Sanborn v. Hamilton Cty. Budget Comm. (Slip Opinion), 27 N.E.3d 498

Indian Hill Exempted Village School District BOE converted 1.25 "inside" mills (within the 10‑mill constitutional floor) from operating to permanent‑improvement levy under R.C. 5705.314.
Conversion had the foreseeable effect of reducing H.B. 920 reductions and thereby increasing the effective rate (about 1.08 mills) under voter‑approved outside levies (the district hit the 20‑mill floor), producing additional operating revenue.
The BOE submitted a budget showing permanent‑improvement expenditures matched to the converted mills and an overall large projected surplus (about $1.85M surplus for the ensuing year; unencumbered balance > $24M).
Taxpayer protestors argued the budget did not show the increased effective outside‑mill revenue was "clearly required" for the ensuing fiscal year, so the conversion should be disapproved under R.C. 5705.341.
Hamilton County Budget Commission approved the conversion (2–1); Board of Tax Appeals affirmed.
Ohio Supreme Court reversed the BTA: R.C. 5705.341’s "clearly required" test applies both to the converted inside mills and to the additional effective outside‑mill revenue, and the BOE failed to show the additional outside revenue was necessary for the ensuing year given the projected surplus.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether R.C. 5705.341’s "clearly required" standard applies to (a) the converted inside mills and (b) the resulting increase in effective outside‑mill revenue	Sanborn: Budget must show the entire resulting rate of taxation for the ensuing fiscal year is "clearly required," including the additional outside‑mill revenue; surplus shows it was not	BOE: Only the redirected inside mills need be matched to permanent‑improvement expenditures; budget commission should not substitute its policy judgment about reserves	Held: "Rate of taxation" includes both the converted inside mills and the predictable increase in effective outside mills; the BOE failed to show the additional outside revenue was necessary for the ensuing fiscal year, so approval was improper
Whether a district may lawfully maintain a large surplus and convert inside mills to increase total revenue	Sanborn: Conversion that produces an unneeded tax increase is impermissible under the "clearly required" test	BOE: Boards have discretion to budget for long‑range needs and maintain reserves; budget commission should defer to board's judgment	Held: Districts may maintain surpluses generally, but a conversion that produces additional tax revenue not necessary for the ensuing fiscal year cannot be justified solely by long‑range planning—the "clearly required" test prohibits padding surplus

State ex rel. Taxpayers for Westerville Schools v. Franklin Cty. Bd. of Elections, 133 Ohio St.3d 153 (2012) (explains H.B. 920 reduction factors reduce effective taxes collected but do not change voter‑approved levy rates)
S. Russell v. Geauga Cty. Budget Comm., 12 Ohio St.3d 126 (1984) (budget commission must determine whether a tax will generate more funds than shown needed in the budget but may not substitute policy judgments about program desirability)