Here are the answers to some commonly asked questions about school district budgets in New York.
Q: What is the difference between the tax levy and tax rate?
The tax levy is the total amount of money a school district raises in taxes each year from all property owners in the district.
Tax rates are calculated by dividing the total amount of the levy by the total taxable assessed value in a community. Tax rates are affected by changes in both municipal assessments and state equalization rates, which are determined in the summer. The tax rate is used to calculate each individual property tax bill.
Q: What is an equalization rate?
As the name implies, equalization rates are intended to spread the tax burden across all municipalities (cities, towns and/or villages) within the school district as fairly as possible. In New York state, each municipality determines its own level of assessment. The rates are intended to “equalize” or balance these differences within the same school district. For example, one municipality’s assessments may be more recently updated than others, and property values don’t change equally in all municipalities within the school district.
A municipality’s equalization rate is set by New York state to reflect a municipality’s level of assessment. It is calculated by dividing total assessed value by total market value.
An equalization rate of 100 means that the municipality is assessing property at 100 percent of market value.
An equalization rate of less than 100 means that the municipality’s total market value is greater than its assessed value.
An equalization rate of greater than 100 means that the municipality’s total market value is less than its assessed value.
You can find additional information on equalization rates and links to local assessment rolls here: https://tax.ny.gov/pit/property/learn/eqrates.htm.
Q: What is the tax levy limit, or tax cap?
The tax levy limit is the highest allowable tax levy (before exemptions) that a school district can propose as part of its annual budget. When staying at or below the tax levy limit, budget proposals can be approved by a simple majority of voters (50 percent + 1). Any proposed tax levy amount above this limit would require budget approval by a supermajority (60 percent or more) of voters. The tax levy limit sets a threshold requiring districts to obtain a higher level of community support for a proposed tax levy above a certain amount.
Q: How would the proposed budget affect my taxes? Is it within the cap?
The proposed tax levy increase of 2.29 percent is below the tax levy limit that is calculated for 2020-21 through a prescribed state formula. As a result, the budget requires the support of a simple majority (50 percent + 1) of voters to be approved.
Residents’ tax bills are determined by several factors that are out of the district’s control, including assessment levels and equalization rates, which are set by the New York State Office of Real Property Services.
While the final tax rates for 2020-21 cannot be determined until the summer when final assessments and equalization rates are available, the district estimates a tax increase of $99.30 for a home in the district valued at $250,000.
Q: What happens if the budget is defeated?
Under New York state law, if the school budget is defeated, the board of education typically has two options: put the same or a modified budget up for another vote on the third Tuesday in June, or immediately adopt a contingent budget. If residents defeat the proposed budget during a second vote, the board must adopt a contingent budget. However, given the delay in this year’s initial vote to June 9, the date in law for a revote of June 16 would not be possible. The district is seeking further guidance on what options may be available in the event that a revote is necessary.
Q: What is a contingent budget?
State law mandates that under a contingent budget, a school district must adopt a budget with no tax levy increase and eliminate all non-contingent expenses, such as certain student supplies, certain equipment purchases and the free community use of school facilities (the district must charge a fee). The administrative budget would also be subject to certain restrictions.
Q: What would be cut under a contingent budget for 2020-21?
If Florida UFSD adopts a contingent budget for 2020-21, the district would have to cut $185,435.00 in program and other operations, and limit or eliminate facility usage by the community.
Q: What is a “fund balance” and how does it help offset the amount of my school taxes?
A fund balance is created when a district receives more revenue than expected and/or spends less than the amount budgeted. As part of the 2020-21 budget, Florida UFSD plans to allocate $140,000 from its fund balance to lower the total tax levy and reduce the tax impact on district residents in the coming year.
Q: How could STAR reduce my school taxes?
New York State’s School Tax Relief Program, or STAR, provides partial school property tax savings to eligible homeowners. Most New Yorkers who own and live in their homes are eligible for STAR savings on their primary residences. There are two STAR programs, Basic and Enhanced, with different eligibility requirements. More information can be found at: https://www.tax.ny.gov/pit/property/star/eligibility.htm
Q: Are taxpayers’ STAR savings factored into the budget?
No. The STAR program is tax relief for homeowners paid for by New York state through state taxes. This tax relief for homeowners does not affect the school district budget.
Q: Are there any changes to the STAR program this year?
Two changes to the STAR program were enacted in the state’s budget this year.
Taxpayers who have property tax bills “that remain unpaid one year after the last date on which they could have been paid without interest” are not eligible for STAR savings. Homeowners will be excluded from the STAR program until past-due property taxes are paid.
There is an extension to the enrollment period for Enhanced STAR filers. The fiscal year 2019 state budget required all Enhanced STAR recipients to enroll in the Income Verification Program. The enrollment period was reopened to allow homeowners who failed to register last year to retroactively verify their income. More information about the Enhanced STAR Income Verification Program can be found here: https://www.tax.ny.gov/pit/property/star/ivp.htm#enroll
Q: Did the Property Tax Relief Credit expire?
Yes. Through the Property Tax Relief Credit, property owners in districts that complied with the state’s property tax cap received a check each year. The credit expired as of this year and was not renewed in the recently adopted state budget.
Q: What are BOCES services and BOCES aid?
Boards of Cooperative Educational Services, or BOCES, provide shared services to school districts as a way to pool resources and share costs. Sharing allows districts to provide programs and services that they might not be able to afford otherwise. A district using BOCES services for the current school year is reimbursed a portion of the cost of the services in the following school year by New York state. The amount returned to each district varies by service and is based on a formula that takes into account the district’s financial resources. Florida UFSD receives 71.1 percent reimbursement on the aidable BOCES services it uses.
Q: Why do salaries and benefits comprise so much of the budget?
It takes many people to create and maintain a safe and productive learning environment for the children in our schools. Employees teach, transport, coach and care for the community’s children. They clean buildings, mow playing fields, order supplies and make decisions so that schools run effectively and efficiently. Every year, approximately 71.92 percent of the district’s budget goes to pay salaries and benefits.
Q: What is a capital reserve fund?
A capital reserve fund allows the district to set aside money for future construction projects and major purchases, much like a savings account. The fund cannot be established without voter approval, and reserve funds cannot be spent without voter approval. Because capital assets have a predetermined useful life expectancy, a reserve fund reduces the need to borrow money, but still maximizes state aid, to replace those assets in the future.
Q: What is the “Pandemic Adjustment”?
In an effort to deal with the financial challenges brought on by COVID-19, this year’s state budget includes a state aid reduction for all public schools, the “Pandemic Adjustment,” that totals $1.1 billion statewide. This is entirely back-filled for each district by federal stimulus funds for 2020-21. While the federal stimulus offers relief this year, it remains to be seen if and how this will be applied to state funding in future years.
Q: What are the “look back periods” in the Enacted Budget and how might they affect schools?
A: The Enacted Budget authorizes the state to review its revenue and expenses on an ongoing basis so it can determine its financial state. The year will be divided into three measurement periods: April 1 – April 30, May 1 – June 30 and July 1 – December 31. If the state’s revenues within these “look back periods” is less than 99 percent of the projected revenue, or its expenditures are more than 101 percent of projections, the state Division of Budget can reduce aid for schools and local governments. According to language in the budget, school districts that have their aid reduced may be repaid at a later date.