[PPT] - County School Facilities Sales Tax Presentation for: Montgomery PowerPoint Presentation

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County School Facilities Sales Tax

Presentation for:

Montgomery County Schools Illinois

February, 2017

Illinois County School Facility Tax Public Act 97-0542

Hillsboro CUSD #3

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Landmark Legislation for Illinois

Sales tax vs. Property Tax for School Capital

– A tax on the sales of retail goods paid by consumers vs. a

real property tax paid by property owners

Originated in Iowa in 1998

– Adopted by all Counties in Iowa

Passed by the Illinois General Assembly on May 30, 2007
Recently approved by 8 more counties

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Hillsboro CUSD #3

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= Counties with CSFT (47) = Counties in which CSFT failed (24). Number indicates how many times CSFT failed.

Illinois County School Facilities Sales Tax Map (as of November 8, 2016)

Fayette Morgan Cass Brown Sangamon Peoria Tazewell Fulton Stark Woodford Mason De Witt Randolph Monroe White Jo Daviess La Salle Warren Will Cook Ford Christian Madison

St. Clair

Pope McHenry Lake Ogle Carroll Kane Whiteside Lee Bureau Henry Mercer Kankakee Knox Marshall Livingston Iroquois McLean Hancock Logan Piatt Adams Menard Macon Edgar Douglas Pike Scott Coles Shelby Greene Clark

Cumberland

Jersey Jasper Bond Clay Marion Clinton Wayne Washington Jefferson Perry Franklin Jackson Gallatin Saline Union Hardin 2 5 1 2 2 2 1 2 1 2 2 1 1 1 1 1 1 1 1 1 2 1 2 1

Hillsboro CUSD #3

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Sales Tax Base:

– Everything in the municipal and county sales tax base is included in the tax base except for:

Cars, Trucks, ATVs
Boats & RVs
Mobile homes
Unprepared Food
Drugs (including over-the-counter and vitamins)
Farm Equipment and Parts
Farm Inputs
Services are not taxed

– If it is not currently taxed, it will not be taxed

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What is Taxed

Hillsboro CUSD #3

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Uses of Sales Tax Ineligible Uses

New Facilities Direct Instructional Costs Additions & Renovations Text Books Security, Entrances, Safety, Disabled Access Buses Technology Infrastructure Detached Furniture & Fixtures Architectural Planning Computers Durable Equipment (non-moveable items) Moveable Equipment Fire Prevention and Life Safety Operating Costs Land Acquisition Salaries and Overhead Energy Efficiency Parking Lots Demolition Roof Repairs

Refund Bonds or Abate Property Taxes Levied to Pay Bonds Issued for Capital Purposes

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Uses for Revenue

Hillsboro CUSD #3

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How to Use Sales Taxes

Pay as you go capital projects

– Sales tax can be saved up over time

Issue new bonds for current capital needs

– Support bonds with sales tax

Retire existing debt issued for capital purposes

– Abate taxes – annual decision – Refund qualifying debt – locks in abatement

………Or any combination of the above
Every district decides for themselves how to spend the

funds

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Hillsboro CUSD #3

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Benefit to Property Taxes Two Ways to Decrease Property Taxes

1. Avoid:

A district can avoid levying property taxes by using sales tax funds to pay for facility projects that would have been paid for with property taxes.

2. Reduce:

Existing building bonds can be paid with sales tax funds instead of property tax funds. s.

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Hillsboro CUSD #3

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Revenue is distributed equally for every pupil who lives

in the county and attends public school, regardless of the location of that school.

EAV used herein simply to estimate enrollment within

the county (i.e. the ratio of EAV in the county equals enrollment in the county).

Real revenue distribution is based on actual enrollment

in County as certified to ROE each Fall.

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Revenue Distribution Logistics

Hillsboro CUSD #3

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The Money Follows the Student

D R A F T

10 Calendar Year

Adjusted Net CSFT at 1% (1) % Change 2002 $2,040,036 N/A 2003 $2,057,138 0.84% 2004 $2,135,616 3.81% 2005 $2,230,642 4.45% 2006 $2,344,868 5.12% 2007 $2,304,710

1.71%

2008 $2,393,247 3.84% 2009 $2,236,458

6.55%

2010 $2,396,294 7.15% 2011 $2,467,250 2.96% 2012 $2,802,421 13.58% 2013 $2,881,390 2.82% 2014 $3,042,691 5.60% 2015 $2,914,689

4.21%

1 2 3 4 5 6 7 8 9 10 11 12 13 County District 2015 District Total EAV (1) % of EAV in the County (1) 2015-16 Housed Enrollment

2015-16 Housed Enrollment adjusted for in- County EAV (2)

Percent of Total Adjusted Annual CSFT per District (3) Estimated Proposed Debt Issuance with 0% Annual Growth in Sales Tax, 1.25x Coverage @ 5% Rate for 20 Years (4) Final Maturity of Existing Debt

Fiscal Year 2017 Debt Service per District from 2015 County Tax Rate Sheet Potential Abatement Available Based

n LESSER of

CSFT Funds or FY 2017 Debt Service Effective Abatement $ Amount per $100,000 House Value Based on column 12

Montgomery Panhandle CUSD 2 $61,983,040 96% 490 468

10.7%

$310,440 $3,095,017 12/1/2027 $325,132 $0.50 $166.95 Montgomery Hillsboro CUSD 3 $181,034,517 98% 1,780 1,738

39.5%

$1,152,168 $11,486,850 12/1/2033 $1,667,682 $0.64 $212.15 Montgomery Litchfield CUSD 12 $127,486,626 98% 1,446 1,414

32.2%

$937,140 $9,343,068 10/1/2020 $858,468 $0.67 $224.46 Montgomery Nokomis CUSD 22 $47,613,964 92% 633 580

13.2%

$384,241 $3,830,793 12/1/2035 $362,438 $0.76 $253.73 Bond Bond County CUSD 2 $154,943,220 1% 1,885 16

0.4%

$10,344 $103,130 $1,282,775 $0.01 $2.23 Christian Morrisonville CUSD 1 $40,125,499 4% 335 12

0.3%

$8,133 $81,085 $187,435 $0.02 $6.76 Christian Pana CUSD 8 $101,693,014 2% 316 6

0.1%

$4,226 $42,133 $0 $0.00 $0.00 Fayette Vandalia CUSD 203 $110,460,232 1% 1,276 19

0.4%

$12,584 $125,457 $1,459,586 $0.01 $3.80 Fayette Ramsey CUSD 204 $24,310,544 2% 443 7

0.2%

$4,621 $46,073 $67,104 $0.02 $6.34 Macoupin Mount Olive CUSD 5 $33,723,515 17% 496 83

1.9%

$55,057 $548,905 $0 $0.00 $0.00 Macoupin North Mac CUSD 34 $119,659,286 2% 1,465 24

0.6%

$16,110 $160,617 $497,932 $0.01 $4.49 Madison Highland CUSD 5 $363,334,417 0% 2,893 1

0.0%

$877 $8,746 $3,903,786 $0.00 $0.08 Sangamon Auburn CUSD 10 $115,500,966 1% 1,385 8

0.2%

$5,184 $51,683 $652,207 $0.00 $1.50 Sangamon Pawnee CUSD 11 $72,801,653 3% 641 20

0.5%

$13,562 $135,213 $195,063 $0.02 $6.21 Total $1,554,670,493 4,397 100% $2,914,689 $29,058,769 Value of a Student $663

(3) Based on County Sales Tax "CST" then multiplied by 4 to represent 1%, less 2% state fee, automotive sales tas estimate removed

County School Facility Tax Worksheet for Montgomery County Schools Debt Capacity and Abatement Impact Per District

(4) Stifel does not guarantee to underwrite at these levels. Interest rates shown are based on curernt interest rate environment. Prepared by Stifel Nicolaus & Company, Inc. - for additional information please contact Tom Crabtree at 800-230-5151 ext. 8457

February 9, 2017

(2) Enrollment of County resident students as reported by ISBE Fall Housing Report then adjusted by factor of % of EAV in the County (1) As reported by ISBE Annual Financial Reports and County

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The Process

School boards pass a resolution
County Clerk will place on the ballot at the next

regularly scheduled election

After approval by the voters, the tax will be imposed
Simple majority of votes cast needed to pass

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Hillsboro CUSD #3

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The Process

The ordinance and the election results must

– Be certified by the County Clerk – Filed with the Illinois Department of Revenue

Money is received monthly beginning approximately

four months after the tax goes into effect

The money follows the student

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Hillsboro CUSD #3

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Required Language on the Ballot

Ballot Language (cannot change): Shall a retailer’s occupation tax and a service

ccupation tax (commonly referred to as a

“Sales Tax”) be imposed in (name of county) at a rate of (insert rate) to be used exclusively for school facility purposes?

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Hillsboro CUSD #3

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Distribution of Sales Tax

2% withheld by IL Dept. of Revenue – Common to sales taxes Distributed by R.O.E. on a per resident-pupil basis The money follows the student

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Revenues do not flow through the Illinois General Assembly budget process and are not subject to cuts similar to what districts currently experience relating to State Aid.

All shoppers in County pay on qualified sales

H i l l s b o r o C U S D # 3

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Election Date April 4, 2017 Pass Resolution* (School Districts)

Jan. 17, 2017

Certify the Resolution* (County Clerk) No later than

Jan. 26, 2017

Election April 4, 2017 File with IL Dept. of

Rev. to Enact Tax

No later than May 1, 2017 ** Sales Tax Goes into Effect July 1, 2017 Regional Superintendent Receive Funds from State Approximately 90 Days after July 1, 2017 District Receives New Sales Tax Revenues October 2017

Election Timelines

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*Per ILCS 5/28 ** 5/1/18 filing with IDOR requires County Clerk to certify election results before 5/1/18

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Additional Information Below is a link to a 10 minute video that gives a non- technical introduction to the basics of the County School Facilities Sales Tax and how it has been used across the State.

http://youtu.be/BLN9yacb4dE

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