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The State School Fund:

The State School Fund:. Why It Matters to You. The Twist Ending. Michael Elliott State School Fund Coordinator Oregon Department of Education 503-947-5627 Michael.S.Elliott@state.or.us. Introduction. History State Revenue Local Revenue Weights and Carve-outs Timeline. Introduction.

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The State School Fund:

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  1. The State School Fund: Why It Matters to You

  2. The Twist Ending

  3. Michael Elliott State School Fund Coordinator Oregon Department of Education 503-947-5627 Michael.S.Elliott@state.or.us Introduction

  4. History • State Revenue • Local Revenue • Weights and Carve-outs • Timeline Introduction

  5. School Funding pre Measure 5: • 60% Local Revenue (property taxes) • 30% State Revenue (income taxes) • 10% Federal Revenue History of School Funding

  6. Measure 5 • Passed in 1990 • Capped property tax rate to $5 per $1,000 of market value for public education • Required State to cover any local revenue losses to public education History of School Funding

  7. Measures 47 and 50 • Passed in 1996 and 1997 respectively • Cut assessed property values • Capped growth of assessed property values to 3% a year History of School Funding

  8. School Funding post Measures 5, 47, and 50: • 30% Local Revenue (property taxes) • 60% State Revenue (income taxes) • 10% Federal Revenue History of School Funding

  9. K-12 Funding 1990-91 through 2014-15* History of School Funding * 2013-14 and 2014-15 are estimated

  10. History of School Funding

  11. History of School Funding

  12. History of School Funding

  13. Purpose of State School Fund

  14. Remember… State School Fund Formula is a tide Purpose of State School Fund

  15. Types of Equity: • Equity of Inputs • Equity of Opportunity • Equity of Outcomes Purpose of State School Fund

  16. Question: What type of equity is embodied in the current State School Fund formula? Purpose of State School Fund

  17. Answer: The State School Fund Formula embodies equity of Opportunity Purpose of State School Fund

  18. How State School Fund Formula creates equity of opportunity: • Unequal students are treated unequally • Weights equalized across the districts • Revenue distribution and accountability • Preserve local control Purpose of State School Fund

  19. Formula is NOT: • A general cost reimbursement • A revenue entitlement per student • An assurance of funding stability or adequacy • A measure of student outcomes • An accountability system Purpose of State School Fund

  20. Components of the State School Fund

  21. State Revenue • Local Revenue • Carve-outs • Weights State School Fund Components

  22. How Components work together: State School Fund Components

  23. State Revenue

  24. Current State and Local Revenue 2013-15 Biennium

  25. State Revenue ($6.65 B) 2013-15 Biennium Includes $100 million from September 30, 2013 Special Session

  26. State Revenue: • Majority of School Funding • Set by the Legislature • The biggest line item in the General Fund budget State Revenue

  27. Local Revenue

  28. Local Revenue Estimated for 2013-15 biennium

  29. What defines local revenue? • ORS 327.011 • School District authority to collect • School District entitled to revenue Local Revenue

  30. What is not local revenue? • Revenue specifically excluded from local revenue • Revenue without authority to collect • Revenue with no entitlement Local Revenue

  31. Property Taxes: • Value of property • Rate Property Taxes

  32. Question: Your district has a major employer that shuts down causing people to move away. This lowers your tax base. Does the State School Fund formula make up the difference? Property Taxes

  33. Answer: Yes. While statewide revenue will reduce a little, the individual district will recover most of the loss. Property Taxes

  34. Question: If a district has the authority to collect $5,000,000 in property taxes but sets a rate that only collects $4,000,000 how much revenue will be calculated as part of the formula? Property Taxes

  35. Answer: The district will be credited as if they had set a rate that enabled the district to collect the full $5,000,000 for purposes of local revenue and the state school fund formula. ORS 327.011(1)(i) Property Taxes

  36. What’s the difference? • The first scenario is involuntary loss • The second scenario is a choice to reduce revenue Property Taxes

  37. Property Taxes

  38. Effects on property values: • Macroeconomic situations • Local decisions Property Taxes

  39. Types of property tax affecting decisions: • Urban Renewal Agency creation • Strategic Investment Programs Property Taxes

  40. Urban Renewal: • Creates public body to raise funds and improve urban blight • Divides tax revenue between the district and the urban renewal agency • Once urban renewal completed, any left over funds redistributed to district Property Taxes

  41. Strategic Investment Programs: • Exempts large capital projects by private enterprise from property taxes • Private company enters into community service fee agreement with local taxing districts • Community Service Fee agreement provides some revenue to local districts • School Districts excluded Property Taxes

  42. Question: Is revenue returned to a school district after an urban renewal agency closes down considered local revenue for funding purposes? Property Taxes

  43. Answer: Yes. The urban renewal agency is required to send that money to the school district. Thus the school district is entitled to the funds and that matches with local revenue. Property Taxes

  44. Question: School district receives funds from the County. The County is disbursing funds it received from the community service fee agreement the county created when it entered into a Strategic Investment Program. Are those funds considered local revenue? Property Taxes

  45. Answer: The school district is excluded from any community service fee agreement. Thus the school district would not be entitled to those funds. Since the school district is not entitled to those funds, then they are not local revenue. Property Taxes

  46. Consequences of Urban Renewal and SIP: • Individual district made whole • Less formula revenue during program • Each individual district receives a little less • Possible loss of control of funding for SIP Property Taxes

  47. Local Option Taxes • Not part of local revenue • Funding stays with district • Passed by voters • Expire in a set number of years Property Taxes

  48. Local Option Taxes and Compression • Local option taxes target gap between assessed value and market value • In recession gap narrows and so local option tax revenue reduced Property Taxes

  49. Disbursements

  50. Where are we? Disbursements

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