Transcript The Allen County Auditor’s Office

The Allen County Auditor’s
Office
Ben E. Diepenbrock, CPA
Allen County Auditor
Agenda
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Local Funding for Public Schools
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How are funds raised locally?
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What is the real property tax?
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Appraisal and Assessed Values
Tax Abatements
Tangible Property Tax
What are inside, voted and effective mills?
Why does one mill raise more?
Levies (Types of levies)
What is the school income tax option?
Agenda

State Funding for Public Schools.
What is the school foundation program?
 State aid on the SF-12 Form. SF-3?
 Distribution of funds to schools
 Formulas
 Lottery Profit Fund
 Education Improvement Fund
 Financing schools in Ohio- is it equitable?
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How Are Funds Raised Locally?
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Funds are raised locally by assessing taxes
on real property and tangible property
(business) taxes.
But not without my approval, right?
Amount of tax raised is based upon the value of
the property and the mills charged against that
property.
What is the Real Property Tax?
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The real property tax is a tax on all real
estate parcels and improvements made to
a parcel. We track 53,000 parcels.
The total tax rate includes all levies
enacted by a legislative authority or
approved by the voters for all taxing
jurisdictions in which the property is
located.
How is Property Appraised?
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We use a group of highly
qualified appraisers to
determine the value of each
parcel in Allen County.
It takes two years to do a full
reappraisal.
Willing buyer and seller
concept.
How is the “Assessed” Value
Determined?
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The real property tax base is the taxable
(assessed) value of land and
improvements.
The taxable (assessed) value is 35% of
the true (market) value, except for certain
land devoted exclusively to agricultural
use. Real property tax rates vary with the
taxing jurisdiction.
How Does Tax Abatements Affect
School Funding?
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When taxes are abated, they are forgiven
for a certain period of time based upon an
agreement between business and
government. Time can be significant.
Incentive to bring in a business to provide
jobs and other benefits.
Period of time varies before a tax is paid
by the business.
What is the Tangible Property Tax?
Does it Work the Same as Real?
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It is a tax on businesses with a value over
$10,000.00 in machinery, equipment, furniture,
fixtures, supplies, and inventories.
It does not work the same as the real property
tax. In fact, due to recent changes of the law,
the tangible property tax will be phased out over
the next four years.
PPT is almost 23% of the total value of all
property in Allen County.
What is the effect of the phase
out?
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The phase out will reduce the total assessed
valuation of Allen County by 23% and schools by
a significant amount. Thus, it will take more
mills to collect the same amount of tax and the
only mills left are on real estate. OR
It will take another revenue source to offset the
loss of personal property (How about the CAT?)
THUS
Funding will be lost or passed on to real
property owners.
What are Inside Mills?
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They are unvoted mills.
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No approval is needed from voters.
But the total unvoted mills can not exceed 10
mills.
The district authority put them on long ago.
These mills are used for operating expenses
or retirement of debt.
What are Voted Mills
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These are mills that are voted
on by the taxpayers. Before a
levy passes, the majority must
say yes. All mills above the 10
mill limit are voted mills.
Voting additional mills will
increase the taxes you pay.
What are Effective Mills?
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These are the number of mills necessary to raise the
amount of money the taxpayers originally authorized.
35,000,000 assessed value x .001= $35,000
38,889,000 new assessed value x .0009= $35,000
For example, because of inflation and revaluation of real
estate, it may take only .9 mills to raise the amount that
originally took 1 mill to raise.
Abstracts are sent from the county to the state. The
state then sends the county the effective mills based on
the new construction and changes in the evaluations.
Why Does 1 Mill Raise More
Revenue in One School District
Than Another?
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The reason this happens is because the valuations in
each district are different.
Examples of Allen East, Bath, Elida, and Shawnee school
district’s millage and estimated revenue are in the next
four slides represent this. One mill at the full rate brings
in the following:
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Allen East
Bath
Elida
Shawnee
$ 90,608,748 x .001=$ 90,608
296,570,737 x .001= 296,570
352,679,500 x .001= 352,679
451,483,798 x .001= 451,483
ALLEN EAST LSD
2004 Total Valuation is
90,608,748
TAX RATES
2005
PERS PROP
INSIDE
AGR & RES
COM & IND
EST
REVENUE
5.05
5.05
5.05
$457,500
22.05
14.95
14.95
$1,390,700
27.10
20.00
20.00
$1,848,200
3.70
3.70
3.70
$335,200
30.80
23.70
23.70
$2,183,400
BOND
4.37
4.37
4.37
$395,900
SCHOOL IMPR BOND
1.55
1.55
1.55
$140,400
CLASSROOM FACILITIES
0.50
0.50
0.50
$45,300
PERM IMPR
2.75
1.63
1.80
$155,600
39.97
31.75
31.92
$2,339,000
OUTSIDE
SUB TOTAL
EMERGENCY
330,000
TOTAL GF
TOTAL TAX RATE
BATH LSD
2004 Total valuation is
$296,570,737
TAX RATES:
INSIDE
PERS
AG &
IND &
2005
PROP
RES
COM
EST REV
6.15
6.15
6.15
1,823,900
12.85
12.85
12.85
3,810,900
19.00
19.00
19.00
5,634,844
EMERGENCY 02 1,391,600
4.70
4.70
4.70
1,393,800
EMERGENCY 04
7.90
7.90
7.90
2,342,900
31.60
31.60
31.60
9,371,544
PERM IMPR
1.25
0.70
1.12
299,700
PERM IMPR
2.00
1.40
1.94
523,800
34.85
33.70
34.66
10,195,044
OUTSIDE
SUB TOTAL
2,333,496
TOTAL GF
TOTAL TAX RATE
ELIDA SCHOOL
2004 Valuation is
$352,679,500
TAX RATES
2005
PERS PROP
INSIDE
OUTSIDE
SUB TOTAL
EMERGENCY 00 1,708,741
TOTAL RATE
AGR & RES
COM & IND
EST REVENE
5.40
5.40
5.40
1,904,400
20.10
14.60
14.60
5,241,700
25.50
20.00
20.00
7,146,100
5.00
5.00
5.00
1,763,300
30.50
25.00
25.00
8,909,400
SHAWNEE LSD
2004 Valuation is $451,483,798
TAX RATES
INSIDE
OUTSIDE
TOTAL
PER
AGR &
COM &
2005
PROP
RES
IND
EST REVEN
5.80
5.80
5.80
2,623,200
17.10
14.20
14.20
6,962,800
22.90
20.00
20.00
9,586,000
EMERGENCY 04
2,150,000
4.78
4.78
4.78
2,161,900
EMERGENCY 02
2,880,000
6.40
6.40
6.40
2,920,200
2.45
0.94
1.42
718,500
36.53
32.12
32.60
15,386,600
PERM IMP
TOTAL GF
How Does the Income Tax Option
Work For Schools?
•In lieu of a real estate tax levy,
schools can request a certain percent
of gross income tax based upon wages
and other taxable items.
If approved, it is withheld from the
paycheck of working folks and
considered on the income tax return of
the retired or self-employed.
Tax is on more than income though.
•Federal AGI goes to state AGI which
goes to SD AGI.
How will Personal Income Tax be
Effected by HB66?
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Main feature of tax reform is a 21% cut
for all brackets.
Phased in over 5 years at 4.2% per year.
Also included a low-income tax credit that
eliminates liability for taxpayers whose
Ohio taxable income is at or below
$10,000.00.
Note that some credits migrate to the new
CAT (Commercial Activity Tax)
What do These Changes Mean?
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5.3 million Ohio taxpayers will see a
personal income tax cut.
Savings to 5.3 million Ohio taxpayers.
Will see a personal income tax cut.
Savings to taxpayers from the rate
cuts and the new credit exceed $2
billion by FY2010.
What do These Changes Mean?
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The average Ohio family of four will see
their state personal income tax and sales
tax burden reduced annually by $555.
550,000 low-income Ohioans will have
their income tax burden eliminated.
300,000 flow-through businesses (Scorporations, LLC’s Partnerships, ect.) will
see their tax rate cut.
General Types of Levies
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Additional Levies are new levies. They
result in an increase in tax.
Renewal Levies continue tax collection
at the same rate that is already being
paid. (No increase in tax.)
Replacement Levies sound like renewal
levies, but provide additional revenue due
to favorable treatment under reduction
factor law.
Renewal Levy
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Continues to collect revenue at the same
level as in the previous year.
No increase in tax for voters.
Fixed-term levies are generally subject to
renewal.
Bond levies are not subject to renewal (or
replacement).
Replacement Levy
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Replaces the effective rate with the
full rate.
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Replaces the old reduction factor
with a new (current year) factor.
Collects revenue a a greater rate
than in the previous year.
Results in a tax increase for voters.
Placing a Levy on the Ballot
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Taxing authorities considering a tax issue
must request a certification form the
county auditor to establish a record of
anticipated revenue.
The taxing authority passes a resolution
or ordinance containing information
necessary to provide the estimate:
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Purpose of the tax
Additional, renewal or replacement of the tax.
Revised Code Section authorizing the tax.
Placing a Levy on the Ballot
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County Auditor calculates the rate of the
levy needed to produce the needed
revenue, or the revenue that will be
produced by a specific tax rate.
The Auditor’s Role
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RC 5705.03(B) requires the
auditor to issue the
certification within ten days
after the taxing authority
request it.
This requirement is mandatory.
The Auditor’s Role
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As the local authority on property tax
issues, the auditor should assist taxing
authorities placing issues on the ballot by:
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Helping authorities understand proper timing
for renewal or replacement.
Completing certifications timely and
accurately.
Ensuring the rate is correct.
The Auditor’s Role
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With support from local
officials, taxing authorities
will hopefully avoid
irregularities that open their
elections to challenges or
injunctions against the
collection of a tax.
What’s the Difference Between an
Operating and Permanent
Improvement Levy?
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An operating levy raises funds for the
operating expenses of the school such as
salaries and utilities.
It cannot be used for permanent
improvements.
A permanent improvement levy raises funds
for the improvement of the schools such as
buildings and grounds and busses.
It cannot be used for any operating expenses.
What is the School Foundation
Program?
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The School Foundation program is the state’s answer to funding
schools.
The funding of K-12 public schools in Ohio is a joint effort with
about 7.4 % coming from the federal government, 47% coming
from local sources and 45.6 % coming from the state, based on
FY04 revenue (the latest data available). Of the approximately
$6.8 billion in state aid, about 80% is distributed through the
Ohio School Foundation Program to 613 city, exempted village
and local school districts. In addition, another $300 million is
funneled through the foundation program to Ohio charter
schools by deducting this funding from the regular school
district’s payments where the charter school pupil resides.
The School Foundation ProgramThe Formula
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The formula for the school foundation program is very
complicated. It does vary by school district.
The “foundation” amount each district receives per
regular student is approximately $5283.
The categories listed below receive more funding than
just for a regular student.
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Special Ed Student
Vocational Ed Student
“Gifted” Student
Poverty Based Assistance (PBA)
Transportation
The School Foundation ProgramThe Formula
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The following is an example of the foundation
funding for the 2005-2006 school year:
Foundation Level ($5283) * Number of Students = Gross Funding (a)
District Assessed Value * 23 mills = Local Share (b)
Total of (a) – (b) = State Share
Example:
A school has 5,077 students x $5,283 per student = $26,821,791 Gross
Assessed value is $311,757,657 x .023 mills = $7,170,426 local share
Difference between the two is the state share of funding of school.
What is a Guarantee?
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The guarantee is
that the state aid
will not be less
than the last year.
How are State Funds Distributed to
the Schools?
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The Ohio
Department of
Education is in
charge of
distributing state
funds to the
different school
districts.
Does the Basic Aid Formula
Consider the Effect of the
Reduction Factor?
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No, per an official from the Dept of Education.
It does not consider the effect of the reduction
factor.
The formula assumes that the district has more
revenue but the law has caused the revenue to
remain constant due to the application of
reduction factors. The state aid is reduced while
the local aid remains constant. This concept is
called Phantom Revenue.
For this reason, the basic aid formula is
considered unconstitutional by the Ohio
Supreme Court.
Should the Foundation Formula be
Changed?
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This remains an issue in the Department of
Education.
The issue has come to the attention of many
people. Groups are forming throughout the
State to put to a vote a reform of the current
funding Formula. Some who support it are:
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Ohio Fair Schools Initiative
Ohio School Boards Assoc. (basically all school
associations are involved)
“Big 8 City Mayors”
What is the Lottery Profit Fund?
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The Ohio Constitution established the lottery profits
education fund, which may be used only for the support
of elementary, secondary, vocational, and special
education programs. In fiscal year 2004, the
appropriation to the fund was $637.9 million. Of that
amount, $606.1 million was designated to support line
item 200-501 (Base Cost Funding), which supports basic
aid, special education weighted funding, vocational
education weighted funding, and educational service
centers. The balance of the appropriation was
designated for the retirement of bonds used to support
school construction.
Is the State System for Financing
Schools in Ohio Considered
Equitable?
TAX CALCULATOR
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In an attempt to provide more information on
tax levies, the Auditor has put a Property Tax
Calculator on the web. It helps taxpayer make a
decision with their head as well as their heart.
Find the website at www.allencountyohio.com
Click on Auditor and then the calculator,
description of levies and types of levies is there
for your use.