KANELAND COMMUNITY UNIT SCHOOL DISTRICT

Transcription

1 KANELAND COMMUNITY UNIT SCHOOL DISTRICT #302 Business Office 47W326 Keslinger Road Maple Park, Illinois Phone: (630) Fax: (630) H-1 November 8, 2011 To: Dr. Jeff Schuler and Members of the Board of Education From: Dr. Julie-Ann Fuchs, Assistant Superintendent for Business Re: Approval of 2011 Tentative Tax Levy It is time once again to begin discussions on the annual Property Tax Levy. The tax levy is the amount of money, by fund, the taxing body requests to operate for the following year. It has been the custom of the Board to ensure the District will receive the maximum property taxes allowable under the Property Tax Extension Limitation Law ( Tax Cap ), and therefore as usual we will request amounts above what we believe will be the ultimate extension. Timetable By law, the Board must adopt its levy and file it with the County Clerk by the last Tuesday in December (this year - Tuesday, December 27, 2011). The only regular meeting scheduled in December is the 12 th, and we will target that date for the levy hearing and the final levy approval with an alternate date of December 19 th should bad weather cancel the meeting on the 12 th. The School Code stipulates that the Board shall adopt an estimated or tentative levy a minimum of 20 days prior to the scheduled hearing. Because the last Board meeting in November on the 28 th is less than 20 days before December 12 th, the Board will need to adopt the tentative levy at tonight s meeting on November 14 th. The schedule will be as follows: November 14 th November 28 th December 12 th December 19 th Adopt Tentative Levy Review Changes and Finalize the Fund Distribution Levy Hearing and Final Approval, with filing on December 13 th Alternate date for Levy Approval, with filing on December 20 th

2 2 Equalized Assessed Valuation (EAV) The first step each year is to estimate the EAV, because final numbers will not be known until March or April. Below is a history of the EAV changes over the past several years for both Kane and DeKalb counties combined: 2006 (actual) 2007 (actual) 2008 (actual) 2009 (actual) 2010 (actual) 2011 (estimated) Existing EAV $695,741,480 $805,286,377 $877,219,541 $888,302,321 $849,625,803 $804,442,707 New Construction $65,157,361 $50,740,221 $21,365,123 $8,086,243 $6,164,311 $3,700,000 Total EAV $760,898,841 $856,026,598 $898,584,664 $896,388,564 $855,790,114 $808,142,707 Existing EAV % Change 8.11% 5.83% 2.48% 1.24% -1.12% -6.00% Total EAV % Change 18.23% 12.50% 4.97% -0.24% -1.33% -5.57% After talking with the local assessors and receiving the EAV estimates from DeKalb and Kane Counties, and as indicated in the table above, it is estimated that the existing EAV from 2010 to 2011 may decrease by approximately 6% this year. Next, it is necessary to estimate new property, which is not capped by the Tax Cap. Last year new property decreased from $8,086,243 in 2009 to $6,164,311 in Discussions with township assessors indicate that new housing patterns in all of the villages have all but stopped. It is estimated that there will be a decrease in new property down to around $3,700,000. Total EAV is expected to be $808,142,707, a decrease of -5.57% over 2010 values. Tax Cap Restrictions and New Property The Tax Cap restriction is limited to the Consumer Price Index (CPI) or 5%, whichever is less, and applies that to the prior year s capped extension. The CPI being used this year is 1.5%, which is lower than last year s 2.7%. The total capped extension for tax year 2010 was $37,924,339. Applying the 1.5% allowable C.P.I. this year increases that amount to $38,670,252. This is the approximate amount of money that the existing property tax payers will pay to the school district.

3 3 New property is not subject to the tax cap. Using an estimate of $3,700,000 for new property, adding that amount to the 2010 Total EAV, and then applying the 2011 Limiting Rate of $ to the total estimated EAV will determine the new extension amount. The limiting rate of $ times $808,142,707 yields an expected extension for 2011 of $38,670,285, a 1.97% increase over the 2010 extension. New dollars from the 2011 extension are expected to be about $745,000. The limiting rate for 2010 was $ Actual 2010 Total EAV Estimated 2011 New Property Estimated Decrease in 2011 Total EAV Estimated 2011 Total EAV $855,790,114 $3,700, % $808,142,707 Aggregate Operating Levy 2011 Under PTELL, if a district levy s more than 105% from the prior year s extension, a levy hearing is required before the levy can be adopted in order to comply with the truth-in-taxation requirement. Historically, the Board s philosophy has been to ensure that we do not leave any potential tax money untapped, so it is necessary to levy more than is expected. This is called a balloon levy and is necessary because the levy is built on estimates. If a taxing district estimates low and does not receive the full extension amount, for all future years, it can never get back that money. Once the final EAV amounts are established, the county will determine the exact extension. With the decreasing EAV, it is not necessary to balloon the levy by the typical 5% above what is expected. The Board could use a 3% balloon, which would make the levy amount to be $39,791,700, and would still be covered in the case where new property EAV exceeds the projections or if the EAV drops greater than 6%. For example, if new property is $15M instead of our estimated $3.7M, the extension would increase to $39,210,966, so the Board would be covered by this 3% balloon. Given the estimates from the counties, it is highly unlikely that new property will reach $15M. Because the 3% balloon does not exceed 105% more than last year s extension, a levy hearing is not required, but it is a recommended practice for the Board. Our levy hearing will take place at the December 12 th Board meeting. Levy Comparison from 2010 to Extension (Actual) 2011 Levy (Estimate) Limiting Rate $4.4315/$100 EAV $4.7851/$100 EAV Extension (Operating Funds) $37,924,339 $38,670,285 Levy Amt. with 3% Cushion $39,791,700

4 4 Bond & Interest Levy Although we do not include the B&I levy on the tax levy certificate, the amount will be included in the final extension. The actual B&I payments next year increase from $8,200,474 to $8,957,460 (+9.23%). The total bond and interest tax rate is expected to be $1.11 per $100 assessed value, which is about fifteen cents more than Effect on Taxpayers The base tax extension from existing homeowners tax increase should be the CPI of 1.5%, while taxpayers from new construction make up the difference. Property in Illinois is assessed at 1/3 of its fair market value. For a house that is worth $200,000 on the real estate market, the assessed value is 1/3 of that value, or $66,667. The total tax rate for 2011 is estimated to be $ per $100 of EAV. It is estimated that the tax bill for a house valued at $200,000 would be approximately $3,930. Distribution Plans The attached document entitled 2011 Levy Calculation Page shows a comparison of the 2010 actual extension (Prior Year Extension) with the new expectations for 2011 (Prorated Extension based on prior year extension). The column labeled Individual Fund Estimated Maximum Extension represents the maximum amount of tax dollars that could be collected. This column shows the effect of the tax cap on our ability to maximize property taxes for the District. By estimating the needs in the Municipal Retirement and Social Security Funds and working backward into the Education, Transportation and O&M Funds, I have slightly modified the levy amounts in each fund. These changes are reflected in the Manual Override column. In order to get the levy amount, 3% is added to the amount in the Manual Override column, which provides the cushion for each fund. This cushion will help to ensure we do not leave any money on the table, and this bump would cover up to a $15 million new property figure, which should be more than adequate. Additional Attachments Also attached to this memorandum are miscellaneous documents required for the levy, including: - Levy Resolution: must be adopted not less than 20 days before final approval of the levy, scheduled for December 12 th ; to be adopted and signed at tonight s meeting. - Secretary s Certification of the Levy Resolution.

5 5 - Levy Certificate, the ISBE form filed with the County Clerks by the last Tuesday in December (December 27). Next Meeting At the November 28, 2011 Board meeting, the Board will review any potential changes to the levy. Then, at the December 12, 2011 Board meeting, the Board will have the levy hearing and adopt the Final Levy as indicated above. Recommendation: That the Board adopts the 2011 tentative levy in the amount of $48,749,

6 2011 LEVY CALCULATION PAGE Consumer Price Index: 1.50% Limiting Rate: (Prior Year Extension x (1+Lesser of 5% or CPI)) (Total EAV - New Construction) Actual Total EAV for 2010: $855,790,114 Estimated % change from 2010 EAV: -6.00% Estimated New Construction for 2011: $3,700,000 Estimated Total EAV for 2011: $808,142, Limiting Rate: % Total change from prior year: -5.57% Estimated Capped Extension: $38,670, Maximum Tax Rate: Individual Fund Estimated Maximum Extension: Prorated Extension based on prior year extension: Prior Year Extension: Manual Override: Balloon % input: Levy Amount: Educational $30,855, % $32,325, $31,462, $31,650, % $32,283, Operations & Maintenance $3,701, % $6,061, $3,774, $3,783, % $3,896, Transportation $1,750, % $1,616, $1,785, $1,800, % $1,854, Working Cash $121, % $404, $123, $100, % $103, Municipal Retirement $575, $0.00 $586, $583, % $600, Social Security $710, $0.00 $724, $724, % $745, Fire Prevention & Safety * $ % $404, $0.00 $ % $0.00 Tort Immunity $0.00 $0.00 $0.00 $ % $0.00 Special Education $209, % $323, $213, $300, % $309, Leasing $ % $404, $0.00 $ % $0.00 $ % $0.00 $0.00 $ % $0.00 Truth in 0 Taxation Capped Extension/Levy $37,924, $41,538, $38,670, $38,940, Capped Levy $39,791, % NO Levy in excess of estimated extension $1,121, SEDOL IMRF $0.00 SEDOL IMRF $0.00 Bond and Interest: $8,200, Bond and Interest: $8,957, $8,957, % Total Extension/Levy $46,124, Total Levy $48,749, %

7 STATE OF ILLINOIS ) ) SS COUNTY OF KANE ) AND DEKALB ) SECRETARY S CERTIFICATE I, Teresa Witt, the duly qualified and acting Secretary of the Board of Education of Kaneland Community Unit School District No. 302, Kane and DeKalb Counties, Illinois, do hereby certify that attached hereto is a true and correct copy of a Resolution entitles: RESOLUTION MAKING A DETERMINATION OF THE AMOUNTS ESTIMATED TO BE NECESSARY TO BE RAISED BY TAXATION which Resolution was duly adopted by said Board of Education at a regular meeting held on the 14 th day of November, I do further certify that a quorum of said Board of Education was present at said meeting, and that the Board of Education complied with all the requirements of the Illinois Open Meetings Act. IN WITNESS WHEREOF, I have hereunto set my hand this 14 th day of November, Secretary, Board of Education Kaneland Community Unit School District No. 302

8 RESOLUTION MAKING A DETERMINATION OF THE AMOUNTS OF MONEY ESTIMATED TO BE NECESSARY TO BE RAISED BY TAXATION WHEREAS, the Truth in Taxation Law at 35 ILCS 200/18-60 requires a determination not less than 20 days prior to the adoption of the levy of the amount of money estimated to be necessary to be raised by taxation; and WHEREAS, the Kaneland Board of Education (the District ) intends to comply with the Act. NOW, THEREFORE, BE IT RESOLVED, as follows: Section One: The District finds it necessary to raise $32,283,000 in the Education Fund. Section Two: The District finds it necessary to raise $309,000 in the Special Education Fund. Section Three: The District finds it necessary to raise $3,896,490 in the Operations and Maintenance Fund. Section Four: The District finds it necessary to raise $1,854,000 in the Transportation Fund. Section Five: The District finds it necessary to raise $600,490 in the Municipal Retirement Fund. Section Six: The District finds it necessary to raise $745,720 in the Social Security Fund. Section Seven: The District finds it necessary to raise $103,000 in the Working Cash Fund. Section Eight: This Resolution shall be in full force and effect upon its adoption and shall supersede any resolution or motions or parts of resolutions or motions in conflict with any part herein and any such resolutions or motions are hereby repealed. Adopted this 14 th day of November, AYES: NAYS: President, Board of Education Kaneland Community Unit School District No. 302 ATTEST: Secretary, Board of Education Kaneland Community Unit School District No. 302

9 ILLINOIS STATE BOARD OF EDUCATION Original: x School Business and Support Services Division Amended: 217/ A copy of this Certificate of Tax Levy shall be filed with the County Clerk of each county in which the school district is located on or before the last Tuesday of December. CERTIFICATE OF TAX LEVY District Name District Number County Kaneland CUSD 302 Kane, DeKalb Amount of Levy Educational $ 32,283,000 Fire Prevention & Safety * $ 0 Operations & Maintenance $ 3,896,490 Tort Immunity $ 0 Transportation $ 1,854,000 Special Education $ 309,000 Working Cash $ 103,000 Leasing $ 0 Municipal Retirement $ 600,490 $ 0 Social Security $ 745,720 Other $ 0 Total Levy $ 39,791,700 See explanation on reverse side. and Specified Repair Purposes. Note: Any district proposing to adopt a levy must comply with the provisions set forth in the Truth in Taxation Law. * Includes Fire Prevention, Safety, Energy Conservation, Disabled Accessibility, School Security, We hereby certify that we require: the sum of 32,283,000 dollars to be levied as a special tax for educational purposes; and the sum of 3,896,490 dollars to be levied as a special tax for operations and maintenance purposes; and the sum of 1,854,000 dollars to be levied as a special tax for transportation purposes; and the sum of 103,000 dollars to be levied as a special tax for a working cash fund; and the sum of 600,490 dollars to be levied as a special tax for municipal retirement purposes; and the sum of 745,720 dollars to be levied as a special tax for social security purposes; and the sum of 0 dollars to be levied as a special tax for fire prevention, safety, energy conservation, disabled accessibility, school security and specified repair purposes; and the sum of 0 dollars to be levied as a special tax for tort immunity purposes; and the sum of 309,000 dollars to be levied as a special tax for special education purposes; and the sum of 0 dollars to be levied as a special tax for leasing of educational facilities or computer technology or both, and temporary relocation expense purposes; and the sum of 0 dollars to be levied as a special tax for ; and the sum of 0 dollars to be levied as a special tax for on the taxable property of our school district for the year 2011 Signed this day of (President) (Clerk or Secretary of the School Board of Said School District) When any school is authorized to issue bonds, the school board shall file a certified copy of the resolution in the office of the county clerk of each county in which the district is situated to provide for the issuance of the bonds and to levy a tax to pay for them. The county clerk shall extend the tax for bonds and interest as set forth in the certified copy of the resolution, each year during the life of the bond issue. Therefore to avoid a possible duplication of tax levies, the school board should not include a levy for bonds and interest in the district's annual tax levy. Number of bond issues of said school district that have not been paid in full 0. (Detach and Return to School District) This is to certify that the Certificate of Tax Levy for School District No. 302, Kane, DeKalb County, Illinois, on the equalized assesed value of all taxable property of said school district for the year 2011 was filed in the office of the County Clerk of this County on, In addition to an extension of taxes authorized by levies made by the Board of Education (Directors), an additional extension(s) will be made, as authorized by resolution(s) on file in this office, to provide funds to retire bonds and pay interest thereon. The total levy, as provided in the original resolution(s), for said purposes for the year 2011, is $. (Signature of County Clerk) (Date) (County) copy of ISBE Form (08/2009) ctl2009.xls

10 Kaneland CUSD # Tax Levy Presentation (Funding for School Year) November/December 2011

11 Agenda Tax Levy General Information Tax Levy Process Data, Assumptions and Calculations Tax Levy Calendar

12 2011 Tax Levy General Information Tax Levy - The amount of dollars in each operating fund a school district asks for to pay the bills for the next school year. The Board of Education must adopt a levy no later than the last Tuesday in December and certify it with the County Clerk.

13 2011 Tax Levy General Information Largest source of revenue in the District Most stable and reliable revenue source Money arrives early and earns interest (June and September) The 2011 tax levy will pay for programs, services, operating costs, salaries, and other expenses for the school year.

14 Kaneland Sources of Revenue 15% 2% 6% Tax Levy (Local) Other Local State Federal 77%

15 The 2011 Tax Levy Process 1. Estimate EAV 2. Estimate New Construction 3. Apply CPI (Tax Cap) 4. Determine Limiting Rate 5. Distribute Levy into Funds

16 What is EAV? What is Equalized Assessed Valuation (EAV)? EAV is the property valuation (for individual and total property of a school district) after the county and state equalization calculations are performed. How much will the EAV grow from last year? Total EAV declined by 1.33% in 2010 after a 0.24% decline in It is estimated that the EAV will decline by about 6% in Why is EAV important? Any growth in EAV must be captured to ensure the financial health of the district. The total district EAV is multiplied by the approved tax rate (per $100 EAV) to arrive at the extension.

17 Kaneland CUSD #302 EAV by Type 0% 7% 10% 3% Commercial Farm Industrial Residential State Rail Road 80%

18 Example of an EAV Calculation 2010 Total EAV = $855,790, Total Operating Tax Rate = Multiply $855,790,114 X % = $37,924, (Total Operating Tax Extension)

19 Kaneland CUSD #302 Total EAV History Levy Year EAV Percent Change 2005 $643,578, $760,898, % 2007 $856,026, % 2008 $898,584, % 2009 $896,388, % 2010 $855,790, % 2011* $808,142, % *Estimate

20 $70,000,000 $60,000,000 $50,000,000 $40,000,000 Kaneland History of New Construction Growth $41,051,134 $65,157,361 $50,740,221 $30,000,000 $20,000,000 $10,000,000 $0 $21,365,123 $8,086,243 $6,164,311 $3,700,

21 What is PTELL? PTELL is short for the Property Tax Extension Limitation Law. PTELL is designed to limit the increases in property tax extensions (total taxes billed) for non-home rule taxing districts. Commonly called the Tax Cap, the use of this phrase can be misleading. PTELL does not cap an individual s property tax bill or property assessment. PTELL allows a taxing district to receive a limited inflationary increase in tax extensions on property.

22 What is the Limitation? Increases in property tax extensions for existing property are limited to the lesser of 5 percent or the increase in the national Consumer Price Index (CPI) for the year preceding the levy year. This limitation does not apply to new construction, which allows taxing bodies to recoup their fair share of tax revenue from that property. There has not been a CPI of 5 percent since the inception of the PTELL.

23 Tax Capped Counties

24 Consumer Price Index History CPI rates over the last six years: CPI Year Levy Year School Year 2010 = 1.5% Dec = 2.7% Dec = 0.1% Dec = 4.1% Dec = 2.5% Dec = 3.4% Dec = 3.3% Dec

25 EAV Change, CPI and Tax Rate Existing EAV Tax Rate Tax Rate Existing EAV Existing EAV Tax Rate CPI CPI CPI Given the CPI, if the existing EAV remains flat, the tax rate will remain flat. Given the CPI, if the existing EAV is decreasing, the tax rate will increase. NOTE: This is the current situation. Given the CPI, if the existing EAV is increasing, the tax rate will decrease.

26 Data, Assumptions and Calculations CPI = 1.5% Estimated EAV % Change from 2010 EAV = -6.0% Estimated New Construction = $3,700, (Gather estimates from talking with local tax assessors) Estimate Needs of each Fund beginning with IMRF and FICA Balloon Levy (add 3%) to protect District from estimate differences do not leave money on the table )

27 The Bottom Line (What Does All of this Really Mean?) At this point in time, the District estimates it will receive approximately $745,000 more from the 2011 Tax Levy than from the 2010 Tax Extension. In order to balance revenues and expenditures, expenditures in need to be limited by this amount, assuming state and federal funding remain consistent.

28 The Bottom Line (What Does All of this Really Mean?) The operating tax rate is estimated to increase to $ from $4.4315, or by $0.36. The bond and interest tax rate is estimated to increase to $ from $0.9582, or by $0.15. The total tax rate is estimated to increase to $ from $5.3897, or by $0.51.

29 The Bottom Line (What Does All of this Really Mean?) Home Value Approximate Tax Bill for School District $200,000 $3,930 $300,000 $5,895 $400,000 $7,860 $500,000 $9,825

30 2011 Kaneland Levy Calendar Date November 14, 2011 December 12, 2011 Before December 27, 2011 March/April 2012 May/June 2012 June/July 2012 Task Board approves tentative levy Levy Hearing and Board approves final levy File levy with County Clerk Verify levy and extension County sends out tax bills Collections begin and 1 st payment is received