When Oxford school district voters go the polls May 3 they will be asked to approve a two-year, 2.3549-mill increase in the non-homestead property tax.
Non-homestead properties include businesses, commercial properties, second homes, vacation homes and rental properties. Exluded from this category are principal residential and qualified agricultural properties.
State law allows school districts to levy up to 18 mills on non-homestead properties to fund operating expenses such as teachers? salaries, building utilities, textbooks and everything else it takes to run a school.
A mill is equal to $1 for every $1,000 of a property’s taxable value.
Due to annual rollbacks caused by the state constitution’s 1978 Headlee Amendment, the Oxford school district is currently levying 15.6451 mills on non-homestead properties.
‘Most other school districts levy 18 mills and we feel we should be able to levy 18 mills here as well,? said Assistant Superintendent Ron Franey. ‘Those dollars are important for our kids and they deserve to have that money for programs and teachers.?
Franey said the current 15.6451-mill rate is not enough to cover gaps in state funding received by the district and rising operational expenditures.
When the state allocates its per-pupil foundation grant money to the district, it assumes the maximum 18 mills is being levied every year, Franey said.
But because of Headlee rollbacks this is not the case, resulting in a gap between what the state doles out and what’s actually collected in non-homestead property taxes, according to Franey.
For instance, for the 2004-05 school year, the state assumed the district was levying 18 mills on $262,159,442 worth of non-homestead property, resulting in a collection of $4,718,870.
But in reality, 15.6451 mills was levied, resulting in an actual tax collection of $4,101,511.
The state calculated the district’s per-pupil foundation grant based on the 18-mill collection figure, resulting in a $617,359 shortfall in funding for 2004-05, Franey said.
Franey explained that when the state touts the fact the Oxford school district received $6,958 per student in funding for 2004-05, that figure is actually a combination of state money and non-homestead tax dollars.
When the full 18 mills is not levied or collected by the district, the difference is not made up by an increase state funds, so that money is ‘lost,? Franey said.
On a per student basis, that amount lost works out to approximately $160 less than the $6,958 the state claims each Oxford student received this school year.
Since 1998, this gap between what the state assumes is being levied in non-homestead property taxes and what is actually being levied has resulted in a total loss of $2,165,359, according to Franey.
If the upcoming 2.3549-mill increase is not approved, Franey estimates the non-homestead millage rate will rollback to approximately 15.33 mills for the 2005-06, resulting in an estimated loss of about $725,000 for the next school year.
Such as loss cannot be easily absorbed especially since Franey is estimating the district’s expenditures will increase by roughly $3.5 million for the 2005-06 school year due to a 2-to-2? percent increase in school employee salaries, rising utility costs, an 18 percent increase in health insurance costs and a 2-percent jump (from 14 to 16 percent) in the district’s required contribution to the state-controlled retirement system for school employees.
However, even if the 2.3549-mill increase is approved by voters for the 2005 and 2006 tax levies, Franey noted the district still won’t be able to levy the maximum 18 mills this year or next year because of continuing Headlee rollbacks.
As for Governor Granholm’s recent proposal to increase the per-pupil foundation grant by $175, Franey said it’s by no means a certainty because it has to be approved by the state Legislature.
And even if $175 more per student was approved, Franey said the state-mandated retirement cost increases alone would equal at least $100 per student, so rising costs could render the increase ineffective.