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How Do Ohio Schools Get Their Money? Levies, the State Formula and the New Property Tax Rules (2026)

Marcus · October 20, 2026 · 9 min read

Empty classroom with sunlight casting shadows across the desks

About half of the money an Ohio school district spends comes from local taxpayers, roughly 37 percent from the state and about 13 percent from the federal government, according to a Signal Ohio breakdown of 2024 school finance data. The local half is the part that makes Ohio unusual: most of it rides on property tax levies that voters approve one ballot at a time, and between July and December 2025 the state rewrote more of the levy rules than it had in decades. If you work in an Ohio school, or are thinking about taking a job in one, those rules decide how secure your district's budget is over the next five years.

The three layers of money

SourceShare of K-12 funding (2024)What it pays for
Local property and income taxesAbout 50 percentMostly salaries and benefits through the general fund
State foundation formulaAbout 37 percentBase cost per student plus extra for poverty, special education, English learners and transportation
Federal grantsAbout 13 percentTitle I, IDEA special education, school meals

Source: Signal Ohio, using state and federal data.

Ohio school districts levied about $13 billion in property taxes in fiscal 2024, and about one-third of districts also run a school district income tax, which brought in $679.5 million that year, per the same Signal Ohio analysis. The averages hide a wide spread. Bexley City Schools, a wealthy Columbus suburb, gets about 74 percent of its money locally and 16 percent from the state; Huntington Local Schools gets about 74 percent from the state.

The federal layer shrank after pandemic relief ran out; see our post on the ESSER cliff and Title-funded jobs.

The state formula: the Fair School Funding Plan

Ohio's formula, often called the Fair School Funding Plan, was first used in fiscal 2022 and was designed to phase in over six years. It works in three steps, as laid out in the Ohio Department of Education and Workforce line-by-line explanation of the FY26 funding report:

  1. Base cost. The state calculates what it should cost to educate a student in each district, built from staffing ratios (teachers, counselors, librarians, building leaders) and actual costs.
  2. Local capacity. It then estimates how much the district can raise itself, using both property values and residents' incomes.
  3. State share. The state pays the difference, with a minimum state share of 10 percent, and adds targeted money for poverty, special education, gifted students, English learners and transportation.

Two details from the current budget, House Bill 96, matter for staff. First, the phase-in reached 83.33 percent in fiscal 2026, its fifth of six years. Second, the statewide average base cost per pupil was not recalculated for fiscal 2026 and 2027; the department's report says the fiscal 2025 amounts carry forward. Because staff salaries are the largest input to base cost, freezing that number means raises districts have negotiated since then are not reflected in state aid until a future budget updates it. A "formula transition supplement" also guarantees no district gets less state money than it received in fiscal 2021.

Why Ohio property taxes behave differently: HB 920 and the 20-mill floor

Most states let property tax revenue rise as home values rise. Ohio, since a 1976 law known as HB 920, mostly does not. When a reappraisal pushes values up, "reduction factors" lower the effective rate on voted levies so the district collects about the same dollars it collected before. A levy approved in 2015 for a set amount of money keeps bringing in roughly that amount.

That was the design: voters, not rising home prices, decide when a school district gets more money. The result is that Ohio districts have to return to the ballot every few years just to keep pace with inflation and enrollment changes.

There is one exception. Reduction factors cannot push a district's operating rate below 20 mills, the "20-mill floor." Once a district hits the floor, rising values do produce more revenue. For most of the law's history that affected a modest number of districts. Then home prices jumped after 2020, and testimony reported by the Ohio Capital Journal put the count of districts at the floor at 168 in 2019 and 409 by 2023. Homeowners in those districts saw bills climb without a new vote, which is the pressure that drove the 2025 changes. Nobody designed that outcome; a 1970s safeguard met a 2020s housing market.

What changed: a 2025 and 2026 timeline

DateWhat happened
June 30, 2025Gov. Mike DeWine signs HB 96, the two-year budget, and vetoes 67 provisions, including Item 66 on levies
July 21, 2025The House votes to override the Item 66 veto
October 1, 2025The Senate completes the override, per the Ohio House
November 4, 2025Last election in which districts can pass emergency, substitute and replacement levies
December 19, 2025DeWine signs a five-bill property tax package (HB 124, 129, 186, 309 and 335)
March 2026The package takes effect, 90 days after signing
June 2026A petition to abolish property taxes misses the November 2026 ballot

The Item 66 override. It removed school districts' authority to levy fixed-sum emergency and substitute levies, ended "renewal with an increase" levies, and bars a district from asking voters for a new operating levy if its prior-year general fund carryover exceeds 100 percent of expenses, according to the Ohio House summary. Emergency levies were widely used: a fixed-dollar levy sits outside the HB 920 math entirely. Cincinnati Public Schools, for example, passed a 10-year extension of its emergency levy in November 2025, per WVXU, one of the last districts able to do so.

The December package. As summarized by the Statehouse News Bureau:

  • HB 186 caps growth in revenue collected under the 20-mill floor at the rate of inflation.
  • HB 129 changes how the floor is calculated, counting emergency, substitute and similar levies, so more districts sit above it.
  • HB 335 caps growth of "inside millage," the small slice of property tax levied without a vote. As introduced it would have eliminated inside millage, which districts warned could cost almost 20,000 teaching jobs; schools supported the version that passed.
  • HB 309 lets county budget commissions reduce the millage on voted levies.

To soften the transition, the state committed one-time payments to districts of $306 million in fiscal 2026 and $105 million in fiscal 2027. Signal Ohio reported that the Legislative Service Commission estimated the inflation-cap credits could save taxpayers up to $3 billion over three years, which is the same money districts at the floor will not collect.

The abolition petition. A citizen campaign to amend the constitution and end property taxes needed 413,487 valid signatures by July 1, 2026, and announced in June it would not file this year and would aim for November 2027 instead, according to the Statehouse News Bureau. Opponents put locally approved property tax revenue at about $24 billion a year across schools and local governments.

What was designed, and what was not

The reforms were designed to slow unvoted tax increases and put more decisions in front of voters, with one-time state money to cover the gap. What lawmakers could not control is how voters respond. In November 2025, about 66 percent of school levies passed statewide, up from 51 percent a year earlier, but only about a third of requests for new money passed, according to WOSU. In Northeast Ohio, 3 of 17 tax increase attempts succeeded. Parma has not passed a new operating levy since 2011 and Elyria since 2010; WOSU reported both are projected to run out of cash by the end of fiscal 2029 and Streetsboro by the end of fiscal 2028 unless something changes.

In practice, a renewal usually passes and new money usually does not. With the floor capped and emergency levies gone, more districts will need new money sooner. That is a structural pressure, not anyone's failure, and it plays out differently in every district.

What this means if you work in an Ohio school

Read your district's five-year forecast. Every Ohio district files one each fall and spring under Ohio Revised Code 5705.391, and the Department of Education and Workforce posts them. Look at the projected cash balance line. A district projecting a negative balance in year three or four is likely to put a levy on the ballot or cut staff.

Know which levies are expiring. The forecast notes list each levy and its expiration. A renewal is routine; a district that needs new money is in a tougher position after 2025.

Check the state funding report. The school payment reports page shows your district's state share percentage. A district with a high state share depends on the next state budget; a district with a low one depends on its voters.

Understand reduction-in-force rules. Under Ohio Revised Code 3319.17, a board can reduce teaching staff for financial reasons or declining enrollment. Teachers on continuing contracts get preference, seniority only decides between teachers with comparable evaluations, and suspended teachers have recall rights. Your union contract adds detail.

Weigh it when job hunting. Two districts ten miles apart can offer similar salaries and very different stability. Compare pay on our salary pages and the job outlook, then read the forecast before you sign. Roles funded through IDEA and the special-education weights, such as special education teacher and one-to-one aide, tend to be the most protected in a squeeze, while substitute teachers and instructional aides are often the first lines trimmed.

For how a neighboring state handles pay through statute instead of levies, see our explainer on Pennsylvania's minimum teacher salary law. For another state's retirement mechanics, see Florida's FRS pension choice.

Sources and further reading