Board of Education Meeting October 15, 2015 The Tax Levy for D211 - - PowerPoint PPT Presentation

Board of Education Meeting October 15, 2015

The Tax Levy for D211

Local property taxes are the source of over 86% of District’s revenue for instructional and operational needs of the District

 Property Tax Extension Limitation Law (PTELL) also known as the “Tax Cap”  Impacts all school districts in Cook County and numerous other counties throughout the state  Limits operating fund levy to

A) increase in the prior year’s CPI % plus B) addition of new property growth

 Districts cannot recover operating revenue if amounts are levied less than CPI  Each year’s levy sets the foundation amount by which taxes may be levied for the following year

Understanding the “Tax Cap”

CPI-U History 2009 0.1% 2010 2.7% 2011 1.5% 2012 3.0% 2013 1.7% 2014 1.5% 2015 0.8%

TOTAL LEVY = OPERATING AND DEBT SERVICE FUND LEVY

Combined Operating Fund levy is “capped” at an increase of CPI % + the new property growth % The current year levy sets the foundation for all future levy amounts Amounts levied less than the cap are “lost” and cannot be recovered in future years These “losses” compound annually Debt Service levy is tied to the District’s outstanding debt and NOT capped by CPI The debt repayment schedule determines the Debt Service levy amount Reductions (abatements) are one year only and do not affect future years’ levies

Educational Working Cash

• Oper. / Maintenance

Transportation

• IL. Municipal Retire.

Social Security OPERATING FUNDS Debt Service Fund DEBT SERVICE FUND

DEBT SERVICE FUND TOTAL LEVY OPERATING FUNDS

2015 Levy Considerations

Operating Fund Levy limit: 1.0%

• 0.8% CPI
• 0.2% New

property growth

Debt Service Levy

• $3.3 mil
• Amount required

by Cook County by debt repayment schedule

Property Tax Refunds

• Average yearly

loss: $5 million

• Losses taken from

2015 levy collections

 0% levy increase of the total levy over the prior year’s total levy amount  For the 2015 levy, a 0% increase may be achieved through two ways:

1. Via the Operating Funds levy 2. Via Debt Service levy reduction (abatement)

What is a Flat Levy?

Last Year's 2014 Tax Levy 1.7% Inc. Levy Amount Operating Funds 212,648,268 $ Debt Service Fund 5,462,533 $ Debt Service Abatement (2,000,000) $ Total Levy Amount 216,110,801 $

Method 1 Method 2

2015 Levy

• $

(2,000,000) $ 216,086,651 $ 1% Increase in Operating Funds

(0.8% CPI+0.2% New Prop)

Levy Amount 214,774,751 $ 3,438,383 $ 216,213,134 $ 0% Increase in Operating Funds Levy Amount 212,648,268 $ 3,438,383 $

Two Methods to Achieve a Flat Levy

0% Increase from 2014 Levy= Flat Levy for 2015

2015 Levy: ($2,100,000)

2016 Levy*: ($2,200,000) 2017 Levy*: ($2,200,000) 2018 Levy*: ($2,200,000) 2019 Levy*: ($2,200,000)

Impact of a 0% Operating Fund Levy

The Operating Fund Levy sets the foundation amount for all future levies. 0% levy increase in Operating Funds for one year (2015) results in compounded lost revenue that can never be recovered.

$10.9 million in lost Operating Fund revenue

• ver 5 years.

Losses continue into perpetuity.

* Assumes levy increase of 1.5% (1.3% CPI+0.2% New Prop) consistent with projections



Impact of a 0% Levy Increase Through Debt Abatement Impact of a 0% Levy Increase Through Debt Abatement

Utilizes $2 mil

• f Working

Cash Reserves

Protects Operating Fund Revenue for Instructional and Operational Needs 0% Change in Total Levy for

• ne year

$- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Debt Service Levy Debt Service Abatement

Debt Service Levy Abatement History

Recommended abatement

Levy Year Fiscal Year Surplus/ Deficit Fund Balance Reserve% % Chg over Prior Yr. 2014 2015-2016 405,000 $ 53.9% 1.7% 2015 2016-2017 3,018,500 $ 42.9% 0.0% 2016 2017-2018 431,400 $ 41.5% 2.1% 2017 2018-2019 (1,283,100) $ 39.3% 0.1% 2018 2019-2020 (2,987,200) $ 36.4% 1.5% 2015 Total Levy Impact $10M Life Safety Bonds 2015 Abatement 2017-2020 CPI Assumption 2016 CPI Assumption 2015 Op. Fund Levy Inc. No L/S Bonds Flat Levy

SCENARIO I

0.8% CPI+ 0.2% New Property = 1.0% 1.0% 1.3% Abate $2M in FY17

Levy Scenarios

Levy Scenarios

Levy Year Fiscal Year Surplus/ Deficit Fund Balance Reserve% % Chg over Prior Yr. 2014 2015-2016 405,000 $ 53.9% 1.7% 2015 2016-2017 3,018,500 $ 42.4%

• 0.6%

2016 2017-2018 431,400 $ 41.0% 2.7% 2017 2018-2019 (1,283,100) $ 38.8% 0.1% 2018 2019-2020 (2,987,200) $ 35.9% 1.5% 2015 Total Levy Impact $10M Life Safety Bonds 2015 Abatement 2017-2020 CPI Assumption 2016 CPI Assumption 2015 Op. Fund Levy Inc. No L/S Bonds 0.6% Total Levy Decrease

SCENARIO II

0.8% CPI+ 0.2% New Property = 1.0% 1.0% 1.3% Abate $3.3M in FY17

Recommended Levy Amount

2014 Levy 2015 Proposed Levy Levy % Inc. Total Operating Fund Levy $212,643,694 214,770,131 1.0% (+) Total Allowable Debt Service Levy $5,462,533 3,274,650 Total Allowable Levy $218,106,227 218,044,781 0.0% (-) Debt Abatement ($2,000,000) (2,000,000) Total Levy $216,106,227 216,044,781 0.0% 2015 Tax Levy Recommendation

No L/S Bonds

SCENARIO I

0.8% CPI+ 0.2% New Property = 1.0% 1.0% 1.3% Abate $2M in FY17



Phase II Life Safety Projects

Completed L/S Projects Remaining L/S Projects $9.4 mil $16 mil Estimated Future L/S Budget FY17 $2.2 mil FY18 $7.2 mil $9.4 million Recommend to fund FY17 projects utilizing reserve fund balance. A decision will be made about the FY18 project funding at a later date.

If bonds are subsequently issued, bond proceeds can reimburse project costs incurred up to 18 months prior to bond issuance by Board resolution within 60 days of the expenditure

Operating Fund Balance Projected Usage

FY14 FY15 FY16 FY17 FY18 FY19 FY20

• Oper. Fund Bal.

67% 56% 54% 43% 42% 39% 36% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Operating Fund Balance %

Fund Balance Reserve Projection

(Assumes Full Operating Fund Levy, $2mil Abatement for 2015 Levy, $10 mil in L/S Projects)

Fund Balance Projections $8 million remaining for future legislation, further debt abatement,

• r budget

deficits

33.3% fund balance minimum per Board policy

Factors Example 1) Property Value $200,000 2) Assessment Level per classification X 10% Assessed Value = $20,000 3) State Equalization Factor X 2.7253 Equalized Assessed Value (EAV) = $54,506 4) Tax Rate X 11.577% Total Tax before Exemptions = $6,310.16 5) Exemptions ($800) Total Taxes Owed $5,510.60

The 5 Factors of a Tax Bill

 What if…?

And

Variables Actual What if? 2014 District 211 Total EAV 6,726,250,939 6,726,250,939 2014 State Equalization Factor 2.7253 2.7253 2014 Property Value 250,000 250,000 2014 District 211 Levy 216,106,227 216,044,781 Change in 2014 taxes paid for District 211: $0 Change in 2014 total taxes paid: $0

Everything Else Remains the Same Flat Levy

October 7, 2015 Budget and Finance Committee Meeting- Review levy material October 15, 2015 Board of Education Meeting- Levy Presentation November 4, 2015 Budget and Finance Committee Meeting- Review levy material November 12, 2015 Board of Education Meeting- Determine amount of proposed 2015 levy (not less than 20 days prior to levy adoption) November 26, 2015- December 3, 2015 Public hearing notice must be published (no more than 14 nor less than 7 days prior to public hearing) December 2, 2015 Budget and Finance Committee Meeting December 10, 2015 Board of Education Meeting- Public hearing

• f 2015 levy and adoption of 2015 levy

December 29, 2015 Last day to file 2015 levy

Tax Levy Calendar

 Funding source for remaining Life Safety projects

 Continue to assess with release of 2015 CPI-U in January, 2016

 Debt abatement strategy

 Continue to review relative to economic and legislative factors  Review relative to Life Safety funding source

 Pending legislation

 Monitor for potential impact on fund balance

Future Considerations