September 1, 2005

School Board Gives Go Ahead For One-Year 29 Cent Tax Levy Increase

The board voted to raise the levy to $3.65 to maximize state aid, yet is promising to lower the rate next year.
Education is an investment in the future. Now the Scotland County R-I Board of Education is calling for the taxpayers in the district to make an investment in their local education system.

The school board voted 7-0 at the August 25th tax rate hearing to increase the local levy rate to $3.65 for 2005. The move was made in an effort to allow the district to cash in on more state aid over the next seven years while the new foundation funding formula is implemented.

Members made the difficult decision to raise the rate at the same time pledging to lower the levy next year.

The board pointed to the more than $500,000 in added state aid that the move will generate as the decision clincher.

“If we raise the rate this year near the maximum to $3.65 we stand to gain over $400,000 dollars of state aid for the district during the phase-in period of the new formula,” said Superintendent Dave Shalley. “In addition to the $400,000 plus during the phase in, this year there would be an additional $140,000 dollars of state aid generated. This total is over $540,000 for the next seven years from the state in aid to the school district.”

The old funding formula was tax-levy driven. School districts across the state receive state aid based on their local tax levy. The minimum levy is $2.75 and the maximum level that can earn state aid is $4.70. Districts may have levy rates higher than $4.70 but no state aid is generated beyond that point. The foundation formula provided the districts with state aid based on the levy rate, basically rewarding schools with higher tax rates with more state aid.

The new state funding scheme is turning toward a student-needs based formula.

During the seven-year phase in period for the new formula, the state will continue to pay aid based on the old tax-rate driven formula. These payments will be based solely on the tax rate established this year.

That allows SCR-I and other districts across the state to raise their tax rate this year and get higher state aid over the seven-year period. The rate can be lowered next year without decreasing the state aid level, which will continue to be based on the 2005 throughout the phase-in process.

Of course the drawback is that local taxpayers will be facing a significantly higher bill this year.

The move required the district to hike the local levy 29 cents from $3.36 to $3.65.

For the owner of a home appraised in the $90,000 neighborhood this translates into about a $50 tax hike. If you own two newer vehicles, the increase will be in the $20-$25 ballpark for personal property taxes. Farm ground will cost roughly $100 more in local taxes for every 500 acres.

The board members agreed the timing for a tax increase is bad considering the difficult farming season combined with high gas prices and high heating costs expected this winter.

Ultimately the governing body looked past the immediate impact and decided the long-term benefit is worth the investment.

The move was made possible by the Proposition C waiver that voters approved for the district in April 2002. The waiver gave the board of education the power to raise the levy as high as $3.69 per $100 of assessed valuation.

At the time the ballot issue was being considered, the school district had pledged to guard this power and raise tax rates with caution. Members agreed that the opportunity to generate half a million dollars in additional state aid warranted a one-year tax increase locally. They expressed hope that the one-year spike would take the place of gradual tax increases over that seven-year span, ultimately rewarding the taxpayers for their investment by replacing some of the local tax revenue with state aid generated by this move.

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