guaranteed tax base aid the great equalizer janelle mickelson, administrator opi school finance...

Guaranteed Tax Base Aid

The Great Equalizer

Janelle Mickelson, Administrator OPI School Finance Division MASBO Summer Conference June 19, 2014


The Great Equalizer

Late 1980’s – Legal cases against the state of MTIssues:• Spending Equity/Tax Equity• Sufficiency/Adequacy

Courts upheld :• Unequal per pupil spending• Unequal educational

opportunities


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:1. General Fund GTBA2. Debt Service GTBA (AKA: Facilities

Reimbursements)3. County Retirement GTBA


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.

The Great Equalizer

General Fund GTBA

Debt Service GTBA

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.

(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.

http://leg.mt.gov/bills/mca/20/9/20-9-370.htm

http://leg.mt.gov/bills/mca/20/9/20-9-371.htm


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 are adjusted for anticipated enrollment increases that did not materialize.-SPED Allowable Cost Payment includes related service block payments to Coops and disproportionate cost reimbursements.


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)


General FundStatewide Guaranteed Tax Base Ratio

Calculated separately for elementary and high school:

193%Statewide Taxable Value

Statewide GTB Ratio

35.3% of Basic Entitlement + 35.3% of Per-ANB Entitlement + 40% of SPED Allowable Cost Payment

Statewide


General Fund

Example:

Statewide taxable valuation (Tax Year 2013)

Statewide Guaranteed Tax Base Ratio

Elementary High School

2,474,575.849.00 2,474,575.849.00

X 193% 4,775,931,388.57 4,775,931,388.57

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


General FundDistrict GTBA Subsidy per Base mill

35.3% of District’s Basic Entitlement

35.3% of District’s Per ANB Entitlement

40% of District’s SPED Allowable Cost Payment

Statewide GTB Ratio

District’s Guranteed Tax Base

District’s Guranteed Tax Base

District’s Taxable Value .001

District’s GTB Subsidy per Base Mill


General FundDistrict GTBA Subsidy per Base mill

Example:

35.3% x 120,000 = 42,360.00 35.3% x 835,444 = 294,911.7340% x 33,438.76 = 13,375.50Total 350,647.24 X 21.73 Guaranteed Tax Base $7,619,564.44 - 4,498,996.00 $3,120,568.44

District’s FY15 GTBASubsidy Per Base Mill $3,121.00

X .001

For every base mill levied, the state will pay $3,121 local taxpayers will pay $4,499

Assume:FY 14 Basic Entitlement = $120,000.00FY 14 Per-ANB Entitlement = $835,444.00FY 14 SPED Allowable Cost Payment = $33,438.76FY15 Statewide GTBA Ratio = 21.73Tax Year 2013 District Taxable Valuation = 4,498,996

Guaranteed Tax Base AidGeneral Fund BASE

Budget

Quality Educator Payment

At-Risk Payment

Indian Education For All Payment

Student Achievement Gap Payment

Data For Achievement Payment

100% of 5 Funding Components

40% of SPED Allowable Cost Payment

Direct State Aid(44.7% of Basic Entitlement and 44.7%

of Per-ANB Entitlement)

NRD PaymentFund Balance Reappropriated

Non-Levy Revenues

GTB Property Tax Levy

GTB Budget Area

BASE BudgetOverBASE Budget


Debt Service GTBA

AKA: Facility Reimbursement


Facility Guaranteed Mill Value Per ANB

1000Statewide

ANB

If:

District Mill Value Per ANB

Is less than:

District’s Taxable Value

1000

Then:

District is Eligible for GTBA

District ANB



Debt Service GTBA

AKA: Facility ReimbursementOnly 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.


Debt Service GTBA

AKA: Facility ReimbursementCalculation of School Facility Reimbursement

$300 per ANB for elementary$370 per ANB for approved and accredited junior high or middle school$450 per ANB for high school

School Facility Entitlements:

(1-(district mill value per ANB/Facility guaranteed mill value per ANB)

State share of entitlement times the lesser of the total facility entitlement or the district current year debt service obligation

State share of entitlement:

School Facility Reimbursement :

Guaranteed Tax Base AidDebt Service

GTBACalculation of School Facility ReimbursementExample

Assume:Facility Guarantee Mill Value Per ANB = 30.39District Mill Value Per ANB = 20.39Elementary ANB = 182; Middle School ANB = 67District 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]


GTBACalculation of School Facility ReimbursementIn 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.

1st Year

Advance Advance

PropertyTaxes

Property Taxes

Facility Reimb

Budget Actual

(Debt Payment)

(Debt Payment)

Fund Balance = 0

Fund Balance =

Facility Reimb

Subsequent Years Final YearBudget ActualProperty

TaxesProperty Taxes

Fund Balance Reapprop

Fund Balance Reapprop

Facility Reimb

Property Taxes

Property Taxes

Fund Balance

Reapprop

Fund Balance

Reapprop

ActualBudget

(Debt Payment)

(Debt Payment)

Fund Balance = 0

Fund Balance = Facility

Reimb

(Debt Payment)

(Debt Payment)

Fund Balance = 0

Fund Balance = 0


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.

Debt Service GTBA


GTBA

Preliminary

Guaranteed Tax Base AidCounty Retirement

GTBA


Statewide Mill Value Per ANB

1000Statewide

ANB

If:

County Retirement Mill Value Per ANB

Is less than:

County’s Taxable Value

1000

Then:

County is Eligible for GTBA

County ANB


Guaranteed Tax Base AidCounty Retirement

GTBACalculated separately for elementary and high school:

Calculation

County Retirement Fund Mills


County Retirement Subsidy Per Mill


Statewide Mill Value Per ANB

County Retirement Mill Value Per ANB

State Retirement Mill Value Per ANB


County ANB

Guaranteed Tax Base AidCounty Retirement GTBAExample

Assume: Elem HSNet County Requirement: $288,957.27 $223,600.81State GTBA Mill Value/ANB 28.12 65.01County Mill Value/ANB 22.04 50.81County ANB 499 214 County Mill Value = 10,731.634


Elementary High School

6.08(28.12-22.04)

14.20(65.01-50.81)


$3,033.92(6.08 x 499)

$3,038.80(14.20 x 214)

County Adjusted Mill Value

13,765.554(10,731.634 + 3,033.92)

13,770.434(10,731.634 + 3,038.80)

Retirement Fund Mills

20.99(288,957.27/13,765.554)

16.24(223,600.81/13,770.434)


$63,681.98(20.99 x 13,765.554)

$49,350.11(16.24 x 13,770.434)

guaranteed tax base aid the great equalizer janelle mickelson, administrator opi school finance...

Documents