November 7, 2017 Sinking Fund Election FREQUENTLY ASKED QUESTIONS

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1 November 7, 2017 Sinking Fund Election FREQUENTLY ASKED QUESTIONS HISTORY AND FEATURES 1. What school proposal will appear on the November 7, 2017 ballot? On the November 7, 2017 ballot, voters in Troy School District will be asked to consider a 1-mill Building and Site Sinking Fund (BSSF) that would generate approximately $3.7 million annually for the next 10 years to fund ongoing facility and technology needs and repairs in our district buildings. If the BSSF proposal is approved by voters, it is estimated that the School District will be able to maintain the existing school levy with a ZERO INCREASE to the current tax rate. 2. Why a sinking fund and how was this plan developed? Because of persistent funding gaps from the State, the Troy School District continues to seek other ways fund quality education in the District. In 2013 voters supported the District s request for a 125 million dollar bond to cover expenses over the bond s 10-year lifespan. The District structured that bond in a way that did not raise property tax rates, but keeping the bond tax-neutral also meant it wouldn t cover everything the District knew it needed. The Board of Education hoped state funding would increase when the economy got better, but that hasn t happened. As a result, the District continues to struggle to pay for important things like repair of broken or worn infrastructure and safety and security upgrades on its buildings. Recent legislative adjustments in how sinking funds can be used have made this a potential avenue for covering some significant district costs, such as repair, refurbishment, facility improvements and construction, safety and security measures, and technology. The District recently retired some debt, so it could structure a new 1-mill sinking fund so that the total school millage rate in Troy would stay where it is, with no property tax increase from what homeowners pay today. That 1-mill would provide the District with 3.7 million dollars per year for the next ten years. In April 2017, the Board commissioned a survey of voters across the Troy community to determine the electorate s willingness to support a sinking fund proposal. The survey indicated that 69% of voters would support a 1-mill sinking fund initiative. In July 2017, the Board of Education unanimously supported putting a 1-mill Building and Site Sinking Fund proposal on the November 7, 2017 ballot.

2 3. What is a sinking fund millage? A sinking fund millage is a limited property tax, considered a pay-as-you-go method, for addressing building remodeling/repair needs and technology/security needs. State law allows a district only to levy up to 3 mills and for no longer than 10 years. The tax is levied each year, and then this amount is used to pay for the repairs and improvements. The district would not pay interest on the money used. The State of Michigan has legal requirements, restrictions and guidelines for public school districts that plan to fund capital enhancements or facility improvements through bond issues and sinking fund millage levies. Those authorities give specific guidance on what is considered an allowable use and what reporting and audit requirements are expected. Sinking fund money cannot be used to pay salaries or operational expenses. 4. Why is the sinking fund proposal important for the Troy School District? A 1-mill sinking fund millage would provide $3.7 million annually to our schools for needed projects. It would offset future, more costly expenditures, by allowing for timely repairs and renovations. It would allow classrooms and student learning to continue to be the priority for general fund expenditures. The Board of Education further felt that it would provide the resources needed to maintain our community commitment to excellence; thus keeping our schools strong, ensuring strong neighborhoods and strong property values. Protect the investment in Troy Schools Preserve excellence in our classrooms Ensure that our students are safe and secure in their learning environment 5. What are the main features of the November 7, 2017 Sinking Fund proposal? The Sinking Fund would address, but not be limited to the following: Offset future, more costly expenditures by initiating repairs and renovations before becoming a major problem to correct or becoming a safety issue. - Roofing - HVAC (heating, ventilation, air conditioning) - Flooring - Ceiling - Concrete - Pavement - Plumbing Address safety and security in our learning spaces by addressing the following: - Replace Broken Doors - Windows, Locks - Upgrade Lighting - Security Software Updates - Continually Enhance Safety Measures

3 6. Why are sinking fund millages becoming more common across Michigan public school districts? Most public schools have suffered severe cuts in state funding during the past several years. Without a sinking fund millage, a school district s necessary future facility repairs and upgrades would have to be paid for from its already-strained General Fund budget. This would mean cutting into support for educational programs for students. A sinking fund millage can provide more stability in a school district s budget to fund necessary repair and upgrade needs. Currently over 170 districts in Michigan utilize sinking fund millages to address facility repairs and upgrades and/or technology/security needs (15 districts in Oakland County have sinking funds.) 7. What are approved uses of sinking fund millage proceeds in Michigan? The repair of school buildings. A sinking fund may be used for repairs, but must be completed by contracted sources. A sinking fund may not be used for maintenance. Maintenance generally means keeping assets in good condition and repairs are directed at putting them back into good condition. Maintenance is preventative while repairs are curative. The purchase of real estate for school building sites. In addition to purchasing land for school building sites, the Department of Treasury has interpreted this provision to include the development and improvement of such sites. The Troy School District has NO intention of purchasing land with this fund and is not in need of any land. The construction of school buildings. The Department of Treasury has interpreted this provision to include the construction of new school buildings and additions to, and the remodeling of, existing school buildings. A sinking fund may be used for technology, but is limited to wiring or materials for installing technology and does not include equipment or software. A sinking fund may not be used for furnishing and equipping. School Security Improvements. This provision was included with the passing of House Bill 4388 of School Security Improvements is defined in MCL as any capital improvement or purchase that is designed to act as a deterrent to unauthorized entry of persons or items onto school premises or to otherwise promote security, including, but not limited to, metal detectors, locks, doors, lighting, cameras, enhancements to entryways, mobile telephone application that provides the ability to communicate with personnel on site while also connecting an emergency telephone call to a center. Technology. This provision was also included with the passing of House Bill 4388 of Technology is defined in MCL by referring to MCL a which provides the following meaning: a. Hardware and communication devices that transmit, or compute information for pupil instructional purposes. b. The initial purchase of operating system software or customized application software, or both, accompanying the purchase of hardware and communication devices under subdivision (a). c. The costs of design and installation of the hardware, communication devices, and initial operating system software or customized application software authorized under this subsection.

4 8. What are surrounding districts paying in school taxes? Current Rate Comparison Hold Harmless Sinking Fund Debt Other Local School District Total Southfield Lamphere Hazel Park Birmingham Farmington Novi Troy Troy (w/ 1.0 BSSF ) South Lyon Bloomfield Hills Lake Orion Oak Park Clawson Ferndale Madison Berkley Royal Oak Clarkston Rochester FINANCIAL AND ELECTION INFORMATION 9. If approved, what is the cost of the sinking fund millage to the average taxpayer? The sinking fund request is for 1.0 mill, which will generate approximately $3.7 million annually. The District recently retired some debt, so it could structure the 1-mill sinking fund so that the total school millage rate in Troy would stay where it is. Taxpayers would see ZERO increase to their current rate. 10. Can money from the sinking fund be used to pay for salaries and benefits? No, sinking fund dollars cannot be used for operational expenses such as employee salaries, maintenance or energy costs. Sinking fund dollars must be accounted for separately from general operating funds.

5 11. May I deduct these property taxes on my income tax return? Property taxes may be deductible as itemized deductions on your federal income tax return if you itemize. You also may be eligible for the Michigan Homestead Property Tax Credit on your Michigan income tax return. Please consult your tax preparer. 12. What exactly is the Michigan Homestead Property Tax Credit? The Michigan homestead property tax credit is a method through which some taxpayers can receive a tax credit for an amount of their property tax that exceeds a certain percentage of their household income. This program establishes categories under which homeowners or renters are eligible for a homestead property tax credit. Please consult with your tax preparer to determine if you are eligible for this valuable tax credit. 13. What are the key dates leading up to the November 7, 2017 vote? Final day to register to vote is Tuesday, October 10, 2017 Final day to vote absentee is Saturday, November 4, 2017 Election Day is Tuesday, November 7, Where and when do I register to vote? To vote in the November 7, 2017 school election, you must be a U.S. citizen; at least 18 years of age by Election Day; a resident of Michigan and the Troy School District and registered to vote. Please visit the Troy City Clerk to register or visit any Secretary of State office. You must be registered 30 days prior to an election to be eligible to vote. The official "last day to register" for the November 7, 2017 election is Monday, October 7, Printable voter registration forms are available on the state website, Please check with the Troy City Clerk s office for voting information: Aileen Bittner, Troy City Clerk 500 W. Big Beaver Rd, Troy, Michigan (bittnera@troymi.gov) 15. What is the procedure for absentee voting? Applications for Absentee Ballots are available: Online at In your school building offices At your Clerk s office Note: Once election ballots are available in the clerk s office, you may walk into your clerk s office, receive an absentee application, fill it out, and immediately be given your ballot to cast your vote. 16. Where do I vote? You will vote for the sinking fund election at the same location you always vote. The location is printed on your voter registration card provided by the Secretary of State. If you re unsure of your precinct s voting location, please go to the following link to review your city or township:

6 17. Who do I contact if I have additional questions? You are welcome to call or Kerry Birmingham Communications Department kbirmingham@troy.k12.mi.us Phone number: Visit the district website at: How will the proposal appear on the ballot? OFFICIAL BALLOT TROY SCHOOL DISTRICT COUNTY OF OAKLAND STATE OF MICHIGAN BUILDING AND SITE SINKING FUND TAX PROPOSAL This proposal, if approved by the electors, will allow the Troy School District to levy a building and site sinking fund tax, the proceeds of which will be used to make improvements and repairs to the School District s facilities. Pursuant to State Law, the expenditure of the building and site sinking fund tax proceeds must be audited, and the proceeds cannot be used for teacher, administrator or employee salaries, maintenance or other operating expenses. Shall the Troy School District be authorized to levy one (1) mill ($1.00 per $1,000 of taxable valuation), for a period of ten (10) years, from July 1, 2018 through June 30, 2028, to create a building and site sinking fund to be used for the purpose of the purchase of real estate for sites for, and the construction or repair of, school buildings, for school security improvements, or for the acquisition or upgrading of technology, and for other purposes, to the extent permitted by law? This millage would provide estimated revenues to the Troy School District of approximately Three Million Seven Hundred Forty-Five Thousand Two Hundred Fifty-Seven ($3,745,257) Dollars during the 2018 calendar year, if approved and levied. YES: NO: