A School District Income Tax is a voter-approved tax on the income of residents that provides funding for the day-to-day operations of the local public school district. It is separate from federal, state, and municipal income taxes and is earmarked to support school districts.

Any individuals who live within the Otsego Local School District would be responsible to pay the school district income tax. This tax generally follows Ohio Adjusted Gross Income (OAGI). The source of income may/may not be taxable based on the following criteria:

• Income that is NOT taxed: social security benefits; disability and survivor benefits; railroad retirement benefits; welfare benefits; child support; property received as a gift; bequest or inheritance; and workers' compensation benefits.
   
• Income that IS taxed:  wages; salaries; tips; interest; dividends; unemployment compensation;   self-employment income to the extent included in OAGI; taxable scholarships and fellowships; pensions; annuities; IRA distributions; capital gains; state and local bond interest (except that paid by Ohio governments); federal bond interest exempt from federal tax but subject to state tax; alimony received; and all other sources.

Non-residents of the school district are not subject to the tax even if they work within the district’s boundaries, per state law.

The tax is administered and collected by the Ohio Department of Taxation, not the school district. For most residents, the school district income tax is automatically withheld from paychecks, similar to state income tax.

The cost depends on your individual income. The proposed tax is one-quarter of one percent (0.25%), which equals $2.50 for every $1,000 of earned income. A simple way to calculate the cost of this tax is to take your Adjusted Gross Income (AGI) reported on line 3 of the Ohio Tax Form IT1050 and multiply it by 0.0025.

Yes, it can be deducted as an itemized deduction on Schedule A of IRS Form 1040. (Note: there is no deduction allowed for the school district income tax on the Ohio personal income tax return.)

Payments for the income tax may be spread throughout the year by making estimated payments or possibly through withholding from farm income, as opposed to the property tax, which is payable twice a year. Additionally, this tax is based on your adjusted gross income, not how much property you own.

After careful review and community feedback, the Board of Education chose to pursue an income tax because it is generally viewed as a more equitable and flexible way to generate needed operating revenue. 

1. An income tax is paid by district residents with taxable income, which broadens participation compared to relying solely on property owners. 
2. The Board was mindful of the impact rising property values have had on homeowners. An income tax does not raise property tax rates, does not depend on home value or acreage, and avoids adding additional pressure to property tax bills.
3. The nature of what is taxed with a school district income tax is more senior-citizen-friendly than an across-the-board real estate tax. A school district income tax does NOT tax social security benefits and also includes a $50 per year senior citizen credit.

According to district records, the last time voters approved new operating revenue for Otsego Local Schools was May 2002. That means the district has operated for more than two decades without the passage of additional new operating funds.

The district continues to experience rising operating costs that are outpacing current revenue. Like most school districts across Ohio, Otsego has seen significant increases in health insurance and benefits, utilities and fuel, transportation, maintenance, instructional materials, and services. At the same time, state and local funding have not kept pace with these rising expenses. The Board of Education has been publicly discussing the need for new operating dollars since 2018. The district’s five-year forecast shows deficit spending beginning in 2026-2027. The Board of Education understands that the only way to continue providing quality educational opportunities for students at the same level the community expects is to increase operating dollars to fund the day-to-day operations and services provided.

Over the past two years, Otsego Local Schools has taken significant steps to reduce spending and operate as efficiently as possible. Leading up to, and following two unsuccessful levy attempts, the district implemented approximately $750,000 in reductions and expenditure controls. The majority of these changes were made through attrition and careful restructuring to minimize direct impact on students.

• Specific cost-saving actions - The district has:
  • Eliminated and reduced positions primarily through attrition
  • Eliminated High School Ohio Virtual Learning Academy Position
  • Eliminated Junior High and HS Library Aides
  • Eliminated High School Counselor Position
  • Eliminated Elementary Kindergarten Position
  • Eliminated High School Spanish Position
  • Eliminated Junior High and High School Health/PE Position
  • Negotiated pay freezes on entry salaries and all supplemental positions
  • Eliminated multiple stipend positions
  • Reduced transportation costs, including eliminating certain weekend/holiday runs/eliminating routes.
  • Offered retirement incentives to reduce the number of higher-salaried teachers.
     
• Ongoing efficiency efforts - In addition to the reductions above, the district continues to:
  • Reduced and closely monitored discretionary spending across departments
  • Tightened purchasing and operational controls districtwide
  • Added new fees and increased select student and participation fees
  • Review staffing levels annually
  • Seek operational efficiencies
  • Monitor enrollment and scheduling
  • Control non-essential expenditures whenever possible

Otsego Local Schools has already made meaningful reductions and continues to operate as efficiently as possible. The current request is intended to help maintain current programs and services for students moving forward. Further reductions would begin to directly impact student programming and opportunities.

What This Data Shows About Otsego
Otsego Local Schools continues to deliver strong academic performance while operating more efficiently than most neighboring districts.

Lower spending, strong results:
Otsego is already doing more with less. Otsego spends $14,625 per pupil, which is nearly $3,000 below the state average of $17,609. Otsego spends less per student than nearly every comparison district listed — many of which spend $2,000–$6,000 more per pupil.

Maintaining quality:
Despite lower spending, Otsego continues to earn state recognition as a 4-Star School, demonstrating solid academic performance and responsible stewardship of taxpayer dollars.

Prioritization of Values:
This data shows the district has been careful, disciplined, and efficient with resources while continuing to support student success.

The proposed operating levy is about maintaining quality programs and financial stability moving forward, not correcting overspending.