School System Funding, & School Property Tax Exemptions Informational Meeting. Held at Chattahoochee Technical College 4/17/2018

Transcription

1 School System Funding, & School Property Tax Exemptions Informational Meeting Held at Chattahoochee Technical College 4/17/2018 1

2 2 Meeting Rules This is an informational meeting only. This topic can become emotional. Let s keep our opinions and our emotions in check and be respectful of those who may have differing views on the information presented.

3 3 Question for Tonight What is a "meaningful exemption?

4 Roles of the Board of Education Oath of Office: I will truly and faithfully discharge all the duties required of me by law I will support the Constitution of the United States and of this state. So help me God. (O.C.G.A ). Georgia law provides that although there are many measures of the success of a local board of education, one is clearly essential; maintaining accreditation and the opportunity it affords. Vote in the best interests of students at all times. Code of Ethics: Render all decisions based on available facts and his or her independent judgment and refuse to surrender his or her judgment to individuals or special interest groups. 4

5 Why am I Involved?. I began my BOE term in January 2015 School Tax Exemptions ads were in the newspaper weekly The BOE had it s first public participation in Dec According to the Constitution of the State of Georgia, the BOE is NOT responsible for any exemptions. The governing authority of a county or municipality, however, the school system is directly affected by any and all exemptions granted locally. I began accumulating information and related data. I requested and received from Pickens Seniors for Change their proposals in January. These will be referenced in this presentation 5

6 Pickens County Schools Informational Meeting I am NOT a tax assessor!! I have had no part in assessing ANY property that you might own. There is no information in this presentation that is intended to show any disrespect to senior citizens! There is no information in this presentation that is intended to show any disrespect to citizens of any area of our county! 6

7 7 What does the Georgia Constitution say about Education? "The provision of an adequate public education for the citizens shall be a primary obligation of the State of Georgia. Public education for the citizens prior to the college or postsecondary level shall be free and shall be provided for by taxation." (Georgia Constitution 8-1-1) The board of education of each school system shall annually certify to its fiscal authority or authorities a school tax not greater than 20 mills per dollar for the support and maintenance of education. Said fiscal authority or authorities shall annually levy said tax upon the assessed value of all taxable property within the territory served by said school system, provided that the levy made by an area board of education, which levy shall not be greater than 20 mills per dollar, shall be in such amount and within such limits as may be prescribed by local law applicable thereto. (Georgia Constitution 8-6-1)

8 8 Funding of Pickens County Schools FY17 Local 48.61% State 44.37% Federal 7.02%

9 9 Federal Funds All federal funds are received through grant programs Some of which go directly to the local school system but most of which are sent to the State Department of Education and distributed pursuant to federal and state regulations and rules to local systems. Designated as Title - Free and Reduced, Special Education Federal Vocational Grants Food Service Grants

10 10 Key take-aways from above slide Federal Funds are highly monitored and can only be used for designated purposes.

11 E-SPLOST Funds 1% Local Sales Tax used for Educational Purposes. Technology Textbooks School Buses/ Transportation Vehicles Construction/ Modifications of Facilities Classroom Additions Physical Education Facilities/ Athletic Facilities Cafeterias Etc. Jan.17 Feb. 18 Average $385K/ mos. 11

12 12 Key take-aways from above slide 1% tax collected from sales inside Pickens County Includes sales collected from people who may not live in Pickens, but chooses to shop in Pickens

13 Local Funding Local funding comes primarily from Ad Valorem taxes. (Real & Personal Property) Motor Vehicles Mobile Homes Timber Heavy Duty Equipment % of your property taxes went to Pickens County Schools. All property is assessed at 40% of market value except timber which is at 100% 13

14 State Funding/ QBE Act Georgia funds education with QBE (Quality Basic Education) earnings. QBE earnings are based on full-time equivalent (FTE) student counts in the various different instructional programs. QBE Act was written into law by the 1985 Georgia General Assembly The QBE Act put in place a mechanism by which every child in Georgia, no matter where he or she lived, had access to an education that received sufficient funding to provide a Quality Basic Education. The QBE Act specified that the funding of education was a shared responsibility between the state and local communities.. districts are required to levy the equivalent of at least 5 mils in property taxes as a basic local commitment. (LOCAL FAIR SHARE) 14

15 State Funding Equalization Grants: Additional funds provided through Equalization Grants to assist the systems with the least taxable property per student. QBE earnings are intended to provide for an adequate education. Equalization is an attempt to address equity. The concept of equalization is related to the concept of the Local Fair Share. Because all counties are not created equal in terms of property tax wealth, they cannot raise the same amounts of money from local property taxes. All 180 school districts are ranked according to their property wealth per student. 15

16 Local Fair Share QBE Act of 1985 COUNTY FTE 5 mil. Local Fair Share 1 Fulton 95,248 $147,089,872 2 Cobb 114,410 $136,707, Rabun 2,176 $7,705, Pickens 4,266 $6,589, Fannin 2,943 $6,178, Dawson 3,409 $5,855, Gilmer 4,142 $5,355, Union 2,692 $5,298, Lumpkin 3,758 $4,774, White 3,845 $4,004, Towns 1,025 $3,597,939 FY 17 amounts 192 districts on the report FY 15 6,355,431 FY 16 6,529,210 FY 17 6,589,225 16

17 Georgia Budget and Policy Institute Georgia s General Fund Revenue FY 2018 Personal Income Tax $11.5 Billion 45.8% Corporate Income Tax $1 Billion 4.2% Sales Tax $5.8 Billion 23.4% Other Taxes and Fees $3.6 Billion 14.3% Motor Fuel Tax $1.8 Billion 7.2% Lottery Funds $1.1 Billion 4.5% Tobacco Settlement Fund $137 Million.5% = $25 Billion $9.4 Billion K-12 $2.3 Billion USG $361 Million TCSG $114 Million Ga. Student Finance Commission: Scholarships, Dual Enrollment $12.3 Billion/ 52% of General funds for Education 17

18 Key take-aways from above slides 2 Primary Sources of Revenue: Local - Ad Valorem Taxes State QBE Formula is based on FTE student count. Once Pickens County School s earnings are calculated, 5 mils [approximately $6.5 million] are deducted from the formula by the state before sending the remainder to the Pickens County School District. Pickens County s deducted $6.5 million is then distributed [Equalization described above] to counties with less property wealth per student. 18

19 Key take-aways from above slides It has been stated that the state will simply make up any revenue shortage that Pickens County Schools may obtain. This statement is not true. Options for a shortfall of revenue from local Ad Valorem Tax include: Cutting of school services or programs Larger class sizes Faculty and staff furlough days Faculty and staff reduction of force [layoffs] Increase in mileage rate for all taxpayers 19

20 State Demographic Changes ( ) AGES 0-24 AGES AGES AGES % +15% +3% +56% Georgia Chamber of Commerce, Georgia

21 21 Key take-aways from above slides Graph above represents changes in the percentage of each displayed age group in Georgia by 2030:

22 22 What will happen? If Georgia sees a 56% increase of citizens 65 and older, most likely retirees; where will they want to live??

23 23 What will happen? If Georgia sees a 56% increase of citizens 65 and older, most likely retirees, where will they want to live?? Did you say mountains?

24 24

25 Region 1 Pickens Demographic Changes ( ) AGES 0-24 AGES AGES AGES % +46% -5% -5% Georgia Chamber of Commerce, Georgia

26 26 Key take-aways from above slides Graph above represents changes in the percentage of each displayed age group in Pickens by Pickens County will show a large increase in senior citizens in the coming years.

27 * Denotes % of change in age group based on trend from 2010 Population Trends In Pickens Red = declining population age group Green = increasing population age group TOTAL POP. AGE 2030 (-5%) 26.2% (+5%) 23.8% (-5%) 27.8% (+46%)29.4% (+9.2%)32,977 *2030 *21.78% *15.47% *29% *32.10% *31,945 * % 22.7% 29.3% 20.2% 29, % 23% 29.8% 19.5% 29, % 23.1% 29.9% 19% 29, % 23.7% 29.8% 17.8% 29, % 24.4% 29.4% 16.8% 29, % 25% 29.4% 15.9% 29, % 25.8% 29% 15.1% 29, *Ga Chamber of Commerce Projected Changes from 2016 Data Data source: factfinder.census.gov 27

28 28 Key take-aways from above slide Population Trends per Age Group Ages 0-24: Declining from 30% to 22% Ages 25-44: Declining from 26% to 15% Ages 45-64: Remains the same at 29% Ages 65+: Increases from 15% to 32%

29 What will happen? 2016 Percent Population Age 65 Or Older Georgia Chamber of Commerce, Georgia

30 What will happen? 6 counties currently have a 25% or higher population of those 65+: Fannin, Greene, Quitman, Rabun, Towns, Union By 2030, this number will grow to 56 counties Why this matters: Baby Boomers [born ] who are retiring in the next years. One of the largest generations in American history is about to be the largest number of senior citizens we've ever seen. Think about what this means for our healthcare sector. Think about what this means for property taxes and schools if you have senior property tax exemptions. How will we perform community services for a large number of people who may not be driving years from now. 30

31 31 Center for Disease Control (CDC) Report 2016 Life Expectancy in Years As life expectancy increases, the footprint of any school tax exemptions will have longer lasting impacts.

32 32 Center for Disease Control (CDC) Report Healthcare in past 12 months Prescription Drugs in Past 30 days 92.1% 76.7% 86.3% 94.5% 21.5% 36.5% 69.6% 90.8% Hospitalization in Past Year 5.8% 7.7% 15.2%

33 Top Growing Industry Sectors Jobs 2025 Healthcare + 16% 10-20% Total Employment 2017 Construction +12% Professional, Scientific, Tech Georgia Chamber of Commerce, Georgia % Wholesale Trade +6% 2025 GA. SHORTAGE 1300 PHYSICIANS 6700 NURSES If we don't address our healthcare crisis, we're going to have major economic impact to our communities combined with a huge need for services that can't be met. 33

34 34 Key take-aways from above slide As population of Senior Citizens in Pickens County increases, the healthcare industry will have to find a way to provide services to meet the higher needs of healthcare for the aging population. Pickens County Schools will have to invest more in the Healthcare Sciences to prepare more students for the healthcare field.

35 Who Will Pay Taxes? AGES 0-24 AGES AGES AGES % of individuals not working +46% 26% of Pop. +5% -5% -5% 30% of Pop. Georgia Chamber of Commerce, Georgia

36 Key take-aways from above slide Age Groups Who Will Pay Taxes By % of these age groups NOT working Ages 0-24: *Declining percentage of population *Very small percentage paying taxes Ages 25-44: *Declining percentage of population *Pays taxes Ages 45-64: *Neutral percentage of population growth *Pays taxes Ages 65+: *Increasing percentage of population *Additional tax exemptions will decrease the number of this age group paying taxes 36

37 1) Must have a regular Homestead Exemption. 2) Must have 3 letters from doctors stating 100% disabled. (Will accept the letter from Social Security as one of the letters). We need copies of the letters. 3) Total GROSS income for the Homesteaded property cannot exceed $25,000 for everyone living on the property. 4) Bring in end of year statements for social security, retirement and any other source of income. (Including if renting out property, part-time wages, etc.) 5) If property was sold this previous year must also be included in the $25,000 gross income. 6) Filing for exemption is January 1 thru April Disability Exemptions Qualifications (Current)

38 Local School Tax Exemption Qualifications (Current) 1) Must have a regular Homestead Exemption. 2) Must be 62 or older on January 1 of the year that they are applying. 3) Total GROSS income from all sources, for the Homesteaded property cannot exceed $25,000 for everyone living on the property. 4) Bring in all statements for social security, retirement and any other source of income. (Including if renting out property, part-time wages, etc.) 5) If property was sold this previous year must also be included in the $25,000 gross income. 6) Filing for exemption is January 1 thru April 1. 38

39 39 Key take-aways from above slides 2 above slides are the current tax exemptions available for those who meet the exemption qualifications

40 2017 Federal Poverty Guidelines (FPG) $12,060 for a family of one. $16,240 for a family of two. $20,420 for a family of three. $24,600 for a family of four. 40

41 41 Seniors For Change Proposal To amend an Act providing a homestead exemption from Pickens County School District ad valorem taxes for educational purposes (approved for 4/21/97) from $25,000 gross income, to $40,000 net income, provisionally for five (5) years, for residents of that school district who are disabled or who are 65 years of age or older; and to exclude Social Security benefits and retirement income; to change income requirements from all members of the family residing within the household to income of homeowner and spouse who reside in and occupy the homestead ; to provide for annual cost of living adjustments;

42 42 Gross vs. Net Income Standard Deductions Taxpayer Gross Income Net Income $25,000 $18, $38,752 $28, $41, $30,000 $55, $40,000 $51, $37, $68, $49,336.46

43 2015 AVERAGE GROSS HOUSEHOLD INCOME $48,859 $50,043 $41, $46, $78, MEDIAN AGE $58,587 $48, AVERAGE GROSS HOUSEHOLD INCOME $54,123 43

44 44 Key take-aways from above slide Seniors for Change proposes current $25k gross income change to $40k net $40k net is equivalent to approximately $55k gross income $55k gross is higher than the average gross income for all of Pickens County

45 45 Key take-aways from above slide Example of a qualified citizen s income if Seniors for Change Proposal (slide 40) was passed Income from job $40K net approx. $55,000 Income from Retirement Plan + $65,000 Social Security Income (Pickens average) + $20,137 = $140,137 Yearly income, and exempt from Pickens County School tax

46 SmartAsset.com 46 Pickens is Fifth Highest in Social Security Payments #1-Forsyth: $20,553 #5-Pickens: $20,137 #6-Dawson: $20,132

47 47 Seniors For Change Proposal To amend an Act providing a homestead exemption from Pickens County School District ad valorem taxes for educational purposes (approved for 4/21/97) from $25,000 gross income, to $40,000 net income, provisionally for five (5) years, for residents of that school district who are disabled or who are 65 years of age or older; and to exclude Social Security benefits and retirement income; to change income requirements from all members of the family residing within the household to income of homeowner and spouse who reside in and occupy the homestead ; to provide for annual cost of living adjustments;

48 48 Key take-aways from above slide After 5 years, impacts are assessed Who assesses? How much time can lapse before a change assessment can be agreed upon? How long until the next Legislative Session? How long until the next voting cycle for voting on any new changes? How long until new changes are in place?

49 49 Seniors For Change Proposal To amend an Act providing a homestead exemption from Pickens County School District ad valorem taxes for educational purposes (approved for 4/21/97) from $25,000 gross income, to $40,000 net income, provisionally for five (5) years, for residents of that school district who are disabled or who are 65 years of age or older; and to exclude Social Security benefits and retirement income; to change income requirements from all members of the family residing within the household to income of homeowner and spouse who reside in and occupy the homestead ; to provide for annual cost of living adjustments;

50 50 Seniors For Change Proposal To amend an Act providing a homestead exemption from Pickens County School District ad valorem taxes for educational purposes (approved for 4/21/97) from $25,000 gross income, to $40,000 net income, provisionally for five (5) years, for residents of that school district who are disabled or who are 65 years of age or older; and to exclude Social Security benefits and retirement income; to change income requirements from all members of the family residing within the household to income of homeowner and spouse who reside in and occupy the homestead ; to provide for annual cost of living adjustments;

51 SmartAsset.com 51 Is Georgia tax-friendly for retirees? Georgia is very tax-friendly toward retirees. Georgia does not tax Social Security retirement benefits When filing income taxes in Georgia, any Social Security that is included in the Adjusted Gross Income on your federal tax return should be subtracted from your income on your Georgia tax return. That means none of your Social Security income will be subject to tax. Georgia provides a deduction of $65,000 per person on all income from retirement accounts and pensions for anyone over the age of 64. For anyone age 62 to 64, the exclusion is $35,000 per person If you have less than $65,000 in retirement income, you will not pay taxes.

52 Key take-aways from above slide Social Security: exempt from State taxes Retirements and Pensions: $65k exemption per person from State taxes Two Primary Sources of Funding for Pickens County Schools State Funds Local Funds Anyone receiving Social Security, Retirement, or Pensions are already receiving exemptions from the state source of funding (state income taxes) for Pickens County Schools and if age 62+, gross income does not exceed $25k, qualify for the current exemption. Any local exemptions will exempt qualified senior citizens from local funding as well 52

53 Georgia Tax Expenditure Report FY19 Georgia Budget & Policy Institute Personal Exemption Retirement Income Exclusion of Federally Taxable Social Security Benefits $7,400 Married Filing Joint $3,700 Married Filing Separately $2,700 For all other filers $3,000 In Addition Excluded from Income for each Dependent Claimed on Tax Return 65+ May Exclude a maximum of $65,000 Retirement Income. This income may include a Maximum of $4,000 of Earned Income. Social Security Benefits are Excluded from State Taxable Income. Cost: $1,048,000,000 Cost: $1,155,000,000 Cost: $189,000,

54 54 Key take-aways from above slide The Senior Citizen Retirement Income Exemption is the # 1 cost to Georgia s revenue in regards to exemptions. Cost: $1.1 Billion annually

55 55 Seniors For Change Proposal To amend an Act providing a homestead exemption from Pickens County School District ad valorem taxes for educational purposes (approved for 4/21/97) from $25,000 gross income, to $40,000 net income, provisionally for five (5) years, for residents of that school district who are disabled or who are 65 years of age or older; and to exclude Social Security benefits and retirement income; to change income requirements from all members of the family residing within the household to income of homeowner and spouse who reside in and occupy the homestead ; to provide for annual cost of living adjustments;

56 56 Key take-aways from above slide Will this provision provide a loophole in which many people could reside in a household and not be responsible for paying taxes?

57 57 Seniors For Change Proposal To amend an Act providing a homestead exemption from Pickens County School District ad valorem taxes for educational purposes (approved for 4/21/97) from $25,000 gross income, to $40,000 net income, provisionally for five (5) years, for residents of that school district who are disabled or who are 65 years of age or older; and to exclude Social Security benefits and retirement income; to change income requirements from all members of the family residing within the household to income of homeowner and spouse who reside in and occupy the homestead ; to provide for annual cost of living adjustments;

58 Seniors For Change Proposal B COLA Cost of Living Adjustments $25,000 $38, $40, $49, $30,000 $37, $40,000 $49, % average annual increase -21 years Social Security Administration Website 58

59 Gross vs. Net Income Standard Deductions Taxpayer Gross Income Net Income $25,000 $18, $38,752 $28, $49, $36, $41, $30,000 $51, $37, $55, $40,000 $68, $49,

60 60 Key take-aways from above slides Cost of Living Adjustments If cost of living adjustments were put in place in 1997 on the current $25k gross income senior tax exemption, that number would be $38,752 today based on an average 2.12% increase per year. If the proposal of $40k net ($55,286 gross) were to be in place in 2020 with an average cost of living adjustment, by 2030 that number would be $49,336 net ($68,191 gross). Do these numbers correspond with the National Poverty Level? Do these numbers identify with the term meaningful exemption? What percentage of income increase have you annually received over the past 20 years? Will your income grow at this rate over the next 10 years?

61 SENIORS FOR CHANGE PROPOSAL To provide a homestead exemption from Pickens County School District ad valorem taxes for educational purposes in the amount of $153,400 of the assessed value of that homestead for certain residents of that school district who are disabled or who are 65 years of age or older; to provide for definitions, to specify the terms and conditions of the exemptions and the procedures relating thereto, to provide for annual adjustments; This number is 40% of the Fair Market Value FMV $383,

62 Seniors For Change Proposal To provide a homestead exemption from Pickens County School District ad valorem taxes for educational purposes in the amount of $100,000 of the assessed value of that homestead for certain residents of that school district who are disabled or who are 65 years of age or older; to provide for definitions, to specify the terms and conditions of the exemptions and the procedures relating thereto, to provide for annual adjustments; This number is 40% of the Fair Market Value FMV $250,

63 63 1 st Quarter Pickens County Home Sales Location Minimum Maximum Average Median Big Canoe (22 sold) $177,000 $640,000 $353,545 $338,500 Bent Tree (15 sold) Other (62 sold) $117,900 $395,000 $213,507 $208,800 $39,500 $441,000 $202,932 $195,000 FMLS (First Multiple Listing Service, Inc.) Report

64 64 Key take-aways from above slide Compare proposals to the averages of Pickens County home sales

65 Georgia Budget and Policy Institute Georgia s General Fund Revenue FY 2018 Personal Income Tax $11.5 Billion 45.8% Corporate Income Tax $1 Billion 4.2% Sales Tax $5.8 Billion 23.4% Other Taxes and Fees $3.6 Billion 14.3% Motor Fuel Tax $1.8 Billion 7.2% Lottery Funds $1.1 Billion 4.5% Tobacco Settlement Fund $137 Million.5% = $25 Billion $9.4 Billion K-12 $2.3 Billion USG $361 Million TCSG $114 Million Ga. Student Finance Commission: Scholarships, Dual Enrollment $12.3 Billion/ 52% of General funds for Education 65

66 The Georgia Center for Early Language and Literacy in Milledgeville, Ga The Center s mission to improve Georgia s literacy rate from birth to age eight Providing support to educators in K-3 classrooms, child care centers and preschools through professional learning and training. 66% of students who enter fourth grade lack the necessary vocabulary and reading comprehension skills to be successful. Without the right intervention to support these students, there is a 78% chance they will not catch up with their peers. What happens? Almost 20,000 students drop out of school in Georgia each year. 70% of Georgia inmates are high school dropouts. 85% of US juvenile inmates are functionally illiterate. 2/3 of students who can t read proficiently by the fourth grade will end up in jail or on welfare. U.S. Department of Labor reports that illiteracy costs business and industry in Georgia approximately $2.1 billion annually. 66

67 67 Georgia Budget and Policy Institute Billion of State Budget to Fund 1.7 Million K Billion of State Budget to Fund 54,000 inmates $5, per student $22, per inmate

68 68 Key take-aways from above slide The above slides demonstrate how a quality education impacts society as a whole, regardless of whether or not you have children. Who is exempt from the negative impacts of an illiterate society? Who is responsible for the incarcerated population?

69 69 Question for Tonight What is a "meaningful exemption?

70 Single Female Age: 71 Income: $11,057 Income Sources: S/S No Other Income Examples of Seniors Using the Current Exemptions. Single Female Age: 67 Income: $23,706 Income Sources: S/S No Other Income Single Male Age: 66 Income: $13,495 Income Sources: S/S No Other Income Single Female Age: 66 Income: $9,324 Income Sources: S/S No Other Income Single Male Age: 68 Income: $20,806 Income Sources: S/S & Retirement No Other Income Married Couple Age: 63/62 Income: $5,553 Income Sources: Retirement No Other Income Married Couple Age: 66/60 Income: $20,350 Income Sources: S/S & Retirement No Other Income Single Female Age: 76 Income: $20,350 Income Sources: S/S No Other Income Single Male Age: 78 Income: $8,819 Income Sources: S/S No Other Income Single Female Age: 77 Income: $19,158 Income Sources: S/S No Other Income Married Couple Age: 76/73 Income: $21,262 Income Sources: S/S No Other Income Married Couple Age: 78/71 Income: $16,552 Income Sources: S/S No Other Income Single Female Age: 79 Income: $16,190 Income Sources: S/S No Other Income Single Male Age: 73 Income: $17,334 Income Sources: S/S No Other Income Single Male (Mother in home) Age: 67/89 Income: $20,652 Income Sources: S/S (both) No Other Income 70

71 71 Key take-aways from above slide Are the above examples of Senior citizens utilizing the current (2014) school tax exemptions what you consider meaningful exemptions?

72 Report From Ga. State University September On Age-based Property Tax Exemptions In Georgia. We find significant effects with age-targeted property tax exemptions leading to higher populations of older homeowners relative both to younger homeowners and to older renters. One question is whether older households who are eligible for these tax breaks do in fact take them. Our analysis suggests that they do. (In reference to Cobb County School District who give full exemptions) 96% of eligible households get their exemption. However, we acknowledge some uncertainty in this number and would consider 90%-100% to be a reasonable range for this number. 72

73 73 Key take-aways from above slide The projection of the growth of the 65+ age population is at a much higher rate in relation to all other age groups. The age demographics will change dramatically in Pickens County by All data presented in this presentation supports this. As the population of the 65+ age population grows, so will the percentage of those eligible for exemptions. This reduces the tax paying base. Keep in mind that these age demographic change predictions do NOT consider any ADDITIONAL tax exemptions. Read the report in the slide above. Any additional exemptions will most likely add to the 65+ age growth projections, thus reducing the tax paying base even more.