Cory Plager, Financial Services Director NorthEast Washington ESD

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1 Cory Plager, Financial Services Director NorthEast Washington ESD Dave Loomer, Levy Specialist Spokane County Jon Gores, Managing Director D.A. Davidson & Co Jim McNeill, Bond Attorney Foster Pepper PLLC

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3 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. 3

4 Maintenance & Operation Levy (1 to 4 years) Capital Levy (1 to 6 years) Transportation Vehicle Levy (1-2 years) Bonds (varies, but 20 years most common) 4

5 School district certifies taxes to County 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. 5

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7 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 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 and Treasurer. 7

8 School districts prepare estimated levy authority during budget for the M&O Levy. OSPI Worksheet for Estimating 2018 Levy Authority and LEA. Posted in School Apportionment and Financial Services (SAFS) budget prep folder annually. OSPI calculates and posts final M&O Levy authority via memo (Nov 1 st ). If your M&O Levy exceeds calculated authority, rollback is required. You must update rollback to actual before final certification, unless excess voluntary rollback is preferred. 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 M&O, Capital and Transportation Vehicle Levies, and Bond Levies) are to be set forth on F195-Budget, Fund Summary page. With estimated rollback, if any. 8

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11 Sample Verification- Class Two Letter from ESD Superintendent Copy of F-195 Fund Summary Board Resolution if Certified Levy changes from F-195 Fund Summary 11

12 Sample Verification- Class One Letter from ESD Superintendent Copy of F-195 Fund Summary Board Resolution if Certified Levy changes from F-195 Fund Summary 12

13 If your certified levy will be different from what you budgeted we recommend a board resolution accompany your certification. 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 certifications bring two copies, the county will stamp received on one for your records. For those that mail, confirm receipt via or other written correspondence. 13

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15 Administrative Refunds A school may collect prior year refunds in the upcoming year Paid twice in error, clerical error, successful appeal to assessed value increases, etc. Letter from superintendent or business manager requesting collection Will not count against levy lid/rollback Considerations Will your tax rate exceed estimates if you collect? Currently administrative refunds are netted together 15

16 Adjudicated Court ordered refunds ~RCW Court enters judgement in favor of taxpayer and determines a refund amount. Refund is Mandatory and must be added to the levy. Administrative Refund ~ RCW Treasurer s Office determines a taxpayer is due a refund. Money is deducted from tax district levies and given to the taxpayer. Refund is Optional 16

17 2013 Legislation effective July 28, 2013 Cancellations and Abatements can be added to administrative refunds Cancellations are primarily exemptions awarded prior to tax collection, appeals. Abatement example would be destroyed property. Cancellations/Abatements are offset by any SUPPLEMENTS within the preceding 12 months Example would be removal of property from current use or designated forest programs. 17

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20 Changes in property values don t change the amount of taxes authorized Local school taxes can only be increased by a vote of the people Changing property values will change tax rates, but not tax collections Year Home Value Tax Rate Tax Bill XYZ School District Home Value 2016 $100,000 $5.00/$1,000 $500 Assume a 20% increase in Assessed Value for XYZ School District #1: 20% increase 2017 $120,000 $4.17/$1,000 $500 #2: 10% increase 2017 $110,000 $4.17/$1,000 $459 #3: 30% increase 2017 $130,000 $4.17/$1,000 $542 20

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22 District passes a two-year capital levy with tax collections of $1,500,000 each year for two consecutive years: 2016 and District fails to certify the $1,500,000 for 2016 tax collection. Under RCW , the Assessor is required to correct the error by adding $1,500,000 to the District s levy for collection in 2017, unless the District determines that amount is so large as to cause a hardship. This means that the correction could be made in one of two ways if the District determines correction in one year would cause a hardship: An adjustment of $500,000 added to District s levy amount for collection in 2017, 2018, and 2019; or An adjustment of $750,000 added to District s levy amount for collection in 2017 and Be careful: DOR believes there is also potential litigation risk associated with making an adjustment to the District s levy beyond the 2017 collection year because the voters only approved collection through

23 District issues voter-approved bonds in June 2016 with debt service payments in June and December However, district fails to certify taxes to pay debt service on the bonds in Washington Constitution and RCW authorize a school district to levy excess taxes unlimited as to rate or amount to repay bonds. District uses an interfund loan from GF or Capital Projects Fund to make debt service payments in 2017 (be careful: interfund loan may create negative fund balance depending on timing). In 2018, the District collects excess taxes sufficient to: (1) repay the interfund loan; and (2) pay debt service due in

24 Have another set of eyes review your budget projections for tax collections (e.g., ESD, underwriter, financial 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. 24

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26 Cory Plager, Financial Services Director NorthEast Washington ESD Dave Loomer, Levy Specialist Spokane County Jon Gores, Managing Director D.A. Davidson & Co Jim McNeill, Bond Attorney Foster Pepper PLLC