no state help, and it gets worse every time a district has to come back to voters.
What the rollback was: Since the 1970s, the state of Ohio paid 12.5% of every homeowner's property tax bill directly to the school district. So if your tax bill was $1,000, the state paid $125 and you paid $875. Schools got the full $1,000. This was called the "10% rollback" plus the "2.5% owner-occupied credit."
What changed in 2013: HB 5 (signed by Gov. John Kasich) ended this state payment for any new or replacement levy passed after November 2013. If a district passes a new levy today, the state pays nothing. Homeowners pay 100% of every new dollar — instead of 87.5%.
Why it matters more each year: Because HB 920 limits how much revenue a school can collect from existing levies, districts are forced to return to voters for new levies every few years just to keep up with rising costs. Every time they do, those new levies carry no state subsidy. Over time — levy by levy, year by year — more and more of the school's total funding comes from the unsubsidized new levies. Schools are gradually put on a "fixed income" while their costs keep rising.
The combined effect: Homeowners pay more. The state pays less. Schools don't receive extra revenue — they're just collecting the same amount with no state help. This change is invisible in any single year but massive over time.
2020–2025 — The Match That Lit the Fire
Housing Market Shock: Supply vs. Demand
A post-COVID housing surge drove property values to historically anomalous levels — up to 7.3x the prior cycle's increase — exposing a structural flaw in HB 920 that left two-thirds of Ohio homeowners with no protection from automatic tax increases.
After COVID, home prices across Ohio surged at a rate never seen before. In counties that were reappraised in 2023, home values jumped 7.3 times more than they did in the same counties six years earlier. Why did this happen? There weren't enough homes for sale — builders had under-built for years, many homeowners with low-rate mortgages didn't want to sell and lose their rate, and demand shot up as people moved to Ohio suburbs and worked from home. HB 920 was built to handle slow, steady increases — not 30–35% jumps. For the 409 school districts (66.9%) below the 20-mill floor, that protection was already suspended. Those homeowners saw their tax bills go up at the full rate of rising property values. The backlash from those tax increases led to the 2025 laws — which cut homeowner bills but also limited how much revenue schools can collect going forward.
2025–2026 — The Legislative Response
HB 129, 186, 309 & 335: Relief for Homeowners, Pain for Schools
Four new laws signed in December 2025 limit how much school property tax revenue can grow, change how tax floors are calculated, and allow unelected county officials to lower tax rates that voters already approved — reducing homeowner bills while limiting school revenue growth.
In response to widespread public outrage over soaring property tax bills, the Ohio legislature passed a major legislative adjustments package in late 2025. These acts work together to alter localized school funding balances. While seeking to offer immediate pressure safety valves for agricultural and residential real estate portfolios, the structural compression introduces long-term operating limitations across base property metrics, driving higher reliance on emergency levies or capital program shifts moving forward into the execution horizon.
Looking Forward — The Path Ahead for Public Education
Structural Imbalances & Funding Realities
The permanent shift toward a localized funding model leaves suburban and rural districts heavily exposed to regional economic volatility while driving public expenditure debates into local communities rather than state chambers.
As the structural changes from five decades of legislation solidify, the responsibility for sustainable K-12 operational budgets settles firmly onto local tax footprints. For districts across Northeast Ohio, tracking baseline valuation shifts against the legacy mechanics of older code platforms remains vital to long-term facility planning and educational program protection.
The Fiscal Reckoning: What This Means for Ohio Schools
Based on FY26 Spring Update Financial Forecasts filed by districts in Spring 2026 and LSC fiscal notes on HB 129, 186, and 335.
92%
of Ohio's 660 school districts projecting deficits by FY2029 (605 of 660 — ODEW FY26 Spring Forecasts)
219
districts projecting Fiscal Emergency — deficit exceeds 15% of annual revenue; state takes financial control
210
districts projecting Fiscal Watch — deficit is 8–15% of annual revenue; must file a recovery plan within 60 days
176
districts in Fiscal Caution — deficit is less than 8% of annual revenue; early warning status
55
districts with no projected deficit — just 8% of all 660 Ohio school districts
$2.5B
estimated revenue reduction over 3 years from HB 186, 335 & 129 combined (to schools & local govt)
FY2029 Projected Status — All 660 Ohio Districts
Source: fixohioschools.org, using ODEW FY26 Required Spring Update Forecasts & ORC Chapter 3316 thresholds. Pre-levy scenario — no new levies or additional state funding assumed.
What these numbers mean in practice: A district in Fiscal Emergency must let the state take over its finances. A state-appointed commission gains control of the district's budget under Ohio law (ORC 3316). A district in Fiscal Watch must submit a plan to fix the problem within 60 days. These projections assume no new levies are passed. But even asking voters for help is unreliable — new operating levies only pass 36.7% of the time historically (36.4% in November 2025). All levy types combined passed at a 51% rate in 2024, rising to 66% in 2025. Districts cannot count on voter approval to stay out of financial trouble.
How Much Revenue Do the 2025 Laws Reduce? (From Ohio Legislative Service Commission)
| Law |
What It Does |
TY2026 |
TY2027 |
TY2028 |
| HB 186 |
Caps revenue growth at inflation after reappraisal; takes back some 2023–24 reappraisal gains |
$360M state offset |
~$567M avg/yr ongoing |
- |
| HB 335 |
Caps growth of the property tax that doesn't require a public vote |
$135M |
$248M |
$378M |
| HB 129 |
Changes tax floor rules; moves ~237 districts to a position with less revenue protection |
$162M |
$223M |
$224M |
| HB 309 |
Lets county officials reduce voter-approved tax rates |
unknown |
unknown |
unknown |
| Combined Losses |
Combined HB 335 + HB 129 losses to school districts |
$297M |
$471M |
$602M |
Ohio's Per-Pupil Spending vs. the Nation
Source: FY2022, Ohio Legislative Service Commission
Ohio ranked 22nd in the country for how much it spends per student (FY2022, Ohio Legislative Service Commission). But it ranks 45th in how much of that comes from the state — meaning local homeowners are filling the gap through property taxes, not the state. Ohio fell from 24th to 41st in state funding per student between 2002 and 2023.
The COVID Effect: During and after COVID, the federal government sent Ohio schools more than $6.5 billion in one-time relief money. Many districts used it to build up their cash reserves, so their budgets looked healthy for a few years. That money is now gone. The Ohio legislature, knowing those reserves existed, also cut one year off the financial reporting requirement schools must follow. Now — with federal relief funds spent, state base funding flat, and the new 2025 revenue limits in place — districts that looked fine in 2024 are now projecting budget deficits within 2–3 years.
⚠ Implementation Status — May 2026
The Ohio Department of Taxation has not yet released the figures needed to calculate the exact impact of the 2025 property tax laws on each school district. County auditors sent in their data on April 20, 2026 — but the final numbers are still unknown. Most districts will feel the first major impact in their August/September 2026 tax settlement, with a second wave in March/April 2027. School finance expert Chris Mohr, MBA, RSBA, CGFM: "Uncertainty is the only certainty."
Where Does the Burden Go From Here?
Without changes to how Ohio funds public education, the cost will keep shifting onto residential property owners. Here are the forces driving that outcome.
🔄 The Levy Cycle Trap
Property tax revenue growth limits and rising costs put school districts on a "fixed income" — continuously seeking additional levies simply to maintain current service levels. Salaries, benefits, insurance, utilities, construction, and other costs may exceed general inflation. New operating levies only pass 36.7% of the time historically. The math points toward structural operating deficits for most districts within a decade.
💸 Income Tax Shift: A False Choice
Some districts have moved toward a school income tax (ORC §5748) to reduce their reliance on property levies. But Ohio's school income tax only applies to wages earned by residents — not business profits, investment income, or rental income. Every dollar shifted from property tax to income tax moves the cost entirely onto residents. Businesses pay nothing under this approach. This is one reason the residential share of school funding is likely to keep rising.
🎲 Gaming Revenue: Big Hype, But Not Nearly Enough
Casino taxes (34% to schools) and sports betting taxes (98% to education) bring in real money — but not nearly enough to change the picture. The average school district gets about $66 per student per year from casino taxes. The Ohio Lottery, often promoted as a benefit to schools, is largely used to offset other state spending rather than add new funding on top of what schools already receive. These sources help at the margins but do not address the fundamental shift in who pays for Ohio's public schools.
🏫 Vouchers Draw From the Same Pool As Public Education
Ohio's EdChoice voucher programs cost $1.095 billion in FY2025 — drawn from the same state funding pool (foundation aid) that pays for public schools. The $966M cost of vouchers in FY24 was, by itself, enough to fully fund the Ohio Fair School Funding Plan (the state's public school funding model). As voucher costs grow, less state funding is available for public schools serving 88% of Ohio students, increasing their dependence on local property levies — and on homeowners.
⚠ Constitutional Amendment & HB 420
Two proposals currently moving in Ohio would not fix the property tax problem — they would eliminate property taxes entirely, with no plan to replace the money and no transition period for schools and local services that depend on it.
The Constitutional Amendment (ballot petition underway): Would end all Ohio property taxes — for homes and businesses — starting the year after voters approve it. Ohio's property tax brings in $21.4 billion every year — more than the state income tax ($11B) and sales tax ($14.3B) combined. The ballot language has no plan for replacing that money and no mechanism for phased reductions. Every school, library, fire district, county road, and township service funded by property taxes would face an immediate funding gap. A poll from August 2025 found 61% of Ohio voters support the idea — showing that frustration with high tax bills is real, even if the consequences of full elimination are not widely understood.
HB 420 (pending in the legislature): Would ban new continuing levies and eliminate all existing continuing levies by 2030. Right now, most Ohio school districts rely on continuing levies — tax levies that voters approve once and that stay in place. HB 420 would require every dollar of that funding to be re-approved by voters over and over, on a set schedule. Since new operating levies only pass 36.7% of the time, most districts would face serious funding gaps within the decade. Unlike the constitutional amendment, HB 420 could become law without a public vote.
🔧 What Would Actually Help
There are practical steps the state could take to address the real problem:
- Increase the state's share of school funding to at least the national average.
- Allow schools to tax business income — Ohio school income taxes (ORC §5748) currently apply only to wages earned by residents, leaving out business profits, investment income, and rental income. Changing this would restore some of the balance that was lost when the business equipment tax was eliminated — and would mean businesses once again help fund the schools their workers and communities rely on.
- Expand the Homestead Exemption — the simplest, most targeted relief for homeowners with fixed incomes.
- Create a circuit breaker (proposed in SB 271): cap property taxes at 5% of income for households earning $60,000 or less; estimated cost $820 million per year.
- Restore CAT replacement payments that ended in 2019, when the state stopped sending schools the money it promised when it eliminated the business equipment tax.
- Require accountability for private schools receiving public voucher dollars.
Detailed Legislative Timeline: 1971–2026
Every significant legislative event with sponsors, impact ratings, and structural changes. Click filters are simulated via integrated metadata attributes.
1971
10% Non-Business Credit & Homestead Exemption Created
Sponsor/Authority: Gov. John Gilligan
residentialstate
◆ Moderate Impact
1973
CAUV (Current Agricultural Use Value) Enacted
Sponsor/Authority: Gov. John Gilligan
residential
◆ Moderate Impact
1976
HB 920: Property Tax Limitation Act
Sponsor/Authority: Gov. James Rhodes
legislativeresidential
▲ High Impact
1979
2.5% Owner-Occupied Credit Added
Sponsor/Authority: Gov. James Rhodes
residential
· Low Impact
1980
HB 920 Constitutionalized; Class I / Class II Split
Sponsor/Authority: Gov. James Rhodes
legislativeresidential
▲ High Impact
1991
Burden Baseline: Near-Equal Split (47.5% / 52.5%)
Observation year — no major legislation
residentialbusiness
· Low Impact
1994
Enterprise Zone & TIF Expansions
Sponsor/Authority: Gov. George Voinovich
business
◆ Moderate Impact
1999
Residential Share Crosses 50% for First Time: 52.4%
Cumulative policy effect
residentialbusiness
▲ High Impact
2005
HB 66: Business 10% Rollback Repealed (Commercial Only)
Sponsor/Authority: Rep. Bill Harris; signed Gov. Bob Taft
businessresidential
▲ High Impact
2005
HB 66: Tangible Personal Property Tax Phase-Out Begins
Sponsor/Authority: Rep. Bill Harris; signed Gov. Bob Taft
business
▲ High Impact
2007
Residential Share Hits 65% — TPP Phase-Out Takes Effect
Cumulative effect of HB 66 phase-out
residentialbusiness
▲ High Impact
2008
State TPP Replacement Payments Begin Eroding
Budget reductions under Gov. Strickland following 2008 recession
state
▲ High Impact
2011
Business TPP Fully Eliminated: Residential Share Peaks at 69.9%
HB 66 phase-out completed; Gov. Kasich
businessresidential
▲ High Impact
2011
State Income Tax Cuts Begin — HB 153
Sponsor/Authority: Gov. John Kasich
state
▲ High Impact
2013
HB 5: Rollbacks Eliminated for New & Replacement Levies
Sponsor/Authority: Gov. John Kasich
residentiallegislative
▲ High Impact
2017
Districts at the 20-Mill Floor Begin Sharp Increase
Cumulative effect of HB 920 mechanics
legislativeresidential
▲ High Impact
2021
Post-COVID Housing Boom Overwhelms HB 920
Market forces — pandemic migration, low inventory, low rates
residential
▲ High Impact
2023
EdChoice Vouchers Surpass $1 Billion — Universal Eligibility Enacted
Sponsor/Authority: FY24-25 budget signed Gov. Mike DeWine; Senate President Matt Huffman, principal architect
stateresidential
▲ High Impact
2023
SB 271 Rejected; Income Tax Cut Instead — Seniors Left Behind
SB 271: Sen. Bill Blessing — not enacted; income tax cuts: Gov. DeWine
stateresidential
◆ Moderate Impact
2025
HB 186: 20-Mill Floor Inflationary Cap & Retroactive Clawbacks
Sponsor/Authority: Reps. David Thomas, Bill Roemer, and Jim Hoops; signed Gov. Mike DeWine, December 19, 2025
residentiallegislative
▲ High Impact
2025
HB 129: 20-Mill Floor Redefined — Emergency Levies Count
Sponsor/Authority: Rep. David Thomas; signed Gov. Mike DeWine, December 19, 2025
legislativeresidential
▲ High Impact
2025
HB 309: County Budget Commissions Can Reduce Voter-Approved Millage
Sponsor/Authority: Rep. David Thomas; signed Gov. Mike DeWine, December 19, 2025
legislativeresidential
▲ High Impact
2025
HB 335: Inside Millage Capped at Inflation After Reappraisal
Sponsor/Authority: Rep. David Thomas; signed Gov. Mike DeWine, December 19, 2025
residentiallegislative
◆ Moderate Impact
2025
HB 96 Piggyback Exemptions: 10 Counties Expand Homestead Credits at Schools' Expense
Sponsor/Authority: HB 96 (FY26-27 budget); county commissioners enacted locally for TY2025
stateresidential
◆ Moderate Impact
2026
ODT Reappraisal Schedule Changed — Districts Lose One Year of Value Growth
Sponsor/Authority: Ohio Dept. of Taxation administrative action, announced January 15, 2026
legislativestate
▲ High Impact
2026
Constitutional Amendment to Repeal Property Tax — Ballot Petition Underway
Citizen petition drive. Proponents state 2025 reforms are insufficient.
legislativestate
⚠ Big Risk