How New State Laws May Affect School Funding in Middletown

How New State Laws May Affect School Funding in Middletown

Ohio lawmakers recently passed several bills that change how property tax revenue grows for schools. These changes are meant to slow property tax increases for homeowners and businesses, but they also affect how public schools are funded.

What is the 20-mill floor?
The 20-mill floor is a state rule that guaranteed school districts a minimum level of property tax collections. When property values increased, districts like Middletown City Schools automatically received more revenue without asking voters for a new levy.

Before House Bill 129, Middletown City Schools was considered to be on the 20-mill floor.

What changed?
House Bill 129 changed how the 20-mill floor is calculated by including certain fixed-sum levies, such as emergency and substitute levies. As a result, Middletown City Schools is now considered above the floor. While that may sound positive, it actually limits future automatic revenue growth as property values rise.

House Bill 186 places an inflation-based cap on property tax growth for districts that were on the floor. Instead of funding rising with property values, growth is limited to inflation. This is provided as a tax credit to property owners and is not automatically reimbursed to school districts.

House Bills 335 and 309 further limit revenue growth from inside millage and add new requirements and oversight that can restrict how much valuation-driven revenue districts collect.

What does this mean financially?
State simulations show Middletown City Schools could lose approximately:
$2.78 million in tax year 2026 and $2.89 million in tax year 2027, totaling about $5.66 million over the first two years after these laws take effect.
More detailed figures will be shared with the Board of Education in February 2026 as part of the district’s updated financial forecast.

Over the next five years the district is estimating their tax revenue to drop $12,544,812 collectively, averaging an annual loss of $2,508,962. This equates to almost 8% of their local revenue.

Pros and cons for public education:
Pros:
These changes may provide more predictable and slower-growing property taxes for homeowners and businesses.

Concerns:
For schools, slower local revenue growth without guaranteed state replacement makes it harder to keep up with rising costs. Over time, this could affect staffing, programs, and future levy needs.

Middletown City Schools will continue to review these impacts carefully and keep the community informed.