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Warrensville Heights City School District files motion with Ohio Supreme Court to reconsider decision on tax sharing with Beachwood schools

"Beachwood’s continued efforts to take tax dollars away from Warrensville raises questions of basic fairness."

WARRENSVILLE HEIGHTS, Ohio — EDITOR'S NOTE: The video above previously aired on 3News on Sept. 6, 2022.

The Warrensville Heights City School District has filed a motion to reconsider with the Ohio Supreme Court following a recent case decision involving tax-sharing with the Beachwood City School District.

The motion to reconsider comes ten days after the court ruled in a 4-3 decision that a 1997 tax-sharing agreement between the two districts is enforceable, despite it not being approved by the Ohio State Board of Education.

“Because the Board feels the Supreme Court must take a closer look at the fiscal certificate requirement for Agreements that include expenditures, the Board has filed a motion with the Ohio Supreme Court to reconsider its decision,” said Warrensville Heights City School District Board President Traci Mitchell.

RELATED: Ohio Supreme Court rules Warrensville Heights School District must share Chagrin Highlands tax revenue with Beachwood schools

According to a press release from the Warrensville Heights City School District, they had argued that the agreement was invalid for two reasons: 

  • The agreement should have been subject to the Ohio State Board of Education’s oversight and approval because it flowed from Beachwood’s attempt to take Warrensville’s territory for itself 
  • Warrensville argued that the treasurers for both districts should have completed fiscal certificates for the agreement because it requires Warrensville to permanently send Beachwood invaluable general fund tax dollars

“The Board certainly respects the Ohio Supreme Court and the rule of law, but the Board is disappointed with this decision. We have said from the start that it is our obligation as a board to use all legal avenues to defend against this tax grab by Beachwood and to protect Warrensville’s resources," said Warrensville Board President  Mitchell. “Our District has made tremendous progress in recent years, and we are committed to doing what’s best for our school community. Beachwood’s continued efforts to take tax dollars away from Warrensville raises questions of basic fairness and we feel strongly that an agreement which provides for the potential permanent transfer of millions in tax dollars from one school district to another should have triggered State Board of Education oversight, or, at a minimum, the application of Ohio’s fiscal certificate laws.”

Chief Justice Maureen O’Connor wrote the opinion for the majority, explaining that Warrensville Heights claimed that the deal was invalid because the school districts did not follow the state law overseeing the transfer of school district territory and the division of funds once territory is moved. She says the negotiated deal did not require any actual transfer of territory, meaning the contract between Beachwood and Warrensville Heights is enforceable without board approval.

According to the Warrensville Heights School District, Cuyahoga County Court Judge Nancy Margaret Russo agreed with Warrensville's arguments, but the Court of Appeals and Supreme Court narrowly rejected the arguments in split decisions with multiple dissenting opinions. 

“I believe that Justices Fischer, Stewart and Brunner, who agreed with Judge Russo, got it right,” said Warrensville Superintendent Donald Jolly. “I think a school district with substantially less resources that is forced to negotiate the surrender of tax dollars to a wealthier district should be able to rely on basic legal protections that require a fiscal certificate when the agreement includes the expenditure of school tax dollars. That was never done here. Not only does this agreement require that Warrensville potentially send substantial tax dollars to Beachwood, it will also create significant costs to both districts for the education sharing programs that must be implemented.” 

The case goes back to the formation of the Chagrin Highlands development near the Harvard Road exit of Interstate 271 in 1990. 

Property taxes from the land that encompasses Chagrin Highlands was already set up to go to Warrensville Heights City Schools prior to the new city limits. Despite the city of Beachwood annexing 405 acres of the land, property taxes still belonged to Warrensville Heights' schools. 

Beachwood City Schools sought the state school board’s approval for the transfer of the land annexed by the city into the Beachwood City School District. Warrensville Heights schools objected.

The two districts engaged in a contentious debate about sharing the property tax revenue and utilized a mediator to reach a deal in 1997. The two sides agreed to start sharing tax revenues from the development once the property value exceeded $22 million. Once Chagrin Highlands exceeded the value, Warrensville Heights would receive 70% of the property tax revenues and Beachwood would receive 30%. 

The deal, which was signed by representatives from both districts, included a clause that would lead to joint education programs.  

But in a 2018 lawsuit filed against Warrensville Heights, Beachwood schools claimed the district was owed more than $5.5 million that Warrensville refused to release for tax years 2012 through 2017. Warrensville officials believed the 1997 agreement was invalid because it never got approval from the State Board of Education, which would have been a requirement. 

 

RELATED: Beachwood City School District suing Warrensville Heights City Schools for $5 million dollars

EDITOR'S NOTE: The video above previously aired on 3News on Dec. 19, 2018. 

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