how mcclearyhas impacted your taxpayers and school district · property tax levy certification...

Keeping up with Property Taxes:

How McCleary has Impacted your Taxpayers and School District

WSSDA Annual Conference, November 16th, 2018

Presenter Info

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Cory Plager, Vice PresidentD.A. Davidson & Co.

[email protected] | 509.462.6370

Jon Gores, Managing DirectorD.A. Davidson & Co.


Kassidy Probert, Executive Director NEWESD 101


Jim McNeill, Bond AttorneyFoster Pepper PLLC


Overview of Property Taxes

Regular• Not voter-approved• Purposes• Subject to certain rate and amount limitations• School districts may not impose regular property taxes

Excess• Voter approved • Purposes• Subject to certain rate and amount limitations• School districts may only impose excess property taxes

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School District Property Taxes

•Maintenance & Operation Levy/Educational Programs and Operation Levy (Enrichment Levy) (1 to 4 years)

• Capital Levy (1 to 6 years)

• Transportation Vehicle Levy (1 to 2 years)

• Bonds (varies, but 20 years most common)

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School District Property Taxes

According to OSPI Report 1061 for 2017• Eight schools did not have a M&O/EP&O levy

• Levy rate; ranges from $0.34 to $9.10 per $1,000 (Avg. $2.39)

• Levy; ranges from $18,325 to the $203,539,671

• Levy per student; ranges from $78 up to $8,079

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Source: OSPI Report Analysis of Excess General Fund Levies Collectible, 1061

Doran Decision Levy Lid

Law

10% Levy Lid

Increased Levy Lid to 20%, and added to

base

Created Local Effort Assistance

Temporary increase to Levy Lid by 4%, to 24%

Reduced by 2% to

22%, restored back to 24% in 1999

Increased Levy Lid another

4% to 28%

Lesser of $1.50 of Assessed Value or $2,500

per pupil

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Levy Lid History

Source: OSPI, Organizing and Financing Schools Publication, Funding for Maintenance and Operations of Schools

1979 1988 1994 1998 2011 2019

Source: OSPI, Organizing and Financing Schools Publication, Funding for Maintenance and Operations of Schools

Levy Changes – State Schools Tax

In 2018 the state schools tax increased to$2.70/$1,000 (adjusted by County)

• State schools tax was approximately $2.00/$1,000 in 2017depending on your county

Varies by County

depending on

assessment practices

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Levy Changes

In 2019 the state schools tax will decrease to$2.40/$1,000 (adjusted by County) (ESSB 6614)

• Scheduled to return to $2.70 in 2020 and 2021

In 2019 the maximum local “enrichment” levy amount will equal the lesser of $1.50/$1,000 assessed value or $2,500 per pupil

• $2,500 per pupil increases with inflation (CPI)

Image: https://dor.wa.gov/sites/default/files/legacy/Docs/Pubs/Misc/TaxTopic_Education.pdf

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A Tale of Two School Districts

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2017 2018 2019 2020 2021

ABC SD

EP&O Levy Rate

M&O Levy Rate

State School Tax*

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

2017 2018 2019 2020 2021

XYZ SD

School Bonds

Capital Projects Levy Rate

EP&O Levy Rate^

M&O Levy Rate

State School Tax*

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Levy Changes

Levy Collects < $1,500 per

Pupil

Between $1,500

and $2,500

$2,500 per Pupil

School Districts 193 60 42

Percent of School

Districts

65.4% 20.3% 14.2%

Local Effort

Assistance Eligible

Yes No No

Source: OSPI, Worksheet for Estimating 2019 through 2022 Levy Authority and LEA

10Source: OSPI, Worksheet for Estimating 2019 through 2022 Levy Authority and LEA

How are Property Taxes Collected?

• School district certifies taxes to the legislative authority of the County by November 30

•Legislative authority of the County must certify taxes to the County Assessor by November 30

• County Assessor extends taxes on the property tax roll

• Property tax roll delivered to the County Treasurer by January 15

• County Treasurer bills and collects taxes

• Taxes are due and payable April 30; but if the amount due from a taxpayer exceeds fifty dollars, one-half may be paid then and the balance no later than October 31 of that year

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Property Tax Levy Certification

• School districts are required to file “budgets or estimates of the amounts to be raised by taxation” with the “clerk of the county legislative authority on or before the thirtieth day of November.” ~RCW 84.52.020

─ Class One (over 2,000 FTE): The Board of Directors must file

─ Class Two: The Superintendent of each Educational Service District must file

• The legislative authority is the County Commissioners

• Copy to the Auditor, Assessor, Treasurer, and ESD Superintendent (for class one)

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• School districts prepare estimated levy authority during budget process for the EP&O/M&O Levy

─ OSPI posts budgeting tools to estimate authority

• OSPI calculates and posts levy authority via report F-780 (October 30th).

•If your EP&O/M&O Levy approved by voters exceeds calculated authority, rollback is required by Nov. 30• Due to the lack of final assessed valuations, OSPI states districts may certify a higher

amount to County Assessors to ensure the maximum collection of $1.50

• Once the Assessor certifies AV for collection (after Nov. 30), the Assessor will roll back actual levy collection amount to conform to $1.50 or $2,500 per student, as applicable

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• For bonds, amounts obtained from underwriter or financial advisor, and for capital and TVF Levies, amounts obtained from authorizing resolution and ballot proposition

• Levy amounts (including EP&O/M&O, capital and transportation vehicle levies, and bond levies) are to be set forth on the F195 budget ‘fund summary’ page

•It is recommended that school boards adopt resolutions for levy certification that have language regarding the County’s role in setting school levy amounts

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15

• Voter Approved: $6,000,000

Ballot

• F195 Cert: $6,000,000

Budget

• OSPI Authority: $6,000,000

Certification

Property Tax Levy Certification Example

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•Inflated Assessed Value (AV)

•Maximize local funding formulas

•Some used > $1.50

Ballot

•Estimate based on Prelim AV, or

•OSPI Worksheet: Estimating Levy Authority and LEA

Budget•Certify highest amount

approved by voters (via resolution)

•Assessor will Roll-back once actual AV is certified

Certification

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Due to the lack of final assessed valuations, OSPI states

districts may certify a higher amount to County Assessors

to ensure the maximum collection of $1.50

• Voter Approved: $6,000,000

Ballot

• F195 Cert: $5,100,000

Budget

• Certification: $6,000,000 (Voter Approved)

Certification

Property Tax Levy Certification Example

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County

Preliminary:

$5,255,845


New legislative creates timing and information challenges:

• Created a budgeting dilemma

• Created challenges for schools in smaller counties

• Flexibility with revisions to levy certification

• Lack of preliminary data available to make decisions

• Inflated Assessed Value (AV)

• Maximize local funding formulas

• Some used > $1.50

Ballot

• Estimate based on Prelim AV, or

• OSPI Worksheet: Estimating Levy Authority and LEA

Budget• Certify highest amount

approved by voters (via resolution)

• Assessor will Roll-back once actual AV is certified

Certification

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Sample Verification-Class One• Letter from Board

of Directors (or designee)

• Board resolution if certified levy changes from F-195 fund summary

• Copy of F-195 fund summary (depending on County)

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Sample Verification-Class Two• Letter from ESD

Superintendent• Copy of F-195

fund summary (depending on County)

• Board resolution if certified levy changes from F-195 fund summary

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• If your certified levy will be different from what your board approved in your budget, most counties require a board resolution.

• If your levy is the same as budgeted, a letter confirming your budgeted levy to the county is permitted

‒ There is no official form to file with the legislative authority, DOR has a template

‒ Certification documentation may vary between schools and ESDs

• For those that hand deliver certification – bring two copies, the county will stamp a receipt confirmation on one for your records

• For those that mail, confirm receipt via email or other written correspondence

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Property Tax Levy Refunds

• 2013 Legislation effective July 28, 2013

• Administrative Refunds─ A school may collect prior year refunds in the upcoming year

o Paid twice in error, clerical error, successful appeal to assessed value increases, etc.

─ Letter from superintendent or business manager requesting collection

• Considerations─ Will your tax rate exceed estimates proposed to the taxpayers if you

collect?

─ Currently administrative refunds are netted together on tax statements

─ Impact of EHB 2242 and the $1.50 limit in the General Fund

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Considerations

• Have another set of eyes review your budget projections for tax collections (e.g., ESD, underwriter, municipal advisor and bond attorney review)

• If a problem arises, seek immediate advice from ESD, OSPI, underwriter, financial advisor, bond attorney or local legal counsel. Don’t try to solve the problem on your own

• Develop a relationship with your County officials, keep them updated and aware of your levy strategies

• Don’t hesitate to ask questions

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Post-McCleary Elections

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In the February

2018 election,

most counties

observed an

overall decrease

in voter support.

Sources: OSPI report 1463-GF

Secretary of State 2018 February Special Election Voters Pamphlet and Results, http://www.k12.wa.us/safs/PUB/LEV/1718/1463gf.pdf 29

An analysis of the 153 school districts who submitted ballotresolutions for the February 2018 election shows no correlationbetween tax rates on the ballot and yes percentages

Source: Secretary of State 2018 February Special Election Voters Pamphlet and Results

(https://www.sos.wa.gov/elections/research/2018-voters-pamphlet.aspx)


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Sources: Secretary of State 2018 February Special Election Voters Pamphlet and Results

(https://www.sos.wa.gov/elections/research/2018-voters-pamphlet.aspx)

An analysis of the 153 school districts who submitted ballot resolutions for the February election

show a correlation between the length of the levy and the overall yes percentage. Historically

there has not been a correlation between levy years and yes votes, but this is the first in four

years to show that there was a relationship between the length of the levy and yes votes.

EDUCATIONAL

PROGRAMS AND

OPERATIONS

LEVIES


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Source: State of Washington, Office of Superintendent of Public Instruction

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Source: State of Washington, Office of Superintendent of Public Instruction

12

4

12

5

14

7

19

2

23

16

34

15

34

16

49

15

29

11

62

-5

5

15

25

35

45

55

65

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Nu

mb

er

Pa

sse

d

Capital Projects Levies Approved

Post-McCleary Questions�Will it be harder to pass a levy due to:

� Supreme Court declaration that schools are fully funded?

� Negotiation backlash?

� Taxes too high?

� School districts in deficit budget?

�Will the legislature increase local taxes, again? If so, when?

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Questions?

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Cory Plager, Vice PresidentD.A. Davidson & Co.


Jon Gores, Managing DirectorD.A. Davidson & Co.


Kassidy Probert, Executive Director NEWESD 101


Jim McNeill, Bond AttorneyFoster Pepper PLLC


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