Admittedly, State Superintendent Tony Evers tells us that he has withheld the intricate details of his plan. His hope is that over the summer, people will at least get talking about school funding. Mission accomplished, Mr. Evers; you have our attention. Evers points out that about $900M in school tax levy "credits" is given to municipalities to lower property tax bills. If it were split evenly to the approximately 450 public school districts, that would amount to about $2M per district. Currently, Sun Prairie, a larger school district, gets about $4.4M. Of course the credit would not be equally distributed.
Evers' plan --at least the extent of which he has shared is essentially based on returning the "School Tax Levy Credit"-- which you may or may not recall seeing on your property tax bill-- where it belongs: schools. Presently, the school tax levy credit dollars are paid from the Department of Revenue directly to municipalities, who in turn apply it, according to a formula, to each property owner's property tax bill. School districts see not one thin dime of that money--although the money is "counted" as a state aid towards schools. Evers' plan is to instead pay out that money directly to school districts, who in turn will apply it against their budget to reduce the tax levy.
With that as a very basic lead-in, and understanding that none of us knows exactly what Mr. Evers has in mind just yet, let's see if, on the surface anyway, it passes the smell test.
* DISCLAIMER *
We are using real numbers, but applying them as best we can tell from information we have at this time. Until we get detail from Evers, this remains conjecture, not fact. The numbers are factual; the way they are applied may change once we learn the details of Evers' plan. We are also simplifying it by using ONLY City of Sun Prairie numbers. In theory, we should be entitled to a larger pool of school tax levy credit dollars from based on a portion of tax levy credit provided to other municipalities within the Sun Prairie School district.
Superintendent Evers wanted to generate discussion. This is our 2 cents.
What are the key numbers?
- In December 2009, for the 2009-10 school year, the City of Sun Prairie received a little over $4.4M in school tax levy credit.
- The Sun Prairie school district's "average" home (which they have used for years to demonstrate Referendum impacts is assessed) at $255,400 for 2009.
- This "average" home paid property taxes of $5,546.85 for 2009.
- This "average" home received a "School Tax Levy Credit" of $455.09 for 2009.
- The effective mill rate "credit" of the school tax levy credit was $1.78 per $1,000 assessed value.
- The actual -after credits-- Sun Prairie school district portion of the property tax for our average home was $ 2,556.94
- The after credit effective mill rate of the SPASD portion of property taxes (for all SP homes) was $10.01 per $1,000 assessed value.
- The 2009 tax levy for SPASD was $ 44,249,461.
Key Assumptions
- We remove the school tax levy credit ($ 455.09).
- We reduce the tax levy by the amount of the Sun Prairie school tax levy credit ($ 4,430,336)
- This reduces the tax levy required by the same amount to $ 39,819,125.
- Using the re-calculated $ 9.01 effective mill rate, the new SPASD portion of the property tax for our average home is $ 2,300.93.
- All other property tax portions remain the same.
The Result
Based on the assumptions above, the property tax for an average home in Sun Prairie actually INCREASES by just a hair under $200, or a 3.6% increase from what this average homeowner actually paid.
Does it really help the schools?
Again, we lack the details of Evers' plan because he has not released them. On the surface, it would seem that there is simply a trade-off as the tax levy needed to run schools is reduced by the amount of the tax levy credit. If the plan calls for just simply giving the tax levy credit directly to the school district as an additional state aid, then we're just substituting tax levy dollars with levy aid dollars. No new revenue is being generated. It's the same revenue, with more coming from the state.
Why it doesn't appear to work
Two big reasons:
1. Unless the plan allows for more spending (increases revenue limits), it has a net zero effect on schools.
2. It actually INCREASES property taxes -- at least for Sun Prairie under this scenario.
Go back to one key figure: the effective mill rate of the school tax levy credit - $1.76.
Now consider that the SPASD portion of the property tax bill is reduced by $256.01. That amount translates to an effective mill rate credit of only $1.00. That means that by trading away our school tax levy credit for the ability to directly apply the entire credit against the district's tax levy, we are effectively trading away a $0.76 mill rate credit. That's a loss of $76 per $100K home value.
The reason for this MAY be the missing piece of the Evers plan. Because Sun Prairie's tax levy is so high: $44.25M, the net effect of the tax levy credit ($4.3M) represents only a 10% reduction to the tax levy. However, the school tax levy credit for our average homeowner, $455 represents a 17.8% decrease in the school district portion of average homeowners tax bill.
What We Don't Currently See in the Evers Plan
What seems to be missing is how exactly this plan gives more money to schools. With the information we have at this time, it appears that Evers' plan simply trades one dollar source for another. The tax levy credit actually has more value to a property owner when it comes directly off the top rather than after it is diluted by the overall tax levy.
Of course, that depends on the absolute value of the tax levy, wouldn't it? For instance, if the school district tax levy was only $4.3M - the same as the total value of the tax levy credit-- then the adjusted tax levy would be zero, meaning the school district portion of the property tax would be reduced to zero.
Where's the Spendability?
What's missing from the Evers Equation is the basic spendability. If he wants to provide more money to schools, then the plan has to be more than just placing the school tax levy credit on a different line of the property tax bill. In short, the money allocated to municipalities to reduce property tax bills must be ADDED to each given school district's revenue limit. That's the only real way that "more money" can be given to schools. They have to be able to SPEND it. And, that, folks is scary monsters with the captains we have at the helm.
What does Raising the Revenue Limit Mean?
Remember the old "See Dick. See Dick run. Jane likes to watch Dick run" book?
Here's an updated version.
See the Revenue Limit.
The Revenue Limit "limits" how much a school district can spend.
See Revenue Limit expanded.
See school district budgets expand as allowed by expanded Revenue Limit.
School district budgets are 80-85% personnel costs.
See school districts hire more people and pay them even more ridiculous salaries and raises.
See Dick lose his school tax levy credit.
See no change to the school district portion of Dick's property tax bill because the school district won't be taxing any less.
See Dick's property tax bill go way up.
See taxpayer Dick take it in the shorts.
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