Local school district sues city government over revenue sharing

Apr. 15—The Vandalia-Butler School District is suing the city of Vandalia for what the schools system alleges are "breaches of revenue sharing related to tax-abated properties."

The district contends that the city owes the schools system "in excess of" $10 million, its lawsuit filing said.

The suit was filed a few days after the city says it paid the district more than $1 million in the dispute.

The district said it found the city "failed to fulfill its obligations to the school district" as outlined under Ohio law, "resulting in significant financial losses."

Dual press releases from both the school district and city government Monday afternoon made the case for each side.

For its part, the city said it has passed a resolution last month offering to pay the district $3.35 million, having worked in "good faith" with the district since first advising the district in October 2022 that "unpaid money may be owed to the school district from the city."

The city also said it has already paid more than $1.3 million to the district in the matter. Depending on how a statute of limitations is applied, the city says it calculates that it may owe between two and six years in back payments.

The district's lawsuit was filed in the Montgomery County Court of Common Pleas Monday. The city says it paid the district on Friday payments totalling more than $1.3 million

The district argues that the city must pay schools half of the difference between the amount of taxes levied and collected on the incomes of new employees in "community reinvestment areas," areas where investors expect tax incentives for investing in real estate improvements — mainly new buildings and infrastructure.

"Unfortunately, the city has ignored this law and kept the income taxes collected for itself," the school district's complaint says.

"The failure to provide adequate and fair revenue sharing has placed a financial burden on the Vandalia-Butler city school district," the district said in its statement. "The lawsuit seeks to hold the city of Vandalia accountable for its obligation and secure the necessary funding to help support district operations."

"We want to be good partners and support economic development in our area, but we also cannot stand by idly while the city of Vandalia neglects its responsibilities to our students, staff, and community," Board President Holly Herbst said in the district's release. "We regret legal action has become necessary, but after several failed attempts to solve the matter amicably, we have no other choice. Our priority is to ensure that our students receive the education they deserve, and we will work to secure the resources needed to fulfill this commitment."

In February this year, after failing to pass new tax levies last May and November, the Vandalia-Butler district said it planned to reconfigure three schools at the start of the 2024-25 school year.

With the failure of a November 2023 levy request, the school board approved $1.2 million in cuts, starting with the 2024-25 school year, which will include the reconfiguration of elementary schools and a subsequent reduction in staffing.

The city said it has offered to involve a mediator in the dispute.

A message seeking comment was left with a spokeswoman for the school district.