Ohio District Profits From Plan To Collect Unpaid Taxes

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While many school administrators watched helplessly this past year as their budgets were cut and their costs increased, one Ohio superintendent of schools reflected on his fiscal problems and came up with an unusual strategy to do something about one of them.

In Aurora, population 8,500, Superintendent Gene Kleindienst noted that delinquent and uncollected property taxes in his district might total several hundred thousand dollars. Sparked by an item he read about another school district, he decided to launch a personal, community-wide appeal, through a series of luncheon meetings, conferences, and letters, to encourage the delinquent taxpayers in his community to pay up.

Since last fall when he began, his strategy has already brought in $60,000, at a cost of less than $3,000 and 50 hours of staff time, he reports. The surprising success has made district staff members exuberant. "It has been a gusher, in a time of dry wells," says Linda Robertson, the principal of an elementary school in the district.

The situation in Aurora--a largely residential community with some light industry located about 30 miles southeast of Cleveland--is not unusual. Most other school districts also face significant annual losses in revenues due to delinquent taxes, says John Augenblick, director of Education Commission of the States' finance center. The delinquencies average about five percent of school districts' operating budgets, he says. Aurora's unpaid taxes amount to about three percent of its operating school budget.

But the Aurora district's persistence is unusual. Most other communities simply write off a certain portion of delinquent taxes as unobtainable, says Mr. Augenblick, adding, "I haven't heard of any district pursuing the last few percents."

The Aurora project began to take shape in Mr. Kleindienst's mind early last year when he saw a short newspaper story about a school district in another state that was considering a plan to collect its delinquent taxes.

The Aurora school district, with five schools and an operating budget of about $6 million, was not in the red, he says, but costs were on the rise and more revenues were needed. "We saw a cache of money that was due to the district schools," he said, "and we saw it as our responsibility to collect it."

In fact, Mr. Kleindienst acknowledges, in Ohio a board of education has no authority to collect taxes itself. The only authority with that power is the county prosecutor, who was hampered by a severe manpower shortage, Mr. Kleindienst recalls.

But a board can hire a law firm to assist it in looking into the matter of uncollected taxes, and that is what the Aurora board did.

The lawyers hired by the board analyzed the real-property and tangible-property delinquency lists. They found that $l90,000 was owed to the school district in uncollected taxes, according to Gary Pierce, a member of the firm. About one-third of the money was in delinquent taxes, another third in taxes under review or appeal, and the final third in late taxes. The largest amounts were owed by businesses and corporations whose taxes were under appeal or review, says Mr. Pierce.

The legal research took about 40 hours and fees came to $2,400.

At this point, the superintendent and the board made an important decision. They told their lawyers to keep a low profile--not to appear at meetings with community members or to draft standard collection letters. They wanted first to make a simple appeal to the voters and other members of the community that would not look like a threat.

"They were not looking for legal action," says Mr. Pierce. "They didn't want to offend everybody by appearing with counsel."

The job of meeting with people fell largely to Mr. Kleindienst. He set up about 25 personal luncheon meetings, made numerous telephone calls, and wrote about l00 personal letters. He described his approach to people as "very low-key."

Often, he says, he asked them if they realized that as much as 80 percent of the schools' revenues come from taxpayers, or that "four out of five school days we operate the district on local tax dollars."

Many of those whom he met with did not realize these facts, he says, and many viewed their tax bills in a new light after their conversation with him.

The response was prompt, Mr. Kleindienst says, recalling that after he had lunch with one businessman whose tax bill was under review, he received a check for $35,000.

But equally gratifying to the 36-year-old superintendent was the total absence of resentment among those he has contacted. "We haven't had one negative reaction from the letters or personal meetings," he says. "The community has looked upon this as an example of the board doing its job."

Now, as Mr. Kleindienst and his colleagues prepare to continue the drive in l983, their spirits are high. Mr. Pierce predicts that it will have a "snowball effect." Those who have paid this time will probably pay next time, too, he believes, because no ill feelings were created.

The project may also have an impact beyond Aurora. Mr. Kleindienst said word of Aurora's success is spreading and that about eight neighboring school districts have called for details of his effort.

Vol. 02, Issue 17

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