Miami Valley school districts collectively stand to receive millions in annual tax revenue from casino profits when they begin receiving their share in January.
Ohio voters in 2009 amended the state constitution to allow casinos in Cleveland, Toledo, Columbus and Cincinnati. The state levies a 33 percent tax on adjusted gross gambling revenue, which is the amount left after winners are paid.
School districts in Ohio will share 34 percent of that tax revenue.
The Department of Taxation, which is slated to make the first payment to schools, has not told school district officials how much revenue they will receive.
Despite the good news of receiving some additional revenue at a time when so many school budgets are tight, area school officials expressed frustration at not knowing what to expect. Also on the horizon, is a new funding formula that could change the way schools are funded.
Gov. John Kasich is expected to unveil the new funding formula that could be in place for fiscal year 2014.
Mike Sobul, a consultant for Public Finance Resources — whose Casino Revenue Estimate Update was sent to all of Ohio’s 614 school districts in October — said there is uncertainty about the inter-relationship between casino tax revenue and a new school funding formula.
“That makes everyone kind of nervous,” he said.
“The question is whether anything in the new formula is going to take into account the casino money that schools are getting in determining state aid,” Sobul said. “That’s the concern. It may be in there, it may not be in there; we don’t really know. The constitutional amendment says it’s not supposed to supplant other revenues.”
Sobul, who also serves as treasurer for the Granville Exempted Village School District, worked for the Ohio Department of Taxation for 25 years before retiring 18 months ago as head of the forecasting and special projects unit. He was part of the research team that did the department’s initial casino revenue estimates in 2009.
He now estimates the overall casino revenue to be about $1.4 billion annually. Of that, he said current estimates indicate school districts stand to receive about $157 million annually.
The casinos in Cleveland and Toledo began operating last spring, the one in Columbus just opened in October and Cincinnati’s is expected to open by next June.
Sobul said for the January distribution, he expects districts will receive about $19 per pupil, down from the previous $21 per pupil he estimated last spring before there was a decline in casino revenue.
The Dayton Daily News calculated how much a sampling of Miami Valley districts could receive using the formula Sobul suggested. The newspaper used districts’ year-end enrollment for fiscal year 2011 because those are the most recent numbers available from the Ohio Department of Education.
The results show the amount of money districts get will continue to grow by fiscal year 2015 when the Cincinnati casino will have been operating for a full year.
Dayton Public Schools — the largest area district with about 14,174 students — would receive an estimated $269,306 for this fiscal year. Jefferson Twp. Local Schools, the smallest area district with only 419 students, would get about $7,961.
Those amounts are expected to climb in fiscal year 2014 when Sobul said districts can expect $50-$55 per pupil and also in fiscal year 2015 when they can expect about $57-$63 per pupil based on current estimates.
That means Dayton Public’s annual share would climb to an estimated $807,918 by 2015 and Jefferson Twp. to $23,883.
The review of 13 Miami Valley districts’ potential revenue indicates they collectively would receive nearly $5 million by fiscal year 2015, so the region as a whole, which has more than 40 school districts, would receive much more than that.
Dayton Public Schools spokeswoman Jill Moberley said the district hasn’t been told how much it will receive “but we would apply those funds to address the widening financial gap created by declining state and local revenues. Local tax revenues declined by $1.3 million from FY11 to FY12, and we received $5.6 million less last year as a result of the accelerated phase out of Tangible Personal Property tax (TPP).”
Bob Hancock, treasurer for Hamilton City Schools, expects his district would get about $180,000 for the current fiscal year.
The district’s share is expected to climb to $472,200 annually next fiscal year and $538,308 in fiscal year 2015, according to estimates.
“Any revenue stream helps us,” Hancock said. “Does it solve a problem in a district that has a $170 million budget? Well, no.”
Hancock added, “I don’t know the gambling revenue stream is one that’s going to save any of us. Because of where it comes from, I don’t know that’s really one that I’m too keen on. The lottery, any of that, I’ve never been too fond of as far as being a main stream of revenue for education. I don’t quite get that logic. There are better ways to fund things.”
The casino tax revenue is expected to have a smaller impact on education than lottery revenue, which has never been sent directly to districts but is built into the state aid districts receive.
Sobul said the lottery provides about $700 million a year for education, which is roughly four and a half times as much money as casino tax revenue is expected to generate for schools.
Chris Mohr, treasurer for Springfield City Schools, declined to speculate on how much the district could receive because he said the Department of Taxation hasn’t provided official estimates.
“The amount of money will be placed in the general fund as part of our budget considerations for future years once we actually have casino money and can determine what future payments will be,” he said.
Mohr called any additional revenue “a relief” since the state eliminated the district’s TPP tax this fiscal year and replaced it with the Commercial Activity Tax,, which he said increases state revenue but decreases local school revenue.
“So whatever the casino money is going to be, I am certain it will not make up this permanent cut in state money,” he said, noting the loss of more than $2.4 million annually in TPP reimbursements.