Ohio Public School Funding 101

The Shaker Heights City School District’s large cash balance was a result of strong fiscal stewardship. Our reserve was supported by additional one-time funding during COVID (such as ESSER funds) and a reduction in spending during the pandemic years. These temporary factors contributed to a larger-than-usual cash balance.

However, this balance was never intended to be a permanent cushion. It is being spent down as part of the natural cycle of district operations, particularly to fund salaries, benefits and other essential services—costs that have continued to rise over time.

Ohio House Bill 920 plays a significant role in this situation. It limits the amount of revenue school districts can collect from previously approved operating levies by reducing the effective tax rate as property values increase. This means that even as the costs of operating the District go up, our revenue does not keep pace. Essentially, HB 920 prevents our revenue from growing alongside inflation or rising property values.

Compounding this challenge is the fact that Shaker has not been on the ballot for a full operating levy since 2014. That means we are still operating the District using the same base of local funding that was approved by voters 11 years ago—despite rising costs in areas like employee compensation, transportation, technology and instructional materials. As a result, the District has had to rely more heavily on its reserves to maintain high-quality programming and services for students.

The District regularly reviews its expenditures and identifies areas where we can reduce costs without compromising educational quality. In recent years, we have realized savings through strategic decisions such as consolidating Woodbury and the Middle School into a single Middle Years building, as well as through reductions in personnel costs.

Moving forward, we are taking a more proactive and strategic approach to cost savings. We’ve already identified $1 million in targeted reductions for Fiscal Year 2026 and continue to explore additional opportunities for savings.

Our cost reduction efforts are guided by several key principles:

• Prioritizing the classroom. We strive to make staffing changes as far away from direct classroom instruction as possible.
   
• Using natural attrition. Wherever possible, we reduce personnel costs through retirements, resignations and unfilled vacancies, helping to avoid layoffs.

While some changes may result in staff reassignments, we remain committed to maintaining an excellent, supportive and challenging educational experience for all Shaker students.

In Ohio, every public school district is required to develop and submit a five-year financial forecast twice each year—once in November and again in May. This forecast is prepared by the District Treasurer and presented to the Board of Education.

The five-year forecast is based on historical data, current financial trends and projections for both revenues and expenditures. It serves as a key planning tool to help the District anticipate future financial needs, make informed decisions and ensure long-term fiscal stability. This forecasting process helps guide budgeting priorities and supports transparent, responsible financial management.

Personnel costs account for approximately 85% of the District’s operating expenses, so any significant budget reductions must involve staffing. That’s why our cost-saving efforts have focused heavily on personnel, with a commitment to making changes as far from the classroom as possible. We’ve prioritized using natural attrition—such as retirements and resignations—to reduce staffing levels while minimizing disruption to students and staff. Some reassignments have been necessary, and more may be required.

Compounding these challenges is Ohio House Bill 920, which prevents school districts from collecting additional revenue from existing levies as property values rise. This means our revenues stay relatively flat while the costs of operating the District—such as salaries, health benefits, transportation and instructional materials—continue to increase. As a result, districts like ours must return to voters for new operating levies on a regular basis to keep up with rising costs.

The District provides regular financial updates through public presentations of the five-year forecast to the Board of Education each November and May. These meetings are open to the public and have consistently shown the financial pressures we face due to rising costs and limited revenue growth under House Bill 920.

Over the past several years, the District has worked to manage costs while continuing to meet the growing and complex needs of our students—particularly in the wake of the COVID-19 pandemic. The academic and social-emotional needs of students increased significantly during this time, and the District prioritized maintaining staffing and services to support recovery and learning.

At the same time, we’ve taken steps to reduce spending. These include personnel reductions through natural attrition, reassignments and the consolidation of school facilities, such as the creation of the Middle Years building. Now, with the expiration of one-time COVID relief funds and as inflationary pressures continue to rise, the District’s financial outlook has become more challenging. That’s why we are now entering a more aggressive phase of cost-cutting and exploring long-term solutions to maintain financial stability.

In 2023, Shaker Heights voters approved a small, targeted operating levy specifically to support the launch and operations of the expanded preschool program at the Ludlow Early Learning Center, opening in Fall 2025.

The community has made it clear that access to high-quality early childhood education is a top priority, and this dedicated funding reflects that shared value. The expanded preschool program will serve as a Universal Pre-Kindergarten (UPK) Site, which means it will receive funding assistance from Invest in Children, Cuyahoga County’s early childhood initiative. This partnership helps offset costs and ensures broader access for families.

The expanded preschool is an important and community-driven investment.

No, the District is not administrator heavy. Our administrative staffing levels are in line with those of other similarly sized public school districts.

We recognize the importance of efficiency at all levels of the organization and have made, and will continue to make, reductions to administrative positions when appropriate. These changes are being made thoughtfully and in alignment with other cost-saving measures across the District, always with the goal of minimizing the impact on students and classrooms.

District enrollment has declined over the past decade, reflecting broader demographic trends in the community. During this time, staffing levels have not decreased at the same pace. As a result, student-to-staff ratios have generally fallen, meaning we have more staff per student than in previous years.

We continuously review staffing levels and plan for adjustments that align more closely with current and projected enrollment. These decisions are made thoughtfully to ensure we continue to support student needs while maintaining financial responsibility.

Over the past five years, the District has added positions that align with key priorities and the evolving needs of our students. In particular, following the COVID-19 pandemic, we invested in roles that support literacy development, academic recovery and social-emotional wellness.

The District is committed to ensuring that our compensation packages remain competitive, especially in the face of inflationary pressures and the need to retain and attract high-quality educators. While we are facing financial challenges, it is essential to balance fiscal responsibility with our commitment to maintaining a strong, dedicated workforce. Competitive salaries are crucial to supporting the District's long-term success and ensuring that our students continue to receive the best possible education.

We actively work with our insurance provider to explore strategies for managing rising benefit costs. Additionally, we promote proactive health and wellness initiatives aimed at improving overall employee well-being and reducing long-term medical expenses. These efforts are part of our ongoing commitment to managing costs while supporting the health and productivity of our staff.

The District has explored options to help manage health care costs, including looking at consortiums, and will continue to do so when appropriate.

Levies are essential because state funding alone does not cover the full cost of running a school district. Local property taxes provide the additional revenue needed to pay for day-to-day operations, classroom resources, building maintenance, and other critical expenses. Without levies, schools may face budget shortfalls that could result in reduced programs or services.

Operating Levies: Fund daily operational costs, such as teacher salaries, transportation, utilities, and supplies. Bond Levies: Used for major capital projects, like building new schools or renovating existing facilities. Bond levies are repaid over time and cannot be used for operating expenses.

Property taxes are based on a home’s assessed value, which in Ohio is 35% of its market value. Taxes are calculated using millage rates, where 1 mill equals $1 for every $1,000 of assessed value. The district receives a fixed amount from the levy, regardless of changes in property values, in accordance with Ohio’s House Bill 920.

Shaker Heights does not have a significant commercial tax base, so we rely heavily on residential property taxes to fund the District. This reliance on residential taxpayers, rather than a diverse mix of commercial and residential sources, contributes to higher tax rates compared to other areas with a broader tax base.

The community approved a bond levy specific to capital improvements in our K-8 buildings in November 2023. That ballot initiative also included a small operating levy specifically to fund the expanded preschool program at the Ludlow Early Learning Center. Preschool programs do not receive state funding, so costs associated with that program expansion required a small levy.  The last full operating levy for Shaker Heights Schools was passed in 2014.

No. Many funding sources are restricted to specific uses:

• Bond Levy Funds: Can only be used for construction, renovation, or capital improvements.
• Federal Grants: Are tied to designated programs like special education or student nutrition.
• Permanent Improvement Levies: Must fund long-term, non-operational needs like repairs or equipment.

Currently, District expenditures are outpacing revenues, which means that the District is drawing down its cash reserves and is in deficit spending. By the end of 2029, the District is currently projected to spend down its operating cash reserves. Ohio House Bill 920 plays a significant role in this situation. It limits the amount of revenue school districts can collect from previously approved operating levies by reducing the effective tax rate as property values increase. This means that even as the costs of operating the District go up, our revenue does not keep pace. Essentially, HB 920 prevents our revenue from growing alongside inflation or rising property values.

The last time the Shaker Heights City School District requested a full operating levy was in 2014. However, it is commonplace for districts to seek operating levies every 3-5 years as costs rise. Prior to 2014, an operating levy was on the ballot approximately every three to four years.  The community did approve a small operating levy specific to funding costs associated with expanding the preschool program at the Ludlow Early Learning Center. Those funds were approved in November 2023.

Typically, school districts need to go out for operating levies every 3-5 years due to the effects of House Bill 920, which limits revenue growth from existing levies. The frequency of levy cycles can also be influenced by changes in state and federal funding, as well as shifts in the District’s financial needs.

The District collaborates with the City of Shaker Heights and the Shaker Heights Public Library to support economic development in our community. When economic incentive proposals for development come before the Board, they are carefully reviewed. The Board considers the long-term impact of these incentives, weighing the potential benefits to the District and the broader community. While these incentives may reduce short-term revenue, they are intended to foster sustainable growth and attract businesses that will contribute to the city’s overall prosperity and build a broader tax base in the long term.

For specific information about commercial property taxes, we recommend reaching out to the City of Shaker Heights.

In 2023, the community approved a bond issue to provide a dedicated funding stream for construction costs, supported by the Permanent Improvement (PI) levy. This funding is specifically allocated for capital projects, so most construction costs will not impact the operating budget.

However, if there are cost overruns or unforeseen expenses, they may need to be covered by the operating budget. The District is committed to minimizing these overruns and evaluates them on a case-by-case basis.

Construction is underway at the Ludlow school building, and the Ludlow Early Learning Center is set to open in fall 2025. Since the Woodbury school building was closed at the beginning of the 2024-2025 school year, the District, the GPD Group (architect), R.P. Madison (architect) and Gilbane Construction Co. (contractor) have been hard at work on various assessments, site development and design. Abatement and demolition are taking place starting in the spring of 2025. 

In addition, early design work for the Fernway Elementary School addition is underway, and planning and design for our other elementary buildings will follow.

The District, the High School and Middle School Athletic Offices and the City of Shaker’s Recreation Department are working in close coordination to ensure athletic teams and programs have spaces for practices and contests.

The District anticipates that operations, maintenance and personnel costs will decrease with a reduced facilities footprint.