Property Tax Hands-on Workshop July 17, 2018 1 Why? 1
Dexter Community Schools 2016-17 Foundation Allowance $7,799 x 3,582.17 students* = $27,937,344** * Blended student counts 10% Feb 2016 and 90% Oct 2016 ** Includes adjustment for 118 students who are school of choice 71.6% General Fund Revenue $39,035,555 Dexter Schools 2016 Taxable Value (nonprimary residence) $242,687,920 * 18.0 mills + (commercial PP) $12,233,894 * 6.0 mills = $4,441,786 Dexter Schools 2016 Taxable Value (all properties) $1,223,034,077 * 6.0 mills = $7,338,204 = $7.3 million Dexter Community Schools 2016-17 Foundation Allowance $7,799 x 3,582.17 students* = $27,937,344** * Blended student counts 10% Feb 2016 and 90% Oct 2016 ** Includes adjustment for 118 students who are school of choice 71.6% General Fund Revenue $39,035,555 Dexter Schools 2016 Taxable Value (nonprimary residence) $242,687,920 * 18.0 mills + (commercial PP) $12,233,894 * 6.0 mills = $4,441,786 Dexter Schools 2016 Taxable Value (all properties) $1,223,034,077 * 6.0 mills = $7,338,204 = $7.3 million 2
Resources Dexter Community Schools electronic files MSBO has posted for you: Property Tax Process 3
A S S E S S M E N T Property Tax Process Township & City Assessors Taxable Value Information (DS-4410) County Equalization Director Tax Increment Financing Authorities Updated in May and at least annually thereafter 7 Property Tax Process A S S E S S M E N T County Equalization Director Taxable Value Information (DS-4410) School District Consolidates information for each school district Submitted online by County Treasurer to MDE 8 4
Property Tax Process T A X L E V Y School District Tax Levy (Form L-4029) Townships & Cities School District prepares L-4029 for each township/city Board approves after Truth In Taxation 9 T A X B I L L I N Property Tax Process Townships / Cities Property Tax Bills Property Owners G 10 5
Property Tax Process C O L L E C T I O N NO Settlement Process with the County Property Owners Pay Bill? (by Feb 28) YES Check Township / City Treasurer 11 C O L L E C T I O N Property Tax Process Tax Breakdown Township / City Treasurer School District Check 12 6
Property Tax Process C O L L E C T I O N Property Tax Receivables Worksheet School District Deposits Check in Bank 13 Property Tax Process S E T T L E M E N T Township & City Treasurer Settlement County Townships & Cities verify to the County parcel by parcel Tax collections Taxes receivable As of March 1 14 7
Property Tax Process D E L I N Q U E N T County Treasurer Tax Breakdown School District Check C O L L E C T I O N 15 Property Tax Process County DELINQUENT PAYOFF Delinquent Personal Property Taxes Delinquent Real Property Taxes Check (Issues debt until collected) No Action School District Township/City collects delinquent personal property taxes County collects delinquent real property taxes (bills back if uncollectible) 16 8
Property Tax Process D E L I N Q U E N T School District Property Tax Receivables Worksheet Used to calculate taxes receivable Deposits Check in Bank P A Y O F F 17 Property Tax Hands-on Workshop Preparation of L-4029 18 9
Obtain the L- 4028 from County Equalization If you are in more than one county, you will need the L-4028 IC. Taxable Values 19 Taxable Values by Municipality 20 10
Taxable Values Total taxable values used for Debt, Sinking, and Special Ed Non-PRE/MBT (non-homestead) used for Operating (General Fund) Use to budget by municipality GF operating tax revenue (11-0111-xxxx) Debt tax revenue (30-011-xxxx) Common debt fund makes splitting debt levy not necessary 21 L-4029 Tax Rate Request Use an excel version of the L-4029 Just update from year to year Calculated cells Reduce inadvertent errors 22 11
L-4029 Tax Rate Request Have last year s L-4029 available for reference 23 L-4029 Tax Rate Request 24 12
L-4029 Tax Rate Request Enter the source for each millage. This may include charter, extra-voted, debt 25 L-4029 Tax Rate Request Enter the purpose of the millage and on what properties it applies. Examples are operating-non PRE, debtall properties, sinking-all properties, special ed-all properties. 26 13
L-4029 Tax Rate Request Record the election date and year for each millage authorized by district voter approval. 27 L-4029 Tax Rate Request List the millage rate for each rate authorized by voters, charter, or debt service. This is the originally authorized rate before any millage reductions. 28 14
L-4029 Tax Rate Request List the millage rate for each rate authorized by voters, charter, or debt service. This is the originally authorized rate before any millage reductions. Always use four (4) decimals. 29 L-4029 Tax Rate Request Look at last year s Column 7 This is the permanently reduced rate recorded in column 7 of last year s L-4029. Enter the full millage rate approved by voters if it was approved after April 30 of this year. Current year approvals are NOT subject to reduction this year. 30 15
L-4029 Tax Rate Request Column 6 does not exceed 1.0000. This prevents roll up of millage rates. Enter 1.0000 for any current year approved millage (after April 30). Enter 1.0000 for debt, as debt millage is not subject to roll back. List Millage Reduction Fraction reported by county equalization on form L-4028 (IC) for the current year Use four decimal places Operating, sinking, and special ed levies may roll back 31 L-4029 Tax Rate Request 18.0000 x 0.9969 = 17.9442 3.0000 x 0.9969 = 2.9907 Calculation Column Multiply rate in Column 5 by the Millage Reduction Fraction in Column 6 Round DOWN to fourth decimal place because you may not levy MORE than and if it rounds up, it would be MORE than 32 16
L-4029 Tax Rate Request This column is always 1.0000 for school districts, since schools are not subject to Truth in Assessing or Equalization millage rollback fractions 33 L-4029 Tax Rate Request Calculation Column Multiply rate in Column 7 by the rollback fraction in Column 8 Since Column 8 is always 1.0000 for schools, Column 9 is always Column 7 for schools 34 17
L-4029 Tax Rate Request Calculation Column Indicate your summer requested levy in column 10 Indicate your winter requested levy in column 11 This district only levies winter taxes Operating non-pre may not exceed 18.0000 List debt splits if you account for debt issuance separately 35 L-4029 Tax Rate Request Record the millage expiration date This is always a 12/31 date with the year of millage expiration. 36 18
L-4029 Tax Rate Request Report millage levy for: Principal Residence, Qualified Ag, Qualified Forest and Industrial Personal (normally 0.0000) Commercial Personal (normally 6.0000) All Other (normally 18.0000 unless you have a roll back) 37 L-4029 Tax Rate Request Complete the certification section Complete the prepared by section, so county officials know who to contact with any questions. Board secretary and Board president must sign the L-4029 AFTER the levy is approved by the Board. 38 19
L-4029 Tax Rate Request Use an excel version of this form or a fillable PDF can be obtained from Michigan Treasury s website at www.michigan.gov/treasury Form must be completed and submitted to county equalization, county treasurers, and local municipalities on or before September 30 of each year. If you do a summer levy, the form must be submitted earlier because tax forms are generated and sent June 30. Tax Rate Requests must be approved in accordance with Truth in Taxation Hearing requirements. 39 Truth in Taxation Hearing Publish notice in your publication of record ON THE ADOPTION OF THE BUDGET FOR THE FISCAL YEAR 2016-17 AND THE 2016 TAX RATE ON NON-HOMESTEAD PROPERTIES THAT WILL BE AT 18 MILLS AND THE 2016 DEBT LEVY ON ALL PROPERTIES THAT WILL BE AT 8.5 MILLS. THE PROPERTY TAX MILLAGE RATE PROPOSED TO BE LEVIED TO SUPPORT THE PROPOSED BUDGET WILL BE A SUBJECT OF THIS HEARING. 40 20
Truth in Taxation Hearing Conduct hearing at Board Meeting before the budget is adopted 41 Resolution for Tax Millage Rate Board authorizes tax levies 42 21
Usage of Extra non-pre 43 Property Tax Allocation Begin your new year Current Property Tax Allocation Tax Collection spreadsheet 2015 Tax Year = 2015-16 Fiscal Year 2016 Tax Year = 2016-17 Fiscal Year 44 22
Budget for Property Taxes From the taxable values, calculate the taxes you will collect for General Fund (non-pre), Debt Fund (all properties), Sinking Fund (all properties) ISD will have Special Ed (all properties) 45 Property Tax Hands-on Workshop Personal Property Exemption Reimbursements 46 23
Personal Property Exemption The exemption of personal property was a loss for schools debt millage collection. Treasury will reimburse the loss under PA 86 of 2014, as amended in 2018. Must complete Form 5451 and submit to TreasORTAPPT@Michigan.gov due August 1, 2018. 47 Personal Property Exemption Need REVISED L-4050 from County Equalization. 48 24
Personal Property Exemption If you are in more than one county, make sure you have the IC version of the REVISED L-4050 from County Equalization. 49 Personal Property Exemption Complete form 5451 Personal Property Exemption Loss 2018 Debt Millage Reimbursement Claim for School Districts & Intermediate School Districts. 50 25
Personal Property Exemption There are now two options. If you are in SBLF, option 2 give you a higher reimbursement. 51 Personal Property Exemption Reimbursement = 19,340,444 * 8.5000 mills = $164,394 Submit claim Form 5451 to TreasORTAPPT@Michigan.gov due August 1, 2018 52 26
Property Tax Hands-on Workshop Settlement Reconciliation 53 Property Tax Collection Track your property tax collections on a spreadsheet (Dexter Excel file: Current Tax Allocations 16-17.xls) 2016 Tax Year = 2016-17 Fiscal Year 2017 Tax Year = 2017-18 Fiscal Year 54 27
Property Tax Collection Finalize property taxes collected details Each property tax receipt by municipality (i.e. township, city) County settlement collections Delinquent personal property tax from municipality 55 Taxable Values Print and Download (Excel) your updated Taxable Value (DS4410) from https://mdoe.state.mi.us/tvs/menu (public access) Note this is a new link for 2018 Note last update is current/ final 56 28
Taxable Values Copy and paste final reported taxable values into a Property Tax Reconciliation Worksheet (Dexter Excel file: Audit Property Tax Reconciliation 16-17.xls) 57 Reconciliation Worksheet Use formulas to calculate expected tax collection of operating, debt, sinking fund, etc. Modify content and formulas as needed for your particular situation and particular year Levy debt as common debt fund or per issuance year Sinking fund Tax captures like DDA Annexed parcels Enter actual property taxes collected from Current Tax Allocations spreadsheet Record receivables, reconciling items, and adjustments to DS4410 that are needed / expected 58 29
County Settlements Tie property taxes calculated from Reconciliation Worksheet to county settlement reports 59 Property Taxes Collected Tie property taxes collected to General Fund, Debt Fund, Sinking Fund general ledgers 60 30
Reconciliation Tie to State Aid Status Report for operating revenues expected If they do not match, either the DS4410 is not updated or the update to the DS4410 has not been picked up by the State. Verify and note adjustment. 61 Reconciliation Compare the L-4029 you did the prior summer to get a sense of your expected taxable values versus final taxable values 62 31
Foundation Allowance Reconciliation Calculate Your Foundation Allowance Foundation per pupil $7,799 x +Number of students 3,582.17 = Foundation Total _27,937,343.80 64 32
Foundation from State Source Expected Gross Foundation_ 27,937,343.80 Less Local Property Tax Revenue - 4,441,786.00 Total Expected State Aid =_23,495,557.80_ Second page of State Aid Status Report: 23,495,549.75 65 Dexter Community Schools 2016-17 Foundation Allowance $7,799 x 3,582.17 students* = $27,937,344** * Blended student counts 10% Feb 2016 and 90% Oct 2016 ** Includes adjustment for 118 students who are school of choice 71.6% General Fund Revenue $39,035,555 Dexter Schools 2016 Taxable Value (nonprimary residence) $242,687,920 * 18.0 mills + (commercial PP) $12,233,894 * 6.0 mills = $4,441,786 Dexter Schools 2016 Taxable Value (all properties) $1,223,034,077 * 6.0 mills = $7,338,204 = $7.3 million 33
I have a difference now what? If you find you have a difference, first check your original numbers, confirming everything with the State Aid Status Reports and DS4410 taxable value website Check if you have a TIF captured value that you did not incorporate into the formula Check to make sure that you received all the revenue from your local treasurers and county treasurer settlement I have extra revenue There is no such thing as extra revenue with this formula or reconciliation. If you have collected more than your foundation allowance calculation, it is not your money, so do not book it as revenue you owe somebody and eventually they will figure out you owe it and come take it back! 68 34
Other Tips County Settlements Most municipalities settle with the county by mid- May Settlements are basis for revised DS4410 report School district pays county for surety bonds issued for delinquent tax revolving fund (DTRF) Delinquent taxes on personal property collected by local treasurers, unless county treasurer agrees to collect 70 35
Tax Adjustment Invoices When tax adjustments (Board of Review, etc.) mean you owe money back to taxpayers, you will get an invoice from the county Determine the split of the original tax: General Fund, Debt, Sinking Fund Pay the General Fund portion to an asset account 11-2141-0000 Due from other Governmental Units You will be reimbursed through your State Aid Pay the Debt Fund or Sinking Fund portions to an expense account 30-1259-7610 Tax Refunds/Costs 71 Tax Adjustment Invoices Be in contact with your county treasurer and know when the 4410 will be adjusted Changes to the 4410 Taxable Value website by the 1 st of the month will be adjusted on your State Aid Status Report on the 20 th of the month The change in non-pre (nonhomestead) taxable value will trigger a prior year adjustment for each tax year of the adjustment Post the prior year adjustment State Aid payment to the same asset account 11-2141-0000 Due from other Governmental Units By the end of the fiscal year, the balance should be close to $0 72 36
Headlee Rollback The State Foundation calculation utilizes the full 18 mills for calculating the local effort against the reported Non Principal Residence Taxable Value (TV) If there is a Headlee Rollback factor that reduces the local revenue collected, the revenue will NOT be made up in the State Aid payment You are expected to go for a Rollback millage to make up the difference or it is LOST REVENUE to the district Property Tax Hands-on Workshop Settlement Reconciliation Help 74 37
Resources Dexter Community Schools electronic files MSBO has posted for you: 38