WASBO 2011
Local Levy and LEA
AN OVERVIEW
LEVY/ LEA
Local M&O Levies
The state constitution provides school district the authority to levy property taxes with a 50% yes vote.
Duration may be one to four yearsIf election fails, proposal may be resubmitted one
more time in a calendar yearReferred to as an “excess Levy” as it is in excess of
the statutory percentage limit on property tax.Revenues are for enhancement to the state basic
education program. – Examples: Extracurricular, enhanced classes, additional salaries for additional duties.
Levy Limits Today
28% starting 2011 / was 24% in 2010After the Doran decision in 1977, Levy Lid
law had established a 10% Levy Lid.
A Growth Model
Fiscal Year Revenue Levy Revenue Percent
1974–75 $994,472 $320,566 32.23%
1980–81 1,908,531 152,700 8.00%
1985–86 2,500,556 277,484 11.10%
1990–91 4,082,666 475,256 11.64%
1995–96 5,415,752 773,351 14.28%
2000–01 6,739,204 1,024,717 15.21%
2005–06 8,139,545 1,317,017 16.18%
2009–10 9,944,680 1,737,022 16.69%
2010-11 10,127,259 1,798,244 17.76%
** Dollars in Thousands, LEA not included, 2010-11 reflects F-195 budgeted figures.
Levy Authority
Maximum levy authority is calculated by OSPI based upon law and rule as adopted under WAC 392-139. It is calculated for a calendar year therefore, affects
two school years. It is adjusted to reflect resident student population. Levy authority is reduced by any LEA provided under
state formula.
Levy Authority
Calculated using: Prior year State and Federal revenues paid by OSPI Direct Federal Funding from second PY F-196
Adjusted for inflation and BEA changes to be reflective of current year amounts.
91 districts have levy authority above 28%. For 2010 only 43 of these exceeded 24%
Levy Information
Actual district by district information 0n levies is available on the OSPI website at:
http://www.k12.wa.us/safs/PUB/LEV/1011/lv.asp
Local Effort Assistance (LEA)
This is an attempt to equalize tax rates between property rich districts and property poor districts.
Calculation is based upon a theoretical levy rate of 14% at both the district and state level.
To be eligible a district must Have a tax rate for the theoretical 14% levy that is
greater than the rate for the state theoretical levy. Pass a levy.
Local Effort Assistance (LEA)
To receive the maximum LEA – a district does not have to pass a 14% levy.
Rather, they must pass a levy that would raise an amount equal to their tax base times the state average tax rate for a 14% levy.
OSPI reduces the districts overall levy authority by the amount of LEA that the district will receive.
Example
The districts 14% levy amount is $422,000District’s tax base is $100,000,00014% rate would be $4.22 / 1,000State Average rate for a 14% levy is $1.00* per
1,000District must pass a levy equal to $100,000
$1.00 X 100,000,000 / 1,000 = 100,000.
LEA would be calculated as $322,000 ($4.22 - $1.00) x $100,000,000 / 1000
* Example purpose only - Not the actual rate
So who gets LEA?
For 2010:220 districts will receive LEA totaling $261
million. These districts serve 709,500 students
12 additional district are eligible but did not pass a levy. These districts serve 2,286 students.
63 Districts are not eligible for LEA. These districts serve 269,117 students.
How Levy/LEA dollars used
School Districts do not track the use of Local/LEA dollars discreetly in our systems.
However, OSPI can generally track state and federal funding dollars provided.
The difference must be local. Correct?
How Levy/LEA dollars Are Used?
Program and Expenditure Purpose
Local Dollars Expended
%
1 Levy, LEA, Misc Local $2,083.1
2 Extra Curricular/ Community 85.5 4.1%
3 Pupil Transportation 130.8 6.3%
4 Special Education 77.2 3.7%
5 NERC 502.6 24.1%
6 Add’l BEA Classified Staff 168.5 8.1%
7 Add’l BEA Instructional Staff 195.0 9.4%
8 Add’l Salary – Classified 210.7 10.1%
9 Add’l Salary – Admin 169.7 8.1%
10 Add’l Salary – Instructional 608.8 29.2%
11 Food Nutrition 11.7 0.6%
SESSION HIGHLITES
LEVY/ LEA
Legislative Changes
At this point in time neither budget addresses any changes to LEA funding.
This is not a guarantee that final budget will also protect LEA funding
However, several bills have been introduced that would affect Levy Base: 1814 1815 -
This bill would add the Edu-Jobs funding into the levy base for the 2011 and 2012 Levy calculations for district that approved levy prior to April 30th, 2011.
Effectively double counts Edu-Jobs $$ in the 2011 levy base.
Reintroduced April 26th.
HB 1814 - EduJobs in Levy Base
HB1815 - Levy Base Revision
Expands school districts' Maintenance and Operations (M&O) levy base by including the positive difference between the per-pupil general apportionment for the 2009-10 school year (excluding per-pupil fringe benefits) and the district's per-pupil state general apportionment for the prior year (excluding per-pupil fringe benefits), multiplied by the district's average annual prior year enrollment.
Excludes from this addition amounts already included in the levy base for the kindergarten through fourth grade staffing ratio enhancement.
HEADED UP BY OFM
Levy / LEA workgroup
Levy and LEA Workgroup
Formed under SHB 2261/ 2776Headed up by OFM – Paula Moore and Jim
CrawfordComposed of 16 membersFirst meeting was May21, 2010Report due June 30th 2011.Materials for Group may be found at:
www.ofm.wa.gov/levy
Levy/LEA Workgroup Members
Brian Benzel Whitworth University ,Vice President, Finance and Administration At Large Don Cox Retired (Prior Superintendent, Legislator, and Professor) At Large Harvey Erickson Bethel School District, Chief Financial Officer At Large Nancy Faaren Olympia School District Principal, Capital High School AWSP Larry Francois Northshore School District, Superintendent WASA Scott Izutsu Yakima School District. Assistant Superintendent, Financial Services At Large Michael Mann Legislative Evaluation and Accountability Committee LEAP Sally McLean Federal Way School District, Chief Financial Officer At Large Doug Nelson Public School Employees of Washington/SEIU 1948 PSE/SEIU Randy Parr Washington Education Association, Budget Analyst/Lobbyist WEA Douglas Poole North Central Education Service District At Large Larry Quarnstrom Rochester School District, Maintenance Director At Large
(and also WA Assoc. of M&O Administrators) Ted Thomas Longview School District School Board Director WSSDA Valerie Torres Department of Revenue Tax Policy Specialist DOR (Diann Locke) Department of Revenue Tax Policy Specialist DOR Carolyn Webb Mukilteo School District Executive Director for Business Services WASBO
Levy and LEA Workgroup – Legislative Charge
Develop options for a new system of supplemental school funding through local school levies and local effort assistance;
Recommend a phase-in plan so no school district suffers a decrease in funding due to implementation of the new system of supplemental funding;
Examine local school district capacity to address facility needs associated with phasing in full day kindergarten and K-3 class size reductions; and
Provide the Quality Education Council with analysis on the potential use of local funds that may become available for redirection due to increased state funds for pupil transportation and maintenance, supplies and operating costs.
Levy and LEA Workgroup
While several legislators envisioned proposals for significantly different levy/LEA models, current funding issues and lack of faith in improved funding has group focused on “do no harm”.
Group has considered several different models for Levy and LEA as well as changes in funding resources for education.
Levy and LEA Workgroup - Issues
LEA is not always acknowledged as a local tax relief program for local taxpayers.
This has created some proposals that would use LEA to provide additional school funding rather than provide taxpayer relief.
Levy and LEA workgroup
The groups reviewed a variety options in regards to how other states provides levies and proposal related to funding. I highlite only a few:
Governor’s Tiered ProposalZarelli BillThe Vermont Model.A flat per student Levy limit.
Governor’s Proposal for 2011-13
Governor Gregoire’s proposed restructuring of levy equalization into four tiers of districts, with the most property-poor districts receiving the smallest reduction in state funds. LEA payments will be reduced based upon each tier.
Governor’s Tiered Proposal
Tier Reduction
14% Local Tax Rate
Percentage Above State
Average# of district in
tier
Tier 1 1% Over 300% 43
Tier 2 3% 175% to 300% 62
Tier 3 5% 125% to 175% 82
Tier 4 28.75% 100 to 125% 48
This proposal would have saved $39.5 Million.
Zarelli Proposal SB 6858
State & Local School Levy Exchange 12 Concept: Raise State School Levy Decrease Local School Levy.
Proposal: Raise State Property Tax $0.88/$1,000. Decrease All District Levy Lids by 12%
(grandfathering remains). Include a Hold-Harmless Provision for Districts Provide increased funding for Transportation and
MSOC in 2011-12.
Iseminger Proposal
Proposal is summarized as five tenets.Tenent 1 - Reserve a portion of the annual increases in
state funding for k-12 education reformTenent 2 – Shift the 28% levy lid to state collection. Tenent 3 – use state bonding for required capital
improvements Tenent 4 - implement reform by funding the neddiest
students first.Tenent 5 - reform local levies to 10% or $1/1,000
whichever is more.Full proposal may be found on the Levy Workgroup
Page.
The Vermont Model
At the local level, the total budget is approved by voters. The amount approved by voters is translated into a per-pupil amount. The state then calculates a local tax rate for that district based on the budget the voters approved. If the locals approved a per-pupil spending amount higher than 125% of the state average, then a penalty or higher tax rate is applied to that local district.
The Vermont Model – Full Eq
Those with ABOVE average tax rates would receive LEA funds so that no tax payers paid ABOVE the state average (this would be equalizing to a 24% lid, as opposed to current policy of a 12% lid).
Those with BELOW average tax rates would be allowed to collect up to 24%, but there would be a recapture provision calculated. This would work as a deduction from state funding allocations, and for this exercise is labeled DEDUCTION I.
The Vermont Model – Excess Lid
In the spirit of the Vermont model, districts would be allowed to exceed the levy lid. However, Vermont requires districts that exceed a per-student spending rate to pay a higher tax rate. For this exercise, in translating the Vermont model to Washington state, there would be a higher tax rate that kicks in for districts exceeding 24% of the levy lid. Again, this is like a recapture provision and would work as a deduction from state funding allocations.
Per Student Levy Limit
This would provide districts a levy limit based upon a per student rate.
To eliminate grandfathering this would require a rate at approximately $3,600 per student.
Proposal to establish minimum levy authority of $1M to address small district.
LEA is assumed to continue at 50% of any levy limit.
Per Student Levy Limit - Issues
Levy change is easy. LEA change creates winners and losers.
Using a flat rate of $3,000 , 119 district would have to be grandfathered at higher rates.
Would be required to have a rate of $3,600 rate to eliminate cuts or grandfathering.
Higher rate for all would grow the state’s LEA costs.Lower rate could be used to limit LEA and create
grandfathering for districts above set rate.No single rate eliminates large winners and losers
in LEA.
Consideration of Reducing Levy Funds
Basic assumption is that at some level as state funding meets adequacy, the reliance upon local funds is reduced.
How to measure that point?How to offset? $0.50 reduction for every
$1.00 increase in state funds??What would be included in determination of
increased state funds? Benefit Rates? MSOC increases? Salary
Increases? Transportation? Additional Staff?
Consideration of Current Levy Structure
After reviewing various proposals and options, the committee is now looking at the benefits of maintaining the current levy model.
Some tweaks discussed: Most members would like to see ghost money go away. Should the base focus on the actual state and federal
dollars being received per student? Should this be limited to just state?
If the base is adjusted the discussion focused on raising the levy lid to protect district current levy levels.
Levy / LEA Workgroup
The work of this group may be followed at http://www.ofm.wa.gov/levy/#meetings
Final Report is due on June 30th, 2011.