Levies, School Funding, and Your Taxes An Overview of Information for the Sequim School District Board of Directors August 2016

Where does school district money usually come from? Of the total funds available to school districts, nearly 85% of them go to pay for employee costs. The other 15% pays for everything else.

What does the levy/LEA pay for? Historically: In the past, levy funds have typically been used to pay for the “extras” that the community supported and desired. Sports / Extra Curricular Smaller Class Sizes Technology Purchases Curriculum Currently: Over the past few years, the State has continued to shift the burden of increased costs to the local tax payers by raising the levy lid and asking districts to go get the funds from their communities. Many districts now rely on their levies to pay for over 24% of the costs of running their schools. *In 1981, that amount was only 8%.

What is LEA? Local Effort Assistance is a law that is designed to protect the taxpayers of communities with a smaller tax base from having to pay more taxes than communities with a larger tax base. RCW 28A.500.010 “….... The purpose of these funds is to mitigate the effect that above average property tax rates might have on the ability of a school district to raise local revenues to supplement the state's basic program of education. These funds serve to equalize the property tax rates that individual taxpayers would pay for such levies and to provide tax relief to taxpayers in high tax rate school districts…….”

Example of LEA Rainier, WA Smaller Tax Base Levy Rate = $3.39/1000 Raises $ 1,600 / Student Seattle, WA Larger Tax Base Levy Rate = $1.28/1000 Raises $ 3,500 / Student LEA = $ 416 / Student * Data taken from OSPI report 1061 (2011-2012)

Why is LEA grouped in with the levy? To be eligible for LEA, a district must have passed it’s levy. Therefore when planning district budgets, many of us combine our levy and LEA funds into the same category.

How is my share of the levy calculated? Tax Rate = $ 2.50/1000 $250 $250 $250 $250 $100,000 $100,000 $100,000 $100,000 If all the properties in the district were the same value, each property would pay the same amount of taxes toward the levy. * Information provided by D.A. Davidson & Co.

What if more property is developed? $1,000 Levy Tax Rate = $ 2.00/1000 $200 $200 $200 $200 $200 $100,000 $100,000 $100,000 $100,000 $100,000 If more properties are developed, there would be more people to split the levy amount and each property would pay less taxes toward the levy. * Information provided by D.A. Davidson & Co.

How does property value affect levies? Increases or Decreases in Home Values Will Not Increase or Decrease the Amount of the Levy Changes in home values don’t change the amount of taxes that the district collects. The levy amount can only be increased by a vote of the people. Changing property values will change tax rates, but not tax collections.

What if property values go up? $1,000 Levy $1,000 Levy Tax Rate = $ 2.50/1000 Tax Rate = $ 1.25/1000 $250 $250 $250 $250 $250 $250 $250 $250 $100,000 $100,000 $100,000 $100,000 $200,000 $200,000 $200,000 $200,000 If property values all go up at approximately the same level, the amount of taxes that each household pays toward the levy remains the same. * Information provided by D.A. Davidson & Co.

What if property values go down? $1,000 Levy $1,000 Levy Tax Rate = $ 2.50/1000 Tax Rate = $ 5.00/1000 $250 $250 $250 $250 $250 $250 $250 $250 $100,000 $100,000 $100,000 $100,000 $50,000 $50,000 $50,000 $50,000 If property values all go down at approximately the same level, the amount of taxes that each household pays toward the levy remains the same. * Information provided by D.A. Davidson & Co.

What are we currently paying in taxes? $180,000 Bond: Balance of $6,300,000 Remaining Term of 12 years Bond: $1.87/1000 Levy: $3.39/1000 Levy: Annual Revenue of $1,440,000 Total Rate for Schools: $5.26/1000 Annual Taxes for Schools: $946.80

Replacement Educational Programs & Operations Levy Current Taxes This option puts us in the best position to continue the work that we do each day for our children. Example: $180,000 Example: $180,000 Bond: $1.87/1000 Levy: $3.39/1000 Bond: $1.35/1000 Levy: $3.96/1000 Total Tax Rate Increases by $0.05/1000 Total Rate for Schools: $5.26/1000 Total Rate for Schools: $5.31/1000 Annual Taxes Increase by $9.00 Annual Taxes for Schools: $946.80 Annual Taxes for Schools: $955.80 Additional $250,000 per Year Toward Educational Programs Levy = $1,440,000 Levy = $1,690,000

What does the future hold? Lawsuit Elections McCleary

Washington State School Directors’ Association Tim Garchow Executive Director Washington State School Directors’ Association (360) 252-3001 or email at t.garchow@wssda.org