How are schools funded since Proposal A Owosso Public Schools Revenue Compositions Budget 2012-13 (Total $27,192,192)

How are schools funded since Proposal A Owosso Public Schools Revenue Compositions Budget 2012-13 (Total $27,192,192)

Proposal A and School Funding Proposal A (1993-1994)—The State pays the majority of the cost, but to receive full funding, schools must levy 18 mills on non-homestead property in their district.

PROPOSAL A “I thought schools no longer received funding through property taxes, so why is the school district asking for a millage renewal?” Funding for schools changed significantly in 1993-94 when Michigan voters passed Proposal A. Under Proposal A, the state provides the majority of the funding to public schools, BUT… …to receive full funding, schools must levy and collect locally 18 mills on Non-Homestead property in their district.

That’s $350 per student less than the amount in 2008-2009 of $7,316. Districts receive most funding on a per-pupil basis. This amount is called the Foundation Allowance. Our current Foundation Allowance for Owosso Public School District is the minimum amount given to school districts = $6,966 per student. That’s $350 per student less than the amount in 2008-2009 of $7,316.

This represents the major portion of Owosso School District’s revenue and is funded from two sources combined: Local Revenue – 18 mills collected on non-homestead property, and State Revenue – The State of Michigan assumes school districts levy and collect the full 18 mills, and subtracts this amount from each district’s per pupil allowance. For Owosso, this equates to about $875/pupil based on 3200 students or $2.8 million.

Owosso Public Schools Non- Homestead Millage has been permanently reduced or rolled back since 1993. The rollback is called a Headlee Rollback. A Headlee Rollback occurs when local units of government (including school districts) are required by law to reduce, or “rollback,” the millage rate when the growth on existing property taxable value is greater than the rate of inflation. As a result of a Headlee Rollback, school districts collect less mills than is allowable under Proposal A. HEADLEE ROLLBACK

For Owosso, over the years, the Non- Homestead millage amount has been “rolled back” from the 18 mills to 17.729 which in essence has meant that the district has collected about $48,000 less due to the rollback (the difference between levying 18 mills and 17.729). However, the reverse does not occur when property taxable value declines so that district does not recoup the 2.8 million. As of late in Owosso, the property values have declined. HEADLEE ROLLBACK

After the initial vote in 1993, the district’s operating millage rate was permanently reduced from 18 mills to 17.7259 mills due to the Headlee Rollback. In Owosso, contrary to other districts, there has not been a vote to restore the full operational dollars to the district. By law, the district can ask for more than 18 mills (it CAN NOT levy more than 18 mills). The district can ask for more so that when/if a Headlee Rollback occurs in the future, the amount of rollback begins on the voter approved amount. HEADLEE ROLLBACK

For instance, in Owosso, if the voters approve the 18 For instance, in Owosso, if the voters approve the 18.2259 mills, the rollback starts there and not at the straight 18 mills (by law, a district can ask for .5% more than what it is currently levying. This allows the district to have a greater opportunity to continue to levy the 18 mills. In essence, the additional .2259 supplemental mills would be available in the event of future Headlee Rollback adjustments. This would allow the district to continue levying 18 mills, without seeking voter approval and incurring additional elections costs to restore funding due to a Headlee Rollback. HEADLEE ROLLBACK

“How are Michigan School Districts Funded?” Student Count 3400 Per-Pupil Foundation Allowance x $6966 Total Foundation Allowance $23,684,400 18 mills on Non-Homestead - 2,800,000 Amount Paid by the State $20,884,400

WHAT HAS THE DISTRICT DONE TO WORK WITH THE INCREASING STRAINS ON THE BUDGET?

We have approximately 3,300 students attending the Owosso Public Schools. The district funding for each student for 2011-2012 will be $6,846. (Lowest since 2004-2005 school year) With the $470 per pupil cut from the State of Michigan, the district will lose approximately $1,551,000 (3,300 x $470) for the 2011-2012 school year and any subsequent years unless something changes. Budget 2011-2012

Budget 2011-2012 Proposal A Funding – Per pupil = ($6,846) (Lowest since 2004-2005 school year) Categorical Funding = Restricted A. State – At Risk B. Federal – Title I and Title II Sinking Funds = Restricted for capital purchases (Voted Millage – can not be used for salaries/benefits/capital purchases that can be removed from a building) Grant Funding and Others Very limited and also restricted for use. Budget 2011-2012

$(6,100,000) (Original projected deficit) -$900,000 (Fund equity) -$330,000 ($100/student special funding for retirement) -$330,000 ($100/student special funding in “Best Practice”) -$610,000 (Not replacing personnel through attrition) $(3,930,000) Budget 2011-2012

Budget 2011-2012 $(3,930,000) (Remaining projected deficit) -$1,000,000 (Elimination of teaching positions) -$2,430,000 (OPS Team) $(500,000) (Remaining deficit to be eliminated) Budget 2011-2012

Budget 2011-2012 $(500,000) Remaining deficit - $150,000 (Closing Lincoln/Administration buildings and 10% overall supply reduction) $(350,000) Remaining gap to be closed Budget 2011-2012

February 26th 2013

OPERATING MILLAGE PROPOSAL Ballot Language OPERATING MILLAGE PROPOSAL This proposal will allow the school district to continue to levy its authorized operating millage of 17.7259 mills on all property, except principal residence and other property exempted by law, required for the school district to receive its revenue per pupil foundation allowance. The remaining .5 mill is only available to be levied to restore millage lost as a result of the reduction required by the "Headlee“ amendment to the Michigan Constitution of 1963 and will only be levied to the extent necessary to restore that reduction. …

OPERATING MILLAGE PROPOSAL Ballot Language OPERATING MILLAGE PROPOSAL Shall the currently authorized millage rate limitation of 17.7259 mills ($17.7259 on each $1,000 of taxable valuation) on the amount of taxes which may be assessed against all property, except principal residence and other property exempted by law, in Owosso Public Schools, Shiawassee County, Michigan, be renewed, and increased by .5 mills ($0.50 on each $1,000 of taxable valuation), for a total authorized millage rate limitation of 18.2259 mills ($18.2259 on each $1,000 of taxable valuation),…

OPERATING MILLAGE PROPOSAL Ballot Language OPERATING MILLAGE PROPOSAL for a period of 20 years, 2014 to 2033, inclusive, to provide funds for operating purposes (17.7259 mills of the above is a renewal of millage which will expire with the 2013 tax levy, and .5 mill is an increase of millage which will be levied only to the extent necessary to restore millage lost as a result of the reduction required by the Michigan Constitution of 1963); the estimate of the revenue the school district will collect if the millage is approved and levied in 2014 is approximately $2,805,972?

“What if the millage is voted down?” The funds generated from the 18 mills are part of the basic budget for the school district. If this millage does not pass, the State will not replace the funding and Owosso School district will be forced to reduce or cut programs/ personnel / etc. to offset the loss.