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Guaranteed Tax Base Aid

Guaranteed Tax Base Aid. The Great Equalizer. Janelle Mickelson, Administrator OPI School Finance Division MASBO Summer Conference June 19, 2014. Guaranteed Tax Base Aid. The Great Equalizer. Late 1980’s – Legal cases against the state of MT Issues: Spending Equity/Tax Equity

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Guaranteed Tax Base Aid

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  1. Guaranteed Tax Base Aid The Great Equalizer Janelle Mickelson, Administrator OPI School Finance Division MASBO Summer Conference June 19, 2014

  2. Guaranteed Tax Base Aid The Great Equalizer • Late 1980’s – Legal cases against the state of MT • Issues: • Spending Equity/Tax Equity • Sufficiency/Adequacy • Courts upheld : • Unequal per pupil spending • Unequal educational opportunities

  3. Guaranteed Tax Base Aid The Great Equalizer In the 1989 Special Session the State created Guaranteed Tax Base Aid (GTBA) payments to address the disparity in wealth. • Three types of GTBA: • General Fund GTBA • Debt Service GTBA (AKA: Facilities Reimbursements) • County Retirement GTBA

  4. Guaranteed Tax Base Aid The Great Equalizer 20-9-367. Eligibility to receive guaranteed tax base aid or state advance or reimbursement for school facilities. (1) If the district guaranteed tax base ratio of any elementary or high school district is less than the corresponding statewide elementary or high school guaranteed tax base ratio, the district may receive guaranteed tax base aid based on the number of mills levied in the district in support of up to 35.3% of the basic entitlement, up to 35.3% of the total per-ANB entitlement, and up to 40% of the special education allowable cost payment budgeted within the general fund budget. General Fund GTBA (2) If the county retirement mill value per elementary ANB or the county retirement mill value per high school ANB is less than the corresponding statewide mill value per elementary ANB or high school ANB, the county may receive guaranteed tax base aid based on the number of mills levied in the county in support of the retirement fund budgets of the respective elementary or high school districts in the county. County Retirement GTBA (3) For the purposes of 20-9-370 and 20-9-371, if the district mill value per elementary ANB or the district mill value per high school ANB is less than the corresponding statewide mill value per elementary ANB or statewide mill value per high school ANB, the district may receive a state advance or reimbursement for school facilities in support of the debt service fund. Debt Service GTBA

  5. Guaranteed Tax Base Aid Components needed to determine eligibility Taxable Values – Obtained from Department of Revenue in December (2013 Tax Year values used to calculate 2015 GTBA). Budgeted ANB Prior Year Basic Entitlements (needed for General Fund GTBA only) Prior Year Per-ANB Entitlements (needed for General Fund GTBA only) Prior Year SPED Allowable Cost Payment (needed for General Fund GTBA only) Note: -Taxable values exclude Tax Increment Financing Districts (TIFDs) -ANB and entitlements are not adjusted for unanticipated enrollment increases or audit adjustments. -ANB and entitlements areadjusted for anticipated enrollment increases that did not materialize. -SPED Allowable Cost Payment includes related service block payments to Coops and disproportionate cost reimbursements.

  6. Guaranteed Tax Base Aid Timeline For Calculating GTBA Eligibility For The Ensuing Fiscal Year • Budgeted ANB is taken from the current fiscal year adopted budget received in September. (Budget ANB in FY2014 is used to determine eligibility for FY2015). • OPI receives a final determination of taxable values from DOR by December 1. (2013 taxable values are used to determine eligibility for FY2015). • OPI performs reasonability checks on changes in taxable values and verifies total elementary taxable values equal total high school taxable values. (generally takes a couple of weeks with an exchange of correspondence between DOR and OPI) • OPI calculates, tests, and verifies GTBA ratios, facility guaranteed mill values per ANB and district mill values per ANB (completed prior to February 1) • OPI adjusts budgeted ANB and budget limits for districts whose anticipated enrollment increase did not materialize and recalculates, tests, and verifies GTBA ratios , facility guaranteed mill values per ANB and district mill values per ANB (completed after the 1st Monday in February) • OPI provides GTBA ratios and mill value per ANB ratios to districts and counties by March 1st. (information is provided on Preliminary Data Sheets)

  7. Guaranteed Tax Base Aid General Fund Statewide Guaranteed Tax Base Ratio Calculated separately for elementary and high school: Statewide 35.3% of Basic Entitlement + 35.3% of Per-ANB Entitlement + 40% of SPED Allowable Cost Payment Statewide Taxable Value 193% Statewide GTB Ratio

  8. Guaranteed Tax Base Aid General Fund Statewide Guaranteed Tax Base Ratio Example: Elementary High School Statewide taxable valuation (Tax Year 2013) 2,474,575.849.00 2,474,575.849.00 4,775,931,388.57 4,775,931,388.57 X 193% 35.3% of Basic Entitlement + 35.3% of Per-ANB Entitlement + 40% of Special Education Allowable Cost Payment (all districts for FY 2014) 219,797,789.99 120,362,485.36 FY 2015 Elementary GTB Ratio (4,775,931,388.57/219,797,789.99) 21.73 FY 2015 High School GTB Ratio (4,775,931,388.57/120,362,485.36) 39.68

  9. Guaranteed Tax Base Aid General Fund District GTBA Subsidy per Base mill 40% of District’s SPED Allowable Cost Payment District’s Guranteed Tax Base 35.3% of District’s Per ANB Entitlement 35.3% of District’s Basic Entitlement Statewide GTB Ratio District’s Guranteed Tax Base District’s Taxable Value .001 District’s GTB Subsidy per Base Mill

  10. Guaranteed Tax Base Aid General Fund District GTBA Subsidy per Base mill Example: Assume: FY 14 Basic Entitlement = $120,000.00 FY 14 Per-ANB Entitlement = $835,444.00 FY 14 SPED Allowable Cost Payment = $33,438.76 FY15 Statewide GTBA Ratio = 21.73 Tax Year 2013 District Taxable Valuation = 4,498,996 35.3% x 120,000 = 42,360.00 35.3% x 835,444 = 294,911.73 40% x 33,438.76 = 13,375.50 Total 350,647.24 X 21.73 Guaranteed Tax Base $7,619,564.44 - 4,498,996.00 $3,120,568.44 X .001 District’s FY15 GTBA Subsidy Per Base Mill $3,121.00 For every base mill levied, the state will pay $3,121 local taxpayers will pay $4,499

  11. Guaranteed Tax Base Aid General Fund BASE Budget OverBASE Budget BASE Budget Property Tax Levy GTB GTB Budget Area Non-Levy Revenues Fund Balance Reappropriated NRD Payment Direct State Aid (44.7% of Basic Entitlement and 44.7% of Per-ANB Entitlement) 40% of SPED Allowable Cost Payment Data For Achievement Payment Student Achievement Gap Payment 100% of 5 Funding Components Indian Education For All Payment At-Risk Payment Quality Educator Payment

  12. Guaranteed Tax Base Aid Debt Service GTBA AKA: Facility Reimbursement Calculated separately for elementary and high school: If: District’s Taxable Value District Mill Value Per ANB 1000 District ANB Is less than: Facility Guaranteed Mill Value Per ANB Statewide Taxable Value 1000 140% Statewide ANB District is Eligible for GTBA Then:

  13. Guaranteed Tax Base Aid Debt Service GTBA AKA: Facility Reimbursement Only General Obligation Bonds qualify for Facility Reimbursement (Debt Service GTBA) MCA, 20-9-408, "General obligation bonds" means bonds that pledge the full faith and credit and the taxing power of a school district.

  14. Guaranteed Tax Base Aid Debt Service GTBA AKA: Facility Reimbursement Calculation of School Facility Reimbursement School Facility Entitlements: $300 per ANB for elementary $370 per ANB for approved and accredited junior high or middle school $450 per ANB for high school State share of entitlement: (1-(district mill value per ANB/Facility guaranteed mill value per ANB) School Facility Reimbursement : State share of entitlement times the lesser of the total facility entitlement or the district current year debt service obligation

  15. Guaranteed Tax Base Aid Debt Service GTBA Calculation of School Facility Reimbursement Example Assume: Facility Guarantee Mill Value Per ANB = 30.39 District Mill Value Per ANB = 20.39 Elementary ANB = 182; Middle School ANB = 67 District Debt Service Obligation = $118,068 District is eligible for debt service GTB. District Mill Value Per ANB is less than the Facility Guarantee Mill Value Per ANB Facility Entitlement = $79, 390 [(182 x $300) +(67 x $370)] State Share of Entitlement .329056 [1-(20.39/30.39)] School Facility Reimbursement = $26,123.72 [.329056 x $79,390]

  16. Guaranteed Tax Base Aid Debt Service GTBA Calculation of School Facility Reimbursement In the first year of an eligible bond, an eligible district will receive both an advance and a reimbursement. No GTBA is paid on the bond in the final year. Districts only budget for the advance in the first year, not the reimbursements. Final Year 1st Year Subsequent Years Actual Actual Budget Budget Budget Actual

  17. Guaranteed Tax Base Aid Debt Service GTBA The amount available for facility reimbursements/advances is subject to appropriation by the State Legislature each biennium. Within the available appropriation, the OPI first distributes the state advances. From the remaining appropriation, the OPI distributes state reimbursement for school facilities. If the legislative appropriation for the state reimbursement for school facilities is less than the school facility entitlement amount for which districts qualify, the OPI will prorate the state reimbursement based on total amount for which districts qualify. Whenever the state reimbursement is prorated, the prorate percentage is applied to the state advance in the ensuing year.

  18. Guaranteed Tax Base Aid Debt Service GTBA Preliminary

  19. Guaranteed Tax Base Aid County Retirement GTBA Calculated separately for elementary and high school: If: County Retirement Mill Value Per ANB County’s Taxable Value 1000 County ANB Is less than: Statewide Mill Value Per ANB Statewide Taxable Value 1000 121% Statewide ANB County is Eligible for GTBA Then:

  20. Guaranteed Tax Base Aid County Retirement GTBA Calculation Calculated separately for elementary and high school: County Retirement Mill Value Per ANB State Retirement Mill Value Per ANB Statewide Mill Value Per ANB County Retirement Subsidy Per Mill State Retirement Mill Value Per ANB County ANB County Retirement GTBA County Retirement Fund Mills County Retirement Subsidy Per Mill

  21. Guaranteed Tax Base Aid County Retirement GTBA Example Assume: ElemHS Net County Requirement: $288,957.27 $223,600.81 State GTBA Mill Value/ANB 28.12 65.01 County Mill Value/ANB 22.04 50.81 County ANB 499 214 County Mill Value = 10,731.634 High School Elementary State Retirement Mill Value Per ANB 6.08 (28.12-22.04) 14.20 (65.01-50.81) County Retirement Subsidy Per Mill $3,038.80 (14.20 x 214) $3,033.92 (6.08 x 499) County Adjusted Mill Value 13,770.434 (10,731.634 + 3,038.80) 13,765.554 (10,731.634 + 3,033.92) Retirement Fund Mills 16.24 (223,600.81/13,770.434) 20.99 (288,957.27/13,765.554) County Retirement GTBA $49,350.11 (16.24 x 13,770.434) $63,681.98 (20.99 x 13,765.554)

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