Ad Valorem Tax Issues Cheree Brown, Itawamba County School District Sheryle Coaker, Petal School District David Rubenstein, Moss Point School District February 14, 2012

Topics State vs. Local Funding Process and Authority 55 Mills Cap Fee Collection Payments Success Story

State vs. Local Funding

Does less state funding (Governor Proposed underfunding MAEP by $330M) mean more local (Ad Valorem) funding?

Assessed Valuation 8%, 3% to less than ½%

Assessed Valuation Decrease From Prior Year Fiscal Year Number of Districts 2009 42 2010 49 2011 68

Shortfall Notes Fiscal Year Number of Districts 2008 22 2009 34 2010 46 2011 51 Increasing over the last 4 years

55 Mills Cap Fiscal Year Number of Districts 2008 16 2009 17 2010 13 2011 19 19 = 12.5%

50.00 to 54.99 Operating Mills Fiscal Year Number of Districts 2008 20 2009 19 2010 30 2011 1/3 of school district at 50+ mills

Between the economy (assessed valuation) and lack of state funding do school districts have the flexibility to increase local funding to survive?

Process and Authority

New Budget Year: Build Your Base! Base starts with collections from October through September ( fiscal year of levying authority NOT the school district) For FY 2012-2013, will use collections from October 1, 2011 through September 30, 2012. Portion of base will be an estimate Clearly show in calculation actual collected amount and estimated amount

A district may use any of the three previously completed fiscal years: A district may use any of the three previously completed fiscal years: (Oct 1, 2010 thru Sept 30, 2011) (Oct 1, 2009 thru Sept 30, 2010) (Oct 1, 2008 thru Sept 30. 2009) Add Homestead Exemption received during the base year used. Estimate September payment, based on payment received in March. Add Ad Valorem Tax Reduction funds received FYE 06-30-12. This allocation amount has been received from MDE even though all may have not been received yet.

Add Tax escrow at June 30, 2011 if used in FY 2011- 2012 and request was reduced by that amount Add Proceeds of shortfall notes issued for FYE 06-30- 12 Deduct any escrow at FYE 06-30-12 (Remember you will either add a shortfall amount at 06-30-12 or deduct an escrow at 06-30-12. You will not do both!)

THESE ADDITIONS AND DEDUCTIONS EQUAL THE BASE To the base can be added the % increase. Less than 4%, only board approval If increase is between 4% and 7%, a petition can bring the increase to a vote and majority of the voters must approve for increase to be approved If the increase is above 7% but equal to or less than what 55 mills would generate, the increase would have to be approved by 3/5 of voters in election.

An additional amount for New Programs allowed under 37-57-104 may be added. Currently this amount is only the amount of increase in local contribution over the prior year. Add New Property request. Total for the district’s Ad Valorem Needs. Reduce these needs by the amount of Ad Valorem Tax Reduction Grant To be received in FY 2012- 2013.

Further reduce by any Ad Valorem escrow if any at June 30, 2012. The net amount is the Ad Valorem Tax Request for operations. Calculate the Ad Valorem Tax request needed for Debt Service. This request should be based on the need for each debt that a tax levy is assessed.

ADVERTISE TAX INCREASE Remember that an increase in tax dollars must be published in a format that is specific by statute New Programs or % New Property (growth)

Know what the request does to your tax mills Know how the request affects the taxpayer Amend your budget as the estimates become actual The Board of Education should approve the Ad Valorem request in dollars Work with the levying authority to determine the latest time to submit the request Ad Valorem in DOLLARS!

55 Mills Cap

If a school district is at the 55 mills cap and have a decrease in assessed valuation, then the district can request the same dollar amount in ad valorem tax effort as last year. Source: Mississippi Code § 37-57-104 (2)(a) 19 at cap

Fee Collection

Payments

Ad Valorem Tax Payments The levying authority shall pay all taxes for the month to the school district by the 20th day of the next month. Mississippi Code 37-57-1 & 27-29-11

Questions How many school districts gets their Ad Valorem Taxes on time? How many school districts have more than one tax collector?

Success Story

Questions