Ohio’s school property tax system has been declared unconstitutional by the Ohio Supreme Court, but it is still in force. In four decisions between 1997 and 2002 known as the DeRolph cases, the court held that Ohio’s heavy reliance on local property taxes to fund public schools violates the Ohio Constitution’s requirement that the legislature provide a “thorough and efficient system of common schools.” The court then dismissed the case in 2002 without keeping jurisdiction, so no judge is enforcing that ruling today. The legislature has since passed the Fair School Funding Plan, which narrows the gap the court identified but has not eliminated it.
The Constitutional Standard
Article VI, Section 2 of the Ohio Constitution directs the General Assembly to secure “a thorough and efficient system of common schools throughout the state.”1Ohio Legislative Service Commission. Ohio Constitution Article VI Section 2 – Schools Funds Two things about that language matter. It places the duty on the state legislature, not on local school boards or communities. And “thorough and efficient” sets a higher bar than simply making schools available: the state must ensure every district has the resources to deliver a meaningful education, regardless of the taxable property inside its borders.
That clause has been the anchor of every major school-funding lawsuit in Ohio. When a funding system allows some districts to offer modern facilities and competitive salaries while others operate in aging buildings with outdated materials, the argument is that the state has failed its constitutional duty.
What the DeRolph Cases Decided
The Ohio Supreme Court ruled on the funding system four times.
In 1997, in DeRolph I, the court held that Ohio’s school-financing system violated Article VI, Section 2, finding that property taxes could not serve as the primary engine for funding a thorough and efficient system of schools.2Supreme Court of Ohio. DeRolph v. State (1997-Ohio-84) The justices pointed to crumbling buildings, overcrowded classrooms, and the inability of property-poor districts to generate adequate revenue even at high tax rates.
In 2000, DeRolph II found the system still unconstitutional on essentially the same grounds and identified seven specific problems, including continued overreliance on local property taxes, delays in the basic aid formula, neglected school facilities, and “phantom revenue” that credited districts with local tax dollars they never actually collected.3Legislative Service Commission. DeRolph v. State School Funding Case
DeRolph III, in September 2001, credited the legislature with progress but ordered further changes. Then came the turn. In December 2002, the court vacated DeRolph III, reaffirmed that the funding system was unconstitutional under DeRolph I and II, directed the legislature to enact a constitutional funding scheme, and dismissed the case.4Supreme Court of Ohio. DeRolph v. State (2002-Ohio-6750) The court did not retain jurisdiction and did not send the case back to a lower court for supervision. A dissenting justice observed that the majority “merely declares the funding system not yet constitutional and dismisses the case.”
That is where the legal question sits. Four rulings of unconstitutionality, no active case, no pending order, no deadline, no enforcement mechanism. The violation was identified but never cured through judicial action.
Why the U.S. Constitution Doesn’t Offer a Second Path
Homeowners sometimes assume the federal Constitution provides a separate route to challenge property-tax-based school funding. It doesn’t. In San Antonio Independent School District v. Rodriguez (1973), the U.S. Supreme Court held that education is not a fundamental right under the federal Constitution and that unequal school funding tied to local property wealth does not violate the Fourteenth Amendment’s Equal Protection Clause.5Justia Law. San Antonio Independent School District v. Rodriguez, 411 U.S. 1 Federal courts apply a lenient rational-basis review to funding disparities, and nearly any system survives it. School-funding challenges have to be built on state constitutions, and Ohio’s “thorough and efficient” clause is what gave the DeRolph plaintiffs their legal hook.
How the Property Tax Mechanics Create the Constitutional Problem
To see why the court found the system unconstitutional, look at how Ohio school property taxes actually work. The mechanics are unusual, and they build in a structural disadvantage for property-poor districts.
Inside and Outside Millage
Ohio property taxes are measured in mills. One mill equals roughly $1 for every $1,000 of assessed property value. School districts draw revenue from two categories. “Inside” mills are set without voter approval, capped at 10 mills total across all local taxing authorities sharing the allocation. “Outside” mills require voter approval through levies on the ballot. Schools depend primarily on outside millage, so most school funding requires voters to say yes at the polls.
The HB 920 Revenue Freeze
In 1976, the legislature passed House Bill 920, which created a “tax reduction factor” that prevents most school levies from generating more revenue when property values rise.6Legislative Service Commission. Property Tax Reduction Factor When the county auditor reappraises properties and values go up, the effective millage rate on voted levies drops automatically so the district collects roughly the same dollar amount it collected before. A 10% jump in property values does not produce a 10% jump in school revenue. It produces essentially none on existing levies.
The reduction factor is recalculated annually for every affected levy, separately for residential and commercial property. The only property tax growth schools see comes from new construction, which is excluded from the reduction calculation. A 20-mill floor keeps the reduction from cutting a district’s total operating millage below 2% of taxable value, but that floor is little help for districts that need far more than the minimum.6Legislative Service Commission. Property Tax Reduction Factor
Rising property values help homeowners, whose effective rate drops, while starving schools. Districts have to return to voters for new levies just to keep pace with inflation. Every new levy starts fresh at the voted rate before HB 920 begins eroding it again. Wealthier districts with growing commercial development can partially offset the problem through new-construction revenue; poorer districts without that development cannot.
The Resulting Gap
Combine unequal property values with HB 920’s freeze and you get exactly the disparity the DeRolph court found unconstitutional. A district sitting on valuable commercial and residential property generates substantial revenue at a modest effective rate. A rural or economically depressed district may tax at far higher rates and still fall short. The state’s funding formula acknowledges this by design, working “to equalize funding and provide additional money to schools and districts that do not have capacity and wealth to raise revenues locally.”7Ohio Department of Education and Workforce. Overview of School Funding Whether it equalizes enough is the question DeRolph raised and never fully closed.
The Legislature’s Response: The Fair School Funding Plan
The most significant legislative answer to DeRolph came in 2021 with the Fair School Funding Plan, codified primarily in Ohio Revised Code Chapter 3317.8Ohio Legislative Service Commission. Ohio Revised Code Section 3317.022 Rather than assigning a flat per-pupil amount, the formula builds a base cost from actual inputs: staff-to-pupil ratios, statewide average salaries, and operational costs. Separate funding streams address special education, English learners, career-technical education, and economically disadvantaged students.
The most meaningful change is how the plan splits costs between the state and the local community. Each district’s “state share percentage” uses both assessed property values and local income to measure ability to pay.7Ohio Department of Education and Workforce. Overview of School Funding Earlier formulas looked only at property wealth. A district with modest property values but relatively high household incomes now receives a lower state share than a district where both are low.
The plan was not fully funded at launch. The state has been phasing it in since fiscal year 2022, with an estimated $13.75 billion allocated in FY 2026, a 1.8% increase over the prior year.7Ohio Department of Education and Workforce. Overview of School Funding Until the formula is fully funded, districts receive less than the model says they should, and the gap between the formula’s calculation and actual state payments keeps local property taxes carrying more than their intended share. The constitutional problem the DeRolph court flagged, dependence on local wealth, has been reduced but not resolved.
Where That Leaves Ohio Homeowners
More than two decades after the DeRolph litigation ended without enforcement, Ohio’s school funding sits in a legal gray area. The Ohio Supreme Court has declared the system unconstitutional and dropped the case. The legislature has responded with a structurally better formula that remains partially funded. The state’s share of public school funding has been declining rather than growing, so local property taxes continue to carry a disproportionate load. More than three-fifths of real property tax revenue in Ohio goes to public schools, and school levies remain the single largest component of most homeowners’ tax bills.
The practical answer to whether Ohio’s school property tax system is unconstitutional is yes, according to the state’s highest court, but with no active court order behind that ruling and no compliant replacement in place. The “thorough and efficient” mandate remains an aspiration the legislature has moved toward without reaching. For homeowners, that means property taxes stay the backbone of school funding, levy elections stay a regular feature of local politics, and the gap between wealthy and struggling districts, while narrower than it was in 1997, has not closed.