Transcript Mattoon Community Unit School District #2

Mattoon Community Unit School District #2
MCUSD#2
2007 Tax Levy
Presentation
Presented:
Tuesday, October 9, 2007
Board Action:
Tuesday, November 13, 2007
Budgeting and Operating Funds
 What is a school district budget?

Illinois Law requires the BOE to budget its income and
expenses each year and to make the budget available
for public inspection.
 The budget serves two purposes:


To demonstrate a plan for receiving and spending in
each of the district’s operating funds.
To demonstrate the amount of taxes levied on real
property within the district.
Budgeting and Operating Funds
 Operating Funds:
 Education Fund
 Operation & Maintenance (Building) Fund
 Transportation Fund
 Working Cash
Aggregate Funds
 IMRF
Subject to Levy
 Social Security Fund
 Life Safety Fund
 Tort Fund
 Special Education Fund
 Leasing/Rent Fund
 Bond & Interest Fund
Generating Revenue
 Where does the money
come from?



Federal dollars
State dollars
Local dollars
= 10%
= 31%
= 59%
Federal,
10%
State, 31%
Local, 59%
Generating Revenue
What is a tax levy?
 A levy is the amount of dollars in each operating fund a
school district asks for to pay the bills for the next school
year.
When must the levy be adopted?
 The board has to adopt a levy no later than the last
Tuesday in December and certify it with the County Clerk.
Generating Revenue
What is a tax extension?
 A levy is the amount of money a district asks for; however,
the extension is the amount of money a district actually
receives.
How is the extension processed?
 The BOE certifies a tax levy to the County Clerk.
 The clerk assigns appropriate tax rates to the various
operation funds.
 The County Clerk processes tax bills that generate tax
dollars extended to the school district.
Generating Revenue
What is Equalized Assessed Valuation (EAV)?
 EAV is the property valuation (for individual and total property of
a school district) after the county and state equalization
calculations are performed.
How much will the EAV grow from last year?
 EAV declined by 0.18% in 2006 after a 3.75% growth in 2005.
The 5-year average EAV growth is 1.1%.
Why is EAV important?
 Any growth EAV must be captured to ensure the financial health
of the district. The total district EAV is multiplied by the
approved tax rate (per $100 EAV) to arrive at the extension.
Generating Revenue
Example of Tax Extension Calculations:
Variables:
Sample Education Fund Tax Rate
Sample District EAV
= 3.1771
= $264,303,919
Extension Formula: EAV x Tax Rate/100
$264,303,919 x 3.1771/100 = $8,397,199
(EAV)
(Ed.Rate/100)
(Extension in Ed. Fund)
Generating Revenue
Budget & Levy Calendar
Jan.-Feb.2007
March 2007
July 2007
August 2007
Building Admin.
Build Admin. submit
Central office
Special Board
Identify costs
Dec. 2006 tax levy
figured into 2007-08
Budget
building budget to
business manager.
Business manager
discusses program
issues related to
costs with central
office staff.
formulate tentative
budget based on
costs and revenues.
Tentative Budget is
presented to the
BOE.
Budget Hearing
Notice in newspaper.
Final budget
numbers are entered.
Meeting to abate for
2006 tax levy.
Final budget
approved by Board.
Budget hearing is
conducted & BOE
gives formal approval
of the budget by
Sept. 30th.
October 2007
November 2007
December 2007
Central office start
Tentative property
Levy submitted with
to gather information
re-garding 2007 tax
levy.
tax levy is presented
to the BOE.
Property tax levy
hearing conducted &
BOE gives final
approval of tax levy
September 2007
County Clerk prior to
the last Tues. of the
month.
Generating Revenue
 What does the November 2007 Levy pay for?

The November 2007 tax levy will pay for programs,
services, operating costs, salaries, and all other
expenses for the 2008-2009 school year.
Property Taxes:
How are local property taxes controlled?
 What are direct property tax controls?
Direct property tax controls used to reduce or freeze EAV of property.
 Examples of controls to assist individuals and seniors:





Homeowners: $5,000 exemption in EAV;
Homestead Improvement: Exemption limited to fair cash value that was
added to the homestead property by any new improvement, up to an
annual max of $75,0000. The exemption continues for 4 years from the
date the improvement is completed and occupied.
Senior Citizen: Reduction of an additional $3,500 in EAV if 65 years of
age or older;
Disabled Veteran: Exempts up to $70,000 in EAV; and
Senior Citizen Freeze: Allows seniors, with less than $50,000 annual
income, to maintain EAV of homes at base year values & prevents
increases due to inflation.
Property Taxes:
How are local property taxes controlled?
 Controls to Assist Businesses:
 Tax Increment Financing (TIF): economic
development incentive for specific area of city, town, or
county is created. Mattoon has four TIF districts.

Enterprise Zones: school boards abate property tax
for business improvements on property.

General Authority Abatements: abatements exist for
commercial and industrial firms, leasehold abatements
for restaurant and lodging facilities, and blighted and
decaying areas.
Property Taxes:
How are local property taxes controlled?
 What are indirect property tax controls?

Include tax limitations such as Property Tax Extension
Limitation Law (PTELL), commonly known as “tax caps”.

PTELL limits the growth of the aggregate extension to an
annual rate of 5% or the Consumer Price Index (CPI),
whichever is less.

PTELL was originally enacted for the five collar counties
surrounding Cook County in the early 1990s.

The purpose of PTELL is to control the growth of the
aggregate extension.
Consumer Price Index History
 *CPI rates over the last six years:
CPI Year
2006 = 2.5%
2005 = 3.4%
2004 = 3.3%
2003 = 1.9%
2002 = 2.4%
2001 = 2.3%
Levy Year
Nov. 2007
Dec. 2006
Dec. 2005
Dec. 2004
Dec. 2003
Dec. 2002
School Year
2008-09
2007-08
2006-07
2005-06
2004-05
2003-04
*CPI in November of the CPI Year is used for the calculation.
Administrative Levy Recommendation
Projects 1% EAV Growth and the actual 2.5% CPI Growth
Funds
2006 Actual
Rate
Education
3.1771
$8,397,147
3.2347
$8,635,000
$8,635,000
Building
0.5201
$1,374,645
0.5282
$1,410,000
$1,410,000
Transportation
0.2073
$ 547,876
0.1873
$ 500,000
$ 500,000
Working Cash
0.0377
$
99,616
0.0281
$
$
IMRF
0.1131
$ 298,848
0.1135
$ 303,000
$ 303,000
Social Security
0.1131
$ 298,848
0.1135
$ 303,000
$ 303,000
Life Safety
0.0000
$ 0
0.0000
$
0
$
0
Tort
0.0000
$ 0
0.0000
$
0
$
0
Spec. Ed.
0.0000
$ 0
0.0243
$
65,000
$
65,000
Leasing
0.0000
$ 0
0.0000
$
0
$
0
Sub-total
4.1682
$11,016,980
4.2297
$11,291,000
$11,291,000
Bonds
0.3225
$
852,433
0.3609
$
$
Total
4.4908
$11,869,416
4.5906
$12,254,499
Abatement
2006 Actual
Extension
$ 554,000
Projected
Rate
Levy
75,000
963,499
$ 475,000
Projected
Extension
75,000
963,499
$12,254,499
Why Abate?
 Abating the bond and interest payment keeps the overall tax rate at a
more manageable level for taxpayers.
 By abating from the bond and interest fund, we are able to keep the
aggregate tax rate (all funds except Bonds) financially healthy. This
allows us to expand our borrowing capacity if, sometime in the future,
the District should ever need to borrow money.
 As a result of Public Act 94-976, our tax rate ceiling for individual funds
within the aggregate has increased to limits defined in the School Code.
Aggregate fund rates can now grow to those limits defined in the School
Code without referendum, as long as the aggregate levy growth does not
exceed CPI.
 By abating, we can still “control” the overall tax rate. Taxpayers are
concerned about the “bottom line”, namely the total tax rate ---- not the
individual fund amounts that make up the total rate.
Results of the Recommendation:
 Aligns to the PTELL guidelines;
 Generates $385,086 additional revenue to the District while
costing $14.97 more per year ($1.25 per month) for a
taxpayer owning $60,000 home;
 Minimizes the increase to the property taxpayer at 2.22%,
below the 2.5% increase in CPI; and
 Maintains MCUSD#2 tax rate as the lowest in Coles County;
 The administration’s recommendation continues to align with
the district goal “for fiscal responsibility to the students, staff,
and residents of the community”; again demonstrating
balance among those you serve.