Tax  Cap  and  Budge-ng  2016  -­‐  2017  

Board  of  Educa+on  Mee+ng  Wednesday,  January  13,  2016  D.  Paul  Blowers  &  Brian  D.  Russ  

Property  Tax  Cap  Chapter  97  of  the  Laws  of  2011  

•  Began  with  the  2012-­‐13  School  Year  •  In  effect  through  2019-­‐20  •  Remains  +ed  to  control  of  residen+al  rents  and  evic+ons  (i.e.  rent  control)  

Tax  Levy  Limit  Calcula+on  Prior  year  tax  levy  

x  Tax  base  growth  factor,  if  any  

+  Payments  in  lieu  of  taxes  receivable  during  prior  year  

-­‐  Taxes  levied  for  Capital  &  Tort  exclusions  during  prior  year  

(not  ERS  &  TRS)  =  

Adjusted  Prior  Year  Tax  Levy  x  

Allowable  levy  growth  factor  (lesser  of  2%  or  CPI)  -­‐  

Payments  in  lieu  of  taxes  receivable  in  the  coming  year  +  

Available  carryover,  if  any  =  

“Tax  Levy  Limit”        

Total  Levy  to  Support  Proposed  Budget  

Tax  Levy  Limit  +  

Coming  school  year  exclusions  =  

Maximum  Allowable  Tax  Levy  (requiring  simple  majority)  

Prior  Year  Tax  Levy  

•  Taxes  levied  in  the  prior  year  including  exclusions  

•  For  2016-­‐17  school  year  Ø 2015-­‐16  tax  levy  

(x)  Tax  Base  Growth  Factor  

•  Tax  Base  Growth  Factor  =  1  +  Quan+ty  Change  Factor  (minimum  of  1)  

•  Quan+ty  Change  Factor  =  Percentage  by  which  the  full  value  of  the  taxable  real  property  in  the  school  district  increases  due  to  physical  or  quan-ty  change,  compared  with  the  prior  year  tax  roll  (growth  in  full  value  due  to  new  construc+on,  addi+ons  and  improvements  to  real  property,  etc.)  

(+)  Prior  Year  PILOTs  

•  Payments  in  lieu  of  taxes  (PILOT)  owed  to  the  district  in  the  prior  school  year  

•  2016-­‐17  school  year  tax  cap  calcula+on  Ø 2015-­‐16  PILOT  payments  

•  Not  all  districts  will  have  PILOT  payments    

(-­‐)  Prior  Year  Exclusions    

•  Capital  Exclusion  +  Tax  levy  necessary  to  support  expenditures  resul+ng  from  the  construc+on,  acquisi+on,  reconstruc+on,  rehabilita+on  or  improvement  of  school  district  capital  facili+es  or  capital  equipment,  including  debt  service  and  lease  expenditures,  and  transporta+on  capital  debt  service;  net  of  aid  and  other  applicable  revenues  (fund  balance,  Capital  Reserve,  Debt  Service  funds)  

•  Court  Orders/Judgments  =  Tax  levy  necessary  for  expenditures  resul+ng  from  court  orders  or  judgments  arising  out  of  tort  ac+ons  for  any  amount  that  exceeds  5%  of  total  tax  levied  in  prior  school  year  –  (excludes  tax  cer+oraris,  breach  of  contract)  

•  Excludes  prior  year  pension  exclusion  

(=)  Adjusted  Prior  Year  Tax  Levy  

•  Prior  year  levy  adjusted  for:  Ø Tax  base  growth  factor  (x)  Ø Prior  year  PILOT  (+)  Ø Prior  year  exclusions  (-­‐)  

(x)  Allowable  Growth  Factor  

•  Allowable  Levy  Growth  Factor  =  Lesser  of:  1.02  OR  (1  +  Infla+on  Factor);  Minimum  of  1.0  

•  Infla+on  Factor  =  CPI  change,  carried  out  four  decimal  places  

•  Source:  US  Department  of  Labor  

   

 

(-­‐)  PILOTs  for  Coming  Year  

•  PILOTs  to  be  collected  in  the  coming  school  year  

•  For  2016-­‐17  school  year  Ø 2016-­‐17  PILOT  payments  

•  Not  all  districts  will  have  PILOT  payments  

(+)  Available  Carryover  •  Districts  may  use  taxing  authority  from  the  prior  school  year  

to  increase  the  subsequent  year’s  tax  levy  if  taxes  were  increased  in  the  prior  school  year  by  less  than  the  amount  allowed  by  the  tax  levy  limit  before  exclusions  

•  Available  Carryover  =  Prior  year  tax  levy  limit  –  prior  year  tax  levy  (before  exclusions),  but  no  greater  than:  (1.5%  x  prior  year  tax  levy  limit)  

•  152  Districts  have  available  carryover  according  to  Property  Tax  Report  Card  data  (May  2015)  

(=)  Tax  Levy  Limit  

•  Amount  to  be  calculated  and  submiied  to  Comptroller’s  Office  prior  to  March  1st  of  each  year  

•  Prior  to  addi+on  of  allowable  exclusions  

Total  Levy  to  Support  Proposed  Budget  

Tax  Levy  Limit  +  

Coming  school  year  exclusions  =  

Maximum  Allowable  Tax  Levy    (requiring  simple  majority)  

Coming  School  Year  Exclusions  •  Capital  Exclusion  =  Tax  levy  necessary  to  support  

expenditures  resul+ng  from  the  construc+on,  acquisi+on,  reconstruc+on,  rehabilita+on  or  improvement  of  school  district  capital  facili+es  or  capital  equipment,  including  debt  service  and  lease  expenditures,  transporta+on  capital  debt  service,  net  of  aid  and  other  applicable  revenues  (fund  balance,  Capital  reserve,  Debt  Service  funds)  

•  Court  Orders/  Judgments  =  Tax  levy  necessary  for  expenditures  resul+ng  from  court  orders  or  judgments  arising  out  of  tort  ac+ons  for  any  amount  that  exceeds  5%  of  total  tax  levied  in  prior  school  year    

                 (excludes  tax  cer+oraris,  breach  of  contract)  

Coming  School  Year  Exclusions  •  Applies  only  when  ERS  and/or  TRS  employer  contribu+on  

rates  increase  by  more  than  2  percentage  points  over  prior  year  

•  ERS  Costs  =  Tax  levy  necessary  for  expenditures  for  coming  school  year  for  employer  contribu+ons  caused  by  growth  in  the  system  average  actuarial  contribu+on  rate,  minus  two  percentage  points  Ø  Decreasing  from  18.2%  of  salaries  to  between  15.5-­‐15%.  No  ERS  exclusion  

•  TRS  Costs  =  Tax  levy  necessary  for  expenditures  for  coming  school  year  for  employer  contribu+ons  caused  by  growth  in  the  normal  contribu+on  rate,  minus  two  percentage  points  Ø  Decreasing  from  13.26%  of  salaries  to  between  12-­‐11.5%.    No  TRS  exclusion  

Tax  Cap  Calcula+on           2016-­‐2017      A.   Total  Real  Property  Tax  Levy  for  base  year   $18,962,486      B.   Excess  Levy  in  Reserve   0      C.   Tax  Levy  subtotal(  A  –  B)   18,962,486      D.   Tax  Base  Growth  Factor  (minimum  of  1.0)   1.0082      E.   Adjusted  Tax  Levy  subtotal  (C  x  D)   19,117,978      F.   Base  Year  PILOT’s   41,270      G.   Base  Year  Levy  plus  PILOT’s   19,159,248                      H.   Base  Year  Torts  and  Judgments  >  5%   0      I.   Base  year  Capital  Expenses  Net  of  Aid   184,900      J.   Total  base  year  Torts  and  Capital  Expenses   184,900                      K.   Levy  less  base  year  Torts  and  Capital  (G  –  J)   18,974,348      L.   Allowable  Levy  Growth  Factor  lesser  of  CPI  or  2%   1.0073      M.   Levy  including  Levy  Growth  Factor   19,112,860      N.   Budget  year  PILOT  receivables   42,000      O.   Levy  less  budget  year  PILOT’s  (M  –  N)   19,070,860      P.   Eligible  Carry  Over  from  base  year  budget  (N/A  2012-­‐2013)   0      Q.   Tax  Levy  Limit  –  before  Exclusions  (O  +  P)   19,070,860   0.57%                       Budget  Year  Exclusions          R.   Capital  Expenditures  net  of  aid  (+  transfer  from  debt  service)   189,625      S.   Pension  Expenditures  above  2%   0      T.   Court  orders/Judgments  in  >5%  base  year  levy   0      U.   Total  Exclusions  (R  +  S  +  T)   189,625                           Total  Tax  Levy  including  Exclusions  (Q  +  U)   19,260,485   1.57%  

What  op+ons  does  the  BOE  have?  •  Op+on  1:  Propose  a  budget  requiring  a  tax  levy  before  

exclusions  at  or  below  the  Tax  Levy  Limit  prescribed  by  law  Ø  Requires  a  simple  majority  (50%  +  1  voter  approval)  

•  Op+on  2:  Propose  a  budget  requiring  a  tax  levy  before  exclusions  above  the  Tax  Levy  Limit  Ø  Requires  a  “super  majority”  (60%  voter  approval)  Ø  Requires  a  statement  on  ballot  indica+on  the  required  tax  levy  before  

exclusions  exceeds  the  Tax  Levy  Limit:    “AdopTon  of  this  budget  requires  a  tax  levy  increase  of  ____  which  exceeds  the  statutory  tax  levy  increase  limit  of  ___  for  this  school  fiscal  year  and  therefore  exceeds  the  state  tax  cap  and  must  be  approved  by  sixty  percent  of  the  qualified  voters  present  and  voTng.”  

%  Tax  Levy  Change  2015-­‐16  for  NYS  School  Districts    

Actual  Tax  Cap  Calcula+ons  

•  370  districts  had  a  “cap”  GREATER  than  2%  •  299  districts  had  a  “cap”  LESS  than  2%  

Proposed  Budget  &  Tax  Levies  for    May  2015  Vote  

96%  of  proposed  budgets  stayed  with  the  “cap”  •  395  districts  were  BELOW  their  cap  •  244  districts  were  AT  their  cap  •  30  districts  were  ABOVE  their  cap  &  needed  60%  approval  •  9  budgets  were  defeated  in  May  vote    •  2  budgets  were  defeated  twice  –  con+ngency  budget    

What  happens  if  the  budget  is  not  approved  by  the  public?  

•  If  the  proposed  budget  is  not  approved  by  the  required  margin:  Ø  District  may  resubmit  original  budget  or  submit  a  revised  budget  to  the  voters  at  the  

June  Revote  OR  Ø  Adopt  a  con+ngency  budget  that  levies  a  tax  no  greater  than  that  of  the  prior  year  (0%  

increase  in  tax  levy)  

•  If  the  resubmiied/revised  budget  proposal  is  not  approved  by  the  required  margin:  Ø  BOE  must  adopt  a  budget  that  levies  a  tax  no  greater  than  that  of  the  prior  year  (0%  

increase  tax  levy)  and  the  budget  would  be  subject  to  con+ngent  budget  requirements  Ø  Districts  will  not  be  allowed  to  increase  the  tax  levy  to  the  extent  necessary  to  fund  

items  of  expenditure  excluded  from  the  tax  cap    q No  growth  factor  q No  capital,  court  order/judgments,  or  pension  exclusions  

Budget  Deadlines/Requirements  Remain  in  Place  

•  Legal  No+ces  Ø  Due  April  2,  2016  Ø  Date,  +me  and  place  of  School  Budget  Hearing  &  Annual  Budget  Vote  

•  Property  Tax  Report  Card  Ø  Due  April  25,  2016  Ø  District  tax  levy  limit  Ø  Proposed  tax  levy  before  exclusions  

•  Public  Hearings  and  Disclosure  Ø May  3  –  May  10,  2016  

•  Budget  No+ce  Ø  District  tax  levy  limit  Ø  Proposed  tax  levy  before  exclusions  Ø  Budget  statement  

Budget  Development  

•  Focusing  on  State  Aid  Projec+ons  Ø Where  do  projec+ons  come  from  Ø Budge+ng  aser  State  Aid  runs    

Projec+on  Data  •  Projected  Claim  Form  Data  

Ø 3rd  column  of  Form  A,  FB,  FT  and  ST-­‐3  used  for  state  aid  projec+ons  for:  q Governor’s  Proposal  –  January  2016  q Final  Aid  Projec+ons  –  April  2016  (State  Budget)  

Ø Projected  data  should  be  as  accurate  as  possible  q Over  projec+ons  in  pupil  counts  &  expenditures  can  cause  over-­‐es+mated  state  aid  projec+ons  

q Under  projec+ons  in  pupil  counts  &  expenditures  can  cause  under  es+mated  state  aid  projec+ons  

Ø Can  be  revised  any+me  during  the  year  via  SAMS  revision  process  

State  Aid  Runs  

•  Governor’s  runs  uses  November  database  (October  2015)  

•  Review  year-­‐to-­‐year  changes  •  Projec+ons  based  on  data  submiied  by  district,  BOCES,  STAC,  BEDS/SIRS  data  and  SED  State  Aid  Unit  

•  Changes  should  reflect  service  changes  and/or  demographic  changes  in  district  

Founda+on  Aid  and  GEA  

•  Currently  unpredictable  •  Balancing  these  funding  streams  will  be  poli+cal  reality  

•  District  pupil  counts,  demographics  and  wealth  measures  play  largest  role  in  alloca+ons  

BOCES  and  High  Cost  Excess  Cost  Aid  

•  Projec+ons  submiied  by  home  BOCES  on  behalf  of  district  

•  Projec+ons  from  STAC  Unit  for  both  Public  and  Private  Excess  Cost  

•  Uses  higher  of  pupil  counts  and  corresponding  costs  from  past  2  years,  if  projec+on  uses  2-­‐year-­‐old  data,  costs  are  increased  by  5%  

•  Fluctua+ons  in  student  popula+on/services  may  result  in  over/under  es+ma+ng  aid  

•  Important  to  review  with  Spec  Ed  Office  

Instruc+onal  Materials  Aid  

•  Textbook,  Computer  Hardware,  Computer  Sosware  and  Library  Materials  

•  Projec+ons  uses  data  submiied  by  district  on  ST-­‐3  and  BEDS/SIRS  pupil  count  data  

Transporta+on  Aid  

•  Projec+ons  based  on  data  submiied  by  district  on  ST-­‐3  and  Form  FT  

•  Significant  changes  to  expenditures/allowable  pupil/miles  may  result  in  aid  fluctua+ons  

•  Changes  to  transporta+on  policy,  bus  routes  or  re-­‐bid  transporta+on  contracts:  district  should  verify/update  projected  expenditures  

Building  Aid  

•  Projec+on  data  submiied  by  State  Aid  Unit  at  NYSED  

•  Based  on  data  submiied  by  districts  on  ST-­‐3  and  SA-­‐139  

•  Delay  of  Interest  Recalibra+on  is  due  to  expire  –  recalibra+on  was  not  on  aid  runs  previously  

 2016  –  2017  

East  Aurora  School  District  Challenges    

&    Funding  Opportuni+es  

 

Challenges  

•  Transporta+on  Re-­‐Bid    $130,000  •  BOCES  CTE        $191,600  •  BOCES  Special  Ed      $300,000  •  Salaries  &  Fringe  Benefits*  $500,000  •  Health  Insurance      $225,000  •  Other          $200,000  

                     $1,546,000  *(FICA,  ERS  &  TRS)  

Funding  Opportuni+es  •  Elimina+on  of  GEA        $700,000  •  Breakage  from  Debt  Payoff      $200,000  •  Reduc+on  in  Re+rement  Contribu+ons  $225,000  •  Re+rement  Incen+ve        $200,000  •  Tax  Levy*            $110,000  

Total  Es+mated  Funding  Opportuni+es                $1,435,000        *Includes  Tax  Base  Growth  Factor  of  0.66%  and  0.73%  Levy  Growth  Factor