Transcript School Finance

Seminar on School Finance Property Taxes and the Tax Levy
(and other Local Revenues)
IASBO Conference – May 19, 2011
Dave Lawson, Business Manager
Johnsburg CUSD 12
(815) 385-6916 [email protected]
Session Objectives
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Understand the Local
Sources of Revenues
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Understand the
Property Tax Cycle
2
Local Revenues - Objectives
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Recognize school funding as a political process
Recognize our “over” dependence on property
taxes.
Become familiar with the property tax levy and
extension cycles.
Be cognizant of the time frame for each process.
Start looking for alternate revenue sources.
3
Revenue by Source
State-wide
Other State
12%
General State Aid
18%
Federal
8%
Property Taxes
57%
Other Local
5%
4
Local Revenues
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Investment Earnings
Student Fees
Impact/Transition
Fees
Corporate Personal
Property Replacement
Taxes (CPPRT)
Local Property Taxes
Other Local Revenues
5
Investments
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If you have fund
balances, do a multiyear cash flow
analysis
Maximize interest
earnings by investing
funds for the longest
term based upon the
cash flow analysis
6
Student Fees
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Textbooks
Classroom Supplies
Drivers Education
Technology
Athletic Participation
Student Activities
Parking Permits
Any other ideas?
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Impact/Transition Fees
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From new housing
developments
Work with villages and/or
county to establish
consistent impact fees
Make sure the
villages/county distribute
the funds timely
To be used for
construction needs
8
Corporate Personal Property Replacement Taxes
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State tax on net income of
corporations to replace
local tax on the assessed
value of corporate personal
property (1979)
Jan, Mar, Apr, May, Jul,
Aug, Oct, Dec payments
Will fluctuate (+/-) with
the economy
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Local Property Taxes
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Assessment Process
Review Process
Equalization Process
Levy Process
Truth in Taxation
Property Tax Extension Limitation Act
(PTELA)
Tax Extension
Collection and Distribution
Assessment Appeals & Other Issues
10
Property Assessment Cycles / Property Tax Cycles / Budget Cycle
2009
2010
2011
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
Assessment Cycle
2005
2006
2009
County Assessor Review
2011
2007
2008
2006
2007
2010
Township Assesses Properties
2005
2008
2007
2008
2011
2006
2007
2010
2005
2009
2006
2007
2010
2005
2006
2009
Department of Revenue Equalizes
Tax Levy/Extension/Collection
2005
2006
2009
2007
2008
2011
2006
2007
2010
Tax Levy
Extension
Collection and Distribution
2004
2005
2008
Budget Cycle
Prepare Budget
Adopt Budget
2006
2007
2010
2005
2006
2009
2005-06
2006-07
2009-10
2010-11
2006-07
2007-08
Budget
FY06
FY07
FY10
2007-08
2008-09
2011-12
FY08
FY09
FY12
FY07
FY08
FY11
2005-06
2006-07
2009-10
FY08
FY09
FY12
2006-07
2007-08
2010-11
Manage Budget
Audit
FY06
FY07
FY10
FY07
FY08
FY11
Assessment Process
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At the Township level, assessors identify real
property, appraise and place value on it. You
should double check that properties are on the
books. Know your assessor(s).
Business/Industrial properties are valued based
upon market value as well as income generated.
Illinois statute states assessed value should
represent 33.3% of market value except for
farm land. Farmland is assessed using a yieldbased formula.
A few counties have special classification
systems.
Manage your real properties – new growth,
TIFs
12
Review Process
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Purpose - For system to correct
under, over, and non-uniform
assessments by local assessor.
Assessor sends changes to
property owners. Publishes.
Property owners can go to the
assessor and then the Board of
Review to challenge their
assessment.
Next level of challenge - Property
Tax Appeals Board (PTAB) or
Circuit Court
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Equalization Process
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Purpose - To bring all township
assessments to the state mandate
of 33.3%.
Multiplier is applied to township
and then county assessments
(except Cook).
Cook County multiplier is
determined by the Illinois
Department of Revenue.
EAV = Multiplier x Assessed
value
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Levy Process
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School district passes budget
Determine levy amount. How much do you
ask for? Are you under the Tax Cap?
If required:
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Publish in Newspaper
Hold public hearing
Board adopts Levy
File Certificate of Tax Levy with County
Clerk prior to last Tuesday in December
(watch Christmas date!). Also, doublecheck the bond amounts (County clerk
offices can make mistakes!)
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ILLINOIS STATE BOARD OF EDUCATION
Original:
Amended:
X
School Business and Support Services Division
100 North First Street
Springfield, Illinois 62777-0001
217/785-8779
CERTIFICATE OF TAX LEVY
A copy of this Certificate of Tax Levy shall be filed with the County Clerk of each county in which the school district is located
on or before the last Tuesday of December.
District Name
District Number
Your School District
411
County
Lake
Amount of Levy
Educational
$
Operations & Maintenance
$
Transportation
$
Working Cash
$
Municipal Retirement
$
Social Security
$
31,202,568
5,269,975
2,706,367
803,037
786,700
786,700
Fire Prevention & Safety *
$
Tort Immunity
$
Special Education
$
Leasing
$
Other
$
Other
$
Total Levy
$
1,017,546
434,356
43,007,249
* Includes Fire Prevention, Safety, Energy Conservation, Disabled Accessibility, School Security,
See explanation on reverse side.
Note:
and Specified Repair Purposes.
Any district proposing to adopt a levy must comply with
the provisions set forth in the T ruth in T axation Law.
We hereby certify that we require:
the sum of
31,202,568
the sum of
5,269,975
the sum of
2,706,367
the sum of
803,037
the sum of
786,700
the sum of
786,700
the sum of
0
dollars to be levied as a special tax for educational purposes; and
dollars to be levied as a special tax for operations and maintenance purposes; and
dollars to be levied as a special tax for transportation purposes; and
dollars to be levied as a special tax for a working cash fund; and
dollars to be levied as a special tax for municipal retirement purposes; and
dollars to be levied as a special tax for social security purposes; and
dollars to be levied as a special tax for fire prevention, safety, energy conservation,
disabled accessibility, school security and specified repair purposes; and
the sum of
1,017,546 dollars to be levied as a special tax for tort immunity purposes; and
the sum of
434,356 dollars to be levied as a special tax for special education purposes; and
the sum of
0 dollars to be levied as a special tax for leasing of educational facilities
or computer technology or both, and temporary relocation expense purposes; and
the sum of
0 dollars to be levied as a special tax for
; and
the sum of
0 dollars to be levied as a special tax for
on the taxable property of our school district for the year
2008
.
Signed this
8th
day ofDecember
20
09
.
(President)
(Clerk or Secretary of the School Board of Said School District)
W hen any school is authorized to issue bonds, the school board shall file a certified copy of the resolution in the office of the county clerk of each county in which the district is
situated to provide for the issuance of the bonds and to levy a tax to pay for them. T he county clerk shall extend the tax for bonds and interest as set forth in the certified copy
of the resolution, each year during the life of the bond issue. T herefore to avoid a possible duplication of tax levies, the school board should not include a levy for bonds and
interest in the district's annual tax levy.
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Number of bond issues of said school district that have not been paid in full
.
(Detach and Return to School District)
This is to certify that the Certificate of Tax Levy for School District No.
,
County,
2008
Illinois, on the equalized assesed value of all taxable property of said school district for the year
was filed in the office of the County Clerk of this County on
,
2008
,
.
In addition to an extension of taxes authorized by levies made by the Board of Education (Directors), an additional extension(s)
will be made, as authorized by resolution(s) on file in this office, to provide funds to retire bonds and pay interest thereon.
The total levy, as provided in the original resolution(s), for said purposes for the year
, is
(Signature of County Clerk )
$
.
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Truth in Taxation
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If current year’s levy request (excluding bond and
interest) is more than 5% greater than prior year’s
extension:
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A notice must be published in a newspaper
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A public hearing must be held
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Publication must be no more than 14 and no less than 7 days before the
date of the public hearing
Must be published in newspaper of general circulation
District explains the reason for the levy and any increases
District must permit anyone wishing to speak the opportunity
Usually done as part of a regular Board meeting
Tentative levy must be approved no less than 20 days
before the adoption of the levy ordinance.
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Property Tax Extension Limitation Act
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Enacted in Collar Counties in 1991, Cook County in
1995, and by referendum in some downstate counties.
Limits the increases in property tax extension to 5% or
the increase in the “Consumer Price Index-All Urban
Consumers” (CPI-U), whichever is less.
Allows for issuance of limited tax bonds where bond debt
cannot exceed 1994 tax levy for bond debt. Enacted in
1995.
1996 Amendments. PTELA enacted for remaining
Illinois counties if approved at county-wide referendum.
If law is approved in referendum, then it becomes
effective in the next levy year. Fight all PTELA
referendums.
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Tax Capped Counties
http://www.isbe.net/sfms/FAAS01/taxcaps.htm
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CPI History
10 Year CPI History
5.00%
4.10%
4.00%
3.30%
3.40%
3.00%
2.70%
2.50%
2.40%
2.00%
1.90%
1.60%
1.50%
1.00%
0.10%
0.00%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
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Property Tax Extension Limitation Calculations
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Limiting rate = (Aggregate Extension Base x (1+ CPI)) /
(Equalized Assessed Valuation - New Property)
Aggregate Extension Base - Prior year extension for all funds
excluding the debt service fund. (i.e.: for 2010 tax year, 2009
total tax levy extended less tax extended for debt service)
CPI - All Urban Consumer Price Index for December 31st.
CPI for December 2010 – 1.5%
New Property - New improvements or additions to existing
improvements on any parcel of real property that increased
the assessed value of that real property.
Debt Service Extension Base: The tax levy for debt service
levied in tax year when the Law is enacted.
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2009 Levy & Tax Rate / 2010 Proposed Levy
2009
2009
2009
Maximum
Proposed 2010
Fund
Levy
Extension
Rates
Rates
Levy
Education
4,025,000
3,500,000
2.2581
Tort Immunity
74,750
65,000
0.0419
Special Education
34,500
30,000
0.0194
0.4000
36,000
Operations & Maintenance
345,000
300,000
0.1935
0.5500
360,000
Transportation
172,500
150,000
0.0968
180,000
IMRF
52,900
46,000
0.0297
55,200
Social Security
52,900
46,000
0.0297
55,200
Working Cash
86,250
75,000
0.0484
90,000
-
-
-
Life Safety
Aggregate Extension
3.5000
4,200,000
78,000
0.1000
-
4,843,800
4,212,000
2.7175
5,054,400
Bond & Interest
650,000
650,000
0.4194
656,000
Total Extension
5,493,800
4,862,000
3.1369
5,710,400
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Assumptions and Givens
Description
Amount
2009 Equalized Assessed Valuation
155,000,000
Estimated Current Year EAV
2010
Assum ption
Estimated New Growth
2010
Assum ption
December 2009 Actual CPI
Given
( A 9.68% Increase from 2009 )
170,000,000
6,500,000
2.70%
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Limiting Tax Rate Calculations
A. Prior Year Aggregate Extension
B. Prior Year CPI
C. Numerator Number (A * (1+B))
4,212,000
D. Est. Current Year EAV
2.7%
E. Est. New Grow th
4,325,724.00
G. Curr Year Est. Agg. Limiting Rate = (C / F) x 100
F. Denominator Number (D - E)
2.6457
H. Est. Max Agg. Ext. = (G/100)*2010 EAV
170,000,000
6,500,000
163,500,000
4,497,690
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2010 Tax Levy and Estimated 2010 Tax Rate
Proposed 2010
2010 Initial
Rate Reduction
Est. 2010 Limited
Est. 2010
Fund
Levy
Rates
%
Extension Rate
Tax Extension
Education
4,200,000
2.4706
2.1985
3,737,450
Tort Immunity
78,000
0.0459
0.0408
69,360
Special Education
36,000
0.0212
0.0189
32,130
Operations & Maintenance
360,000
0.2118
0.1885
320,450
Transportation
180,000
0.1059
0.0942
160,140
IMRF
55,200
0.0325
0.0289
49,130
Social Security
55,200
0.0325
0.0289
49,130
Working Cash
90,000
0.0529
0.0470
79,900
-
-
-
Life Safety
Aggregate Levy/Extension/Rate Total
0
5,054,400
2.9733
88.980%
2.6457
4,497,690
Aggregate % Increase
20.00%
Bond & Interest
656,000
0.3859
0.3859
656,030
5,710,400
3.3592
3.0316
5,153,720
Total Levy/Extension
Total % Increase
17.45%
6.78%
6.00%
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Tax Extension
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Adds loss amount to District
levy (2% to 5%)
Calculate Property Tax
Extension Limitation
Calculate final tax rates for each
taxing district
Extend taxes on Equalized
Assessed Value and enters in
county Collector’s books
Deliver Collector’s books to
county Treasurer for preparation
of bills
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Collection & Distribution
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Two mailings of tax bills
Taxes due one month after
billing date
Distribution : Cook
County March & Fall;
Collar Counties 1/2 in
June and 1/2 in
September; Downstate
often July and September
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Assessment Appeals
Township Assessor
Board of Review
Property Tax Appeal
Board (PTAB)
Circuit Court
Circuit Court (Complaint
for Administrative Review
Only)
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Time Frames for Filing Appeals
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Township Assessor – after receipt of proposed
assessment.
Board of Review – by township closing date.
PTAB – within 30 days of date of final decision
from Board of Review. (Mostly commercial and
industrial assessment appeals go beyond the Board
of Review)
Circuit Court – within 120 days of second
property tax installment due date
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Typical Issues for Commercial/Industrial Appeals
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Fair cash value – this is determined by a proper
appraisal
Uniformity
Vacancy/Occupancy
Recent sales
Legal arguments (open space, conservation
easement, historic property, etc.)
Exempt status
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Your Rights at the Board of Review (BOR)
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Right to notice if over $100,000 EAV Change
Right to Intervene (submit letter within 14 days)
May submit evidence and defend current assessment
Attend the hearings to 1) make sure the appellant knows that
the taxing bodies have knowledge of what is going on and
will be actively involved, 2) look at the evidence submitted
by the appellant (if presented) and the township assessor, 3)
to encourage the parties involved to come to a settlement.
All settlements at the BOR are pre-tax extension.
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Your Rights at the Property Tax Appeal Board (PTAB)
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Right to notice - submit within 30 days
Only legal counsel can represent taxing bodies
The appeals process at PTAB may take up to two years to resolve. The
volume of PTAB Appeals State Wide: 1997 – 3,072; 1999 – 6; 176; 2002
– 9,918; 2004 – 11,218; 2007 – 13,515
Manage your legal counsel- legal counsel will hire an independent
appraiser to review the appellant and the township’s appraisal. If appraiser
believes the appellant’s assessment is closer to the fair market value, do
nothing. If the appraiser believes the township assessor’s numbers are
closer to the fair market value then submit that to PTAB. If the appraiser
believes that both assessments are low, then get a full appraisal of the
property and submit that to PTAB and request an assessment increase.
Form consortiums with other taxing bodies to share the cost of challenging
the assessment appeals.
All settlements come out of current year’s tax collections
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Your Rights at the Circuit Court
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You are not notified of cases presented to the court
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Some legal firms have begun monitoring the filings and can
notify you if a relevant case is filed.
In 2008, attorney’s have been allowed to give input into a few
cases, hopefully that will grow (foot in the door)
The Illinois State’s attorney and the county assessor
represent the taxing bodies.
All settlements come out of current year’s tax collections
Keep an eye on this as this is a growing issue, especially in
Cook County
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Other Local Revenues
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Foundations
Local Grants
Corporate Sponsorships
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Finally, The End
Any Questions?
Thank You!
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