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
Understanding the “Tax Cap” Property Tax Extension Limitation Law (PTELL) also known as the “Tax Cap” Impacts all school districts in Cook County and numerous other counties throughout CPI-U History the state 2009 0.1% 2010 2.7% Limits operating fund levy to 2011 1.5% A) increase in the prior year’s CPI % plus 2012 3.0% B) addition of new property growth 2013 1.7% 2014 1.5% Districts cannot recover operating revenue if amounts are levied less than CPI 2015 0.8% Each year’s levy sets the foundation amount by which taxes may be levied for the following year
TOTAL LEVY = OPERATING AND DEBT SERVICE FUND LEVY OPERATING FUNDS Educational Combined Operating Fund levy is “capped” at an Working Cash increase of CPI % + the new property growth % Oper. / Maintenance The current year levy sets the foundation for all future levy amounts Transportation Amounts levied less than the cap are “lost” and cannot be recovered in future years IL. Municipal Retire. These “losses” compound annually Social Security DEBT SERVICE FUND Debt Service levy is tied to the District’s outstanding debt and NOT capped by CPI Debt Service Fund The debt repayment schedule determines the Debt Service levy amount Reductions (abatements) are one year only and do not affect future years’ levies OPERATING FUNDS TOTAL LEVY DEBT SERVICE FUND
2015 Levy Considerations Operating Debt Service Property Tax Fund Levy Levy Refunds limit: 1.0% • $3.3 mil • Average yearly loss: $5 million • Amount required • 0.8% CPI by Cook County • Losses taken from • 0.2% New by debt 2015 levy property growth repayment collections schedule
What is a Flat Levy? 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)
Two Methods to Achieve a Flat Levy 2015 Levy Last Year's Method 1 Method 2 2014 Tax Levy 1% Increase in 0% Increase in Operating Funds 1.7% Inc. Operating Funds (0.8% CPI+0.2% New Prop) Levy Amount Levy Amount Levy Amount Operating Funds $ 212,648,268 $ 212,648,268 $ 214,774,751 Debt Service Fund $ 5,462,533 $ 3,438,383 $ 3,438,383 $ (2,000,000) $ (2,000,000) Debt Service Abatement $ - $ 216,110,801 $ 216,086,651 $ 216,213,134 Total Levy Amount 0% Increase from 2014 Levy= Flat Levy for 2015
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 2015 Levy: ($2,100,000) in lost Operating Fund revenue 2016 Levy*: ($2,200,000) over 5 years. Losses continue into 2017 Levy*: ($2,200,000) perpetuity. 2018 Levy*: ($2,200,000) * Assumes levy increase of 2019 Levy*: ($2,200,000) 1.5% (1.3% CPI+0.2% New Prop) consistent with projections
Impact of a 0% Levy Increase Impact of a 0% Levy Increase Through Debt Abatement Through Debt Abatement Protects Operating Fund Revenue Utilizes $2 mil 0% Change in for of Working Total Levy for Instructional one year Cash Reserves and Operational Needs
Debt Service Levy Abatement History $12,000,000 $10,000,000 Recommended abatement $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Debt Service Levy Debt Service Abatement
Levy Scenarios SCENARIO I 2015 Op. Fund Levy Inc. 0.8% CPI+ 0.2% New Property = 1.0% 2016 CPI Assumption 1.0% 2017-2020 CPI Assumption 1.3% Abate $2M in FY17 2015 Abatement $10M Life Safety Bonds No L/S Bonds Fund Surplus/ Balance % Chg over Levy Year Fiscal Year Deficit Reserve% 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 Flat Levy
Levy Scenarios SCENARIO II 2015 Op. Fund Levy Inc. 0.8% CPI+ 0.2% New Property = 1.0% 2016 CPI Assumption 1.0% 2017-2020 CPI Assumption 1.3% Abate $3.3M in FY17 2015 Abatement $10M Life Safety Bonds No L/S Bonds Fund Surplus/ Balance % Chg over Levy Year Fiscal Year Deficit Reserve% 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 0.6% Total Levy Decrease
Recommended Levy Amount 2015 Tax Levy Recommendation 2015 Proposed 2014 Levy 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% SCENARIO I 0.8% CPI+ 0.2% New Property = 1.0% 1.0% 1.3% Abate $2M in FY17 No L/S Bonds
Phase II Life Safety Projects Estimated Future L/S Budget Recommend to fund FY17 projects utilizing reserve fund balance. A FY17 $2.2 mil decision will be made about the FY18 $7.2 mil FY18 project funding at a later date. $9.4 million $9.4 mil Completed L/S $16 mil Projects Remaining L/S Projects 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
Fund Balance Reserve Projection (Assumes Full Operating Fund Levy, $2mil Abatement for 2015 Levy, $10 mil in L/S Projects) 100% 33.3% fund balance minimum 90% per Board policy Operating Fund Balance % 80% $8 million 70% remaining 60% for future Fund Balance Projections legislation, 50% further 40% debt abatement, 30% or budget 20% deficits 10% 0% FY14 FY15 FY16 FY17 FY18 FY19 FY20 Oper. Fund Bal. 67% 56% 54% 43% 42% 39% 36%
The 5 Factors of a Tax Bill Factors Example 1) Property Value $200,000 2) Assessment Level per classification X 10% Assessed Value = $20,000 X 2.7253 3) State Equalization Factor 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
What if…? Flat Levy And Everything Else Remains the Same 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
Tax Levy Calendar 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- Public hearing notice must be published (no December 3, 2015 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 of 2015 levy and adoption of 2015 levy December 29, 2015 Last day to file 2015 levy
Future Considerations 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
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