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Tax Year 2019 Levy

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During the November meeting of the Oakland CUSD #5 Board of Education, Superintendent Lance Landeck introduced the tentative tax levy.  In presenting the numbers, Landeck explained that he was presenting two sets up numbers; the actual anticipated numbers as well as the inflated levy numbers.

At the beginning of the levy development process, Landeck contacts the Assessor's office for each of the three counties the district is in.  He asks if they can provide him with an estimate of what the district's Equalized Assessed Value (EAV) will be.  EAV is the total valuation of all properties within the school district's boundaries after county and state equalization are performed.  All properties include commercial property, farmland, residential property, and railroad property.

Once an estimate of EAV is determined, the superintendent starts the levy process. Levy is defined as the amount of the school district's need for property taxes for each fund within the district budget.  Some funds within the budget (Education, Operations & Maintenance, Transportation, and some minor operating funds) cannot exceed the the rates authorized by the voters of the community.  Other funds (Bond & Interest, IMRF, Tort, and Social Security) there is no rate limit.

The fixed rates and the no limit rates are then multiplied by the estimated equalized assessed value (EAV) to get the total extension and answer several questions.  This mathematical equation  estimates how much revenue the district can anticipate to receive.  It also provides an estimate for what the district's total tax rate will be on property owners tax bill.  The anticipated final rate also allows the board to discuss what impact (total costs) it will have on property owners based on the value of their property.  How does that tax rate compare to last year's tax rate.

That is an explanation of the first set of numbers, the actual anticipated numbers.  However, as Landeck said in the meeting, he also introduced inflated levy numbers.

Inflated levy numbers are actually presented for approval when the new EAV is unknown.  Although the counties provide an estimate, they also preface providing that estimate with making sure the district understands it is only an estimate and the final, official EAV may be higher or lower.

For that reason, the superintendent presents a levy where he/she has hedged against an unknown increase in the tax base by "ballooning" the levy.  There is no legal limit to the amount that can be levied, another term for "asked for."  Community members also have to understand that just because a board levies for a higher amount, that does not mean the district is going to receive that higher amount.  It simply means that is what the district is asking for.  In the end, the district will only get what it is entitled to by taking the tax rate times the EAV.

For example ... If the current tax rate is 2.58% in the Ed Fund and EAV is $45,000,000 then the district will be entitle to .0258 x $45,000,000=$1,161,000.  However, because the district does not know it's final EAV, it may only ask for $1,000,000 so in this example, the district would be "losing out" on $161,000 it is entitled to.

To avoid losing out on funds or leaving funds on the table, the levy will be inflated as described above.

Take the same example from above ...  If the current tax rate is 2.58% in the Ed Fund and EAV is $45,000,000 then the district will be entitle to .0258 x $45,000,000=$1,161,000.  Because the district does not know it's final EAV it will balloon the levy and ask for $1,250,000.  However, the district will only receive $1,160,000 because that is all it is entitle to based on it's tax rate and EAV.

When the amount the district is asking for represents a 5.0% or more from the actual amount of tax dollars received the previous year, the district is required to hold a Truth in Taxation Hearing. This is the case for Oakland CUSD #5 as the district is asking for 14.25% more than it received last year.  Keep in mind, as described above, that is simply what the district is asking for, not what the district intends to receive.

The substantial increase in what the district is asking for is based on the estimated EAV figures received from the counties.  Landeck stated that based on the EAV estimates he received, he expects Total EAV for the district to increase by just over 14%.  However, as explained above in example two, he has inflated estimated EAV to just over 18% to assure the district doesn't leave any funds on the table they are entitled to.

Oakland CUSD #5 will hold it's Truth in Taxation Hearing on Wednesday, December 18th at 6:45 pm in the Lake Crest Library.  Approval of the levy will be an agenda item at the regular monthly meeting scheduled to follow the hearing at 7:00.  If you have any questions, please feel free to contact the superintendent or attend the hearing on December 18th.