MADISON TOWNSHIP — Voters in the Madison Local School District may be asked to trade a property tax for an income tax in November.
The Madison school board is set to vote Wednesday on a resolution to kick-start the process of putting an income tax levy on the ballot.
If approved, the proposed 1.5-percent earned income tax would replace the 7.5 mill property tax voters narrowly approved in 2023.
The new income tax would result in a $3.33 million in additional revenue for the district. The proposed income tax would generate $6.27 million annually, while the 2023 property tax that would be eliminated generates $2.94 million each year.
“I know nobody wants more taxes. I don’t, and I’m a resident of the district,” Supt. Rob Peterson said. “However, in order to operate this district, we need an increase in funding to get our district to financial stability.”
Collection of the 7.5 mill property tax would cease, effective Jan. 1, 2026. Collection of the income tax would begin in tax year 2026, with collection starting in 2027.
Peterson and Treasurer Bradd Stevens said they are recommending a rate of 1.5 percent because it would generate enough to put the district on solid financial footing.
The Government Finance Officers Association recommends public entities like school districts maintain a minimum cash reserve of 60 days’ worth of operating expenses.
Madison ended its recent fiscal year on June 30 with just two days’ worth of rainy day funds.
Stevens also said school district income tax rates have to be in quarter-percent increments.
“Ultimately our goal is to get to a 60-day cash balance which provides some financial stability for our district. It’s not exorbitant, but it puts you on pretty solid ground,” Peterson said. “The 1.5 percent was the lowest that could get us to that point.”
Peterson said even if the income levy passes, the district will need to continue making cuts. But he also emphasized the cost-saving measures the district has already made.
“We need to continue to look at our staffing. We’re going to need to look at our buildings to see if there is a way to be more efficient with the elementary buildings that we have,” he said.
“We’ve cut 41.5 staff positions over the last five years. The maximum raise we’ve given over the last two years is 2 percent, which is not exorbitant. Our beginning teachers salary for the 2025-2026 school year is $37,754 and we pick up part of their retirement contribution.”
It’s going to shift a little more burden onto our younger population and our working population, but those are the people who have kids or grandkids in school.
Rob Peterson, Madison Supt.
‘We’re trying to reduce the burden on elderly and retirees’
The proposed change is the result of Madison’s new taxation policy, which district officials said aims to minimize the impact on elderly residents with fixed incomes.
“At the state level, there’s a movement across the state to try to provide property tax relief to the elderly and retirees. That is a goal of ours,” Peterson said.
“It’s going to shift a little more burden onto our younger population and our working population, but those are the people who have kids or grandkids in school.”
A key recommendation from the new policy is a shift from traditional property taxes to an earned income tax model.
Unlike property taxes, earned income taxes do not apply to Social Security, disability, or other retirement income. Instead, they are based on wages, salaries, tips and other employment earnings.
Nearly 42 percent of Madison Local School Districts residents receive Social Security or retirement income, according to a press release from the district.
Madison’s new taxation policy was developed with assistance from David Conley, a financial consultant whose focus includes school districts and other public entities, to develop a long-term taxation policy.
The board, school district administrators and Conley have met several times since then to discuss district finances. The press release states the school board and Conley completed a comprehensive review of the its financial strategy and tax structure.
“The result is a forward-thinking plan designed to maintain high-quality educational services while easing the tax burden on residents, particularly senior citizens and those on fixed incomes,” the release said.
The board voted to approve a contract with Conley’s firm, Rockmill Financial, in March. The contract included a monthly rate of $3,000 for Conley, with a cap of six months for consulting work.
“Normally, (Conley) charges a much larger amount for his services, but he so kindly offered his services to us for no more than $18,000, so we feel that is well worth putting that policy together and having a framework to guide us for how we move forward,” Supt. Rob Peterson said at the time.
Health insurance costs bogging down district finances
Madison is projected to operate in a deficit after this school year, according to its latest five-year forecast, a twice-yearly financial overlook required by the Ohio Department of Education.
School board members approved a reduction-in-force of 10 staff members in May.
“I think (staffing levels) is something that we’re going to have to take a look at every year,” Peterson said at the time.
“We’ve tried to reduce (our staffing) as our enrollment has dropped. Every time we make a cut, there’s at least some negative impact on the education we can provide.
“Sooner or later you get to that point where you just can’t make any more cuts,” he added. “I don’t know that we’re at that point, but we’re getting there quickly.”
Treasurer Bradd Stevens told board members in May that health care costs are “crushing” the district, even after hiking employee premiums by 16 percent in January.
Stevens told the board the district’s share of a family health-insurance plan costs more than a first-year teacher’s salary.
Stevens said he and Peterson are exploring ways to reduce insurance costs while still meeting the terms of the negotiated agreement with the union.
“We’ve gone out to bid on stop loss. We’ve gone out to bid on PPO (preferred provider organization) carrier. We’ve talked to consortiums,” Stevens said. “We’re working with a broker. We’re trying to figure it out.”
Madison’s next board of education will take place Wednesday at 6 p.m. at Madison Middle School.