Court settlement spurs big tax hike for Oklahoma school district

An Oklahoma school district will increase property taxes by as much as 75% as part of a plan to pay off the remainder of a $7.5 million court-approved settlement with money also used for debt service payments.

Ninnekah Public Schools, a rural district southwest of Oklahoma City, announced the move last week in a letter to residents, which was posted in a local TV news report.

The tax hike stems from a lawsuit over the sexual abuse of students that was filed against the district and others in 2021. Under a consent judgment approved by a federal district court judge in September 2024, the district was ordered to pay plaintiffs $1.5 million within 30 days. The school system used $500,000 from its general fund with liability insurance covering $1 million, according to the letter.

The remaining $6 million plus interest was ordered to be paid over three years from the district's sinking fund, which is also the source for debt service payments on $1.28 million of voter-approved, unrated general obligation bonds sold in 2023.

To ease the impact on taxpayers, the district restructured a $12.3 million lease purchase agreement it entered into in June 2024 as a mechanism to pay for capital projects funded by GO bonds.

In a statement, the district, which enrolls about 420 students, said the agreement was restructured in March to make only interest payments during tax years 2026 and 2027, adding the restructuring came too late to affect the millage for tax year 2025.

The resulting property tax increase of about 71% to 75% on residents' bills for tax year 2025 is expected to shrink to 32% in 2026 and 29% in 2027 due to the restructuring, according to the letter signed by Superintendent Regina Jones.