Transcript School Tax Reimbursement – The Past and The Future

School Tax Reimbursement –
The Past and The Future
Malane Pike
S.C. Department of Revenue
October 13, 2008
New Property Tax Relief – NPTR
The New Homestead Exemption Fund
• Tier 1 – The old $100,000 property tax
relief fixed at the 2006-2007 rate
• Tier 2 – The school operating portion of
the old homestead exemption for those 65
and older, blind, or totally and permanently
disabled fixed at the 2006-2007 rate.
• Tier 3 – School operating millage on owner
occupied residential property
Formula for Tier 3
2007 NPTR File
Minus
Old $100,000 Property Tax Relief
Minus
Homestead School Operating
Plus
“The Bump”
Minus
Lease Purchases for Capital Improvements
Payment Timeline
• Tier 1 (Old $100,000 Exemption)
90% by December 1st
Balance by last quarter of fiscal year
• Tier 2 (Old Homestead Exemption)
Paid by last quarter of fiscal year
• Tier 3 (New Property Tax Relief)
9 equal monthly installments beginning October 15th
Final adjusting balance payment by the close of the state’s
books for the fiscal year
Timeline of Events
• October 2007
Office of Research and Statistics estimated NPTR
payments and DOR made first 1/10th payment.
• March – April 2008
DOR received NPTR files from the county
assessors.
• May 2008
Realized problem with Lease Purchase Millage for
Capital Construction. DOR asked school
districts who included this in school operating to
come forward.
Timeline of Events (Cont.)
• May – June 2008
DOR audited reported financial records of School
Districts to detect lease purchases for capital
improvements..
• May – July 2008
DOR conducted county audits of legal residences
submitted on NPTR files.
• June 2008
DOR called every school district to confirm
existence or nonexistence of lease purchase
agreements.
Timeline of Events (Cont.)
• July 1, 2008
Deadline to resubmit NPTR file to include
additional legal residences. Law suit filed
against DOR on the Lease Purchase issue.
• August 2008
DOR made reconciliation payment to the counties.
• October 2008
Office of Research and Statistics estimates NPTR
payments and DOR makes first 1/10th payment.
Lease Purchase Issue
• Office and Research and Statistics and DOR
discovered that certain school districts had
included lease purchases for capital
improvements in school operating millage.
• DOR issued Property Opinion #2008-03 along
with a Memo asking school districts who had
requested reimbursement for such lease
purchase millage to come forward and identify
the amounts.
• DOR subsequently audited reported financial
information of each school district to determine
which school districts to adjust.
Types of Lease Purchases that
Were Reimbursed
• Lease Purchases for Personal Property
(e.g. computers, copiers, faxes, postage
meters, audio visual equipment, etc)
• Lease Purchases for Johnson Controls
contracts (aka efficiency contracts)
Law Suit Involving Lease
Purchases
•
•
•
•
•
Brought by Berkeley, Orangeburg District
5, and Spartanburg District 5
Has been brought in the original
jurisdiction of the S.C. Supreme Court
S.C. Supreme Court has disallowed
discovery – Court has not indicated if it
will allow oral argument.
Briefs have been filed by the Plaintiffs.
DOR is currently preparing its Brief.
School Districts Adjusted for Lease
Purchases for Capital
Improvements
•
•
•
•
•
•
•
Berkeley
Charleston
Florence District 3
Orangeburg District 3
Orangeburg District 5
Spartanburg District 1
Spartanburg District 5
How the Lease Purchase
Adjustments Were Determined
• Used information from most recent Local
Government Report (2006)
• Computation:
Assessed Value of Residential Property
Divided by
Assessed Value of All Property
Multiplied by
Total Lease Purchase Amount
What Happened Next in the Lease
Purchase Saga
•
Each school district was notified of:
1. Total lease purchase amount
2. DOR computation of adjustment
3. Time period to dispute accuracy of
DOR information
• One school district provided a
correction
Reimbursements for 2008-2009
• Reimbursements are now solely computed by
Office of Research and Statistics
• DOR has provided the Office of Research and
Statistics with the amount of Tax Replacement
dollars paid (i.e. not including supplemental
amounts paid to get to $2.5 million) less late filed
homesteads.
• Office of Research and Statistics has provided
DOR with new payment for 2008-2009.
• Counties should be receiving 1st checks this
week.
Computation of Reimbursement for
2008-2009
•
Tax Replacement Amounts from 2007-2008 will be
increased by:
an inflation factor equal to the % increase in CPI for
the SE Region for the previous year
PLUS
% increase in population of the state in the previous
year.
•
If the total increase is less than 4%, it will be increased
to 4% if funds are available
% Change in CPI and Population
Growth Used for 2008-2009
Reimbursements
• % change in Southeastern CPI = 2.91%
• % change in Population Growth
Statewide = 1.79%
Computation of Reimbursements
(Cont.)
• All of the increases will be aggregated and
apportioned out to the school districts
based upon the following:
Each district’s weighted pupil units as a %
of statewide pupil units with an additional
add on of 0.20 for students in poverty
Poverty Weighting
Revenues generated by the poverty weighting must be
used to provide:
1. Services and research based strategies for addressing
academic or health needs of these students;
2. Summer school;
3. Reduced class size;
4. After school programs;
5. Extended day programs
6. Instructional Materials
7. Any other research based strategy to improve student
academic performance
$2.5 Million Supplemental
for 2008-2009
•
For those counties whose school districts
collectively will not receive at least $2.5
million for tax replacement this year, the
law guarantees that the county will
receive at least $2.5 million in total.
$2.5 Million Supplemental
for 2008-2009 (Cont.)
• Computation of Distributions to the School
Districts:
135 day average daily District membership
Divided by
Total average daily membership in all districts in
the county
Multiplied by
Amount of supplemental funds received to bring
county reimbursement up to $2.5 million