Property Tax Levy Cap

Chapter 97 of the Laws of 2011

The tax levy cap- begins in 2012-13 School Fiscal

Year

• In effect through at least 2016-17. Thereafter, it remains in effect only so long as regulation and control of residential rents and evictions (i.e., rent control) laws are in place.

• Chapter 97 leaves the current contingency budget requirements/restrictions in place

Tax Levy Limit Prior year tax levy (x tax base growth factor, if any)

+

Payments in lieu of taxes receivable during prior year

–

Taxes levied for exemptions during prior year (not ERS & TRS)

=

Adjusted Prior Year Tax Levy x

Allowable levy growth factor (lesser of 2% or CPI)

–

Payments in lieu of taxes receivable in the coming year

+

Available carryover, if any

=

“Tax Levy Limit”

“Tax Levy Limit” +

Dollar amounts attributable to coming year exemptions

= Allowable tax levy prescribed by Chapter 97 of the Laws of 2011

(with a simple majority vote)

Allowable Levy Growth Factor = Lesser of: 1.02 OR (1 + Inflation Factor); Minimum of 1.0.

Inflation Factor = CPI change, carried out four decimal places.

Source: US Department of Labor

Available Carryover = (Prior year tax levy limit – prior year tax levy), but no greater than (.015 x prior year tax levy limit). Districts may use taxing authority from the prior school year to increase the subsequent year’s tax levy if taxes were increased in the prior school year by less than the amount allowed by the cap. Maximum carryover increase is the lesser of actual available carryover or 1.5%

Source: NYS Office of the Comptroller

Quantity Change Factor = The percentage by which the full value of the taxable real property in the school district increases due to physical or quantity change, compared with the prior year tax roll (growth in full value due to new construction, additions and improvements to real property, etc.).

Source: New York State Tax and Finance Department

Tax Base Growth Factor = 1 + Quantity Change Factor; only calculated if quantity change factor is a positive number. Determined by Office of Real Property Tax Services

Definitions

Exemptions• Capital Tax Levy = Tax levy necessary to support capital local

expenditures

• Capital Local Expenditures = The tax levy associated with budgeted expenditures resulting from the construction, acquisition, reconstruction, rehabilitation or improvement of school district capital facilities or capital equipment, including debt service and lease expenditures, and transportation capital debt service.

• Court Orders = Tax levy necessary for expenditures resulting from court orders or judgments arising out of tort actions for any amount that exceeds 5% of total tax levied in prior school year

Exemptions• ERS Costs = Tax levy necessary for expenditures for coming school year

for employer contributions caused by growth in the system average actuarial contribution rate, minus two percentage points.

• TRS Costs = Tax levy necessary for expenditures for coming school year for employer contributions caused by growth in the normal contribution rate, minus two percentage points

• The pension cost exclusion applies only when ERS and TRS employer contribution rates increase by more than 2 percentage points over the prior year.

• For example, if an employer contribution rate for ERS or TRS increased by 2.2 percentage points, only an amount equal to applicable salary expenditures times .002 would be excluded from the tax levy cap. If an employer contribution rate increased by 1.98 percentage points over the prior year, no exclusion would be allowed from the cap on the tax levy for pension cost increases.

One area in which schools have almost no discretion over spending is the mandatory contributions they make to the state pension systems.

• Teacher Retirement System (TRS) contribution rates increased from .36% of payroll in 2002-03 to 11.84% in 2012-13.

2002-032003-04

2004-052005-06

2006-072007-08

2008-092009-10

2010-112011-12

2012-13

Year

0

2

4

6

8

10

12

14

% o

f C

ontr

ibu

tion

Data A

TRS Contribution Rates

Employees Retirement System (ERS)

ERS rates increased from 1.3% of payroll in 2002-03 to 18.9% of payroll in 2012-13.

2002-032003-04

2004-052005-06

2006-072007-08

2008-092009-10

2010-112011-12

2012-13

Year

0

5

10

15

20

% o

f Con

trib

utio

ns

Data A

ERS Contribution Rates

Pension Calculation: ERS

18.9% - 16.3% = 2.6 (SFY 12-13) (SFY 11-12) Percentage Points

Difference

2.6 - 2.0 = 0.6%% point diff. Local responsibility Excludable Portion

ERS Exclusions:

ERS PFRS

February 2012* April 1, 2011-March 31, 2012 2.4% 1.4%

December 2012 April 1, 2012-March 31, 2013 0.6% 2.2%

February 2013 April 1, 2012-March 31, 2013 0.6% 2.2%

ERS/PFRS Retirement Exclusions by Payment Date During Fiscal Years Starting in 2012

Pay in For State Fiscal YearPercentage Excluded

TRS Exclusions

Pay by Percentage Excluded

September-November 20120.49% (for use by local governments only)

TRS Retirement Exclusion

School Districts: the excludable percentage has not yet been determined for the 2012-13 school year

TRS Exclusion

• It has been determined that there will be no TRS Exclusion for School Districts.

• The TRS rate did not increase over 2% from 2011-12 to 2012-13

• Rate 11-12 11.11%

• Rate 12-13 11.84%

Pension Exclusion CalculatorBrocton Central

Salary Base for bill to be paid in fiscal years beginning 2012:*

State and Local Employee Retirement System (ERS) 1,071,316

Police and Fire Retirement System (PFRS)

Teachers Retirement System (TRS) 3,929,386

Excludable Percentage:

State and Local Employee Retirement System (ERS) 0.60%

Police and Fire Retirement System (PFRS)

Teachers Retirement System (TRS) 0.00%

Pension Exclusion:

ERS 6,428

PFRS -

TRS -

Capital Exclusion

Capital Expenditures Net of Aid

Capital Expenditures 2011-12

Serial BondsCapital Project 2005

Principal Interest Total Principal & Interest6,676,098.00$ 460,000.00$ 152,761.26$ 612,761.26$

12,495,420.00$ 910,000.00$ 319,075.00$ 1,229,075.00$ 394,000.00$ 30,000.00$ 11,205.00$ 41,205.00$

Total 19,565,518.00$ 1,400,000.00$ 483,041.26$ 1,883,041.26$ Less: State Building Aid (1,676,473.00)$

Local Share Capital 206,568.26$

Capital Exclusion

Capital Expenditures 2012-13

Serial BondsCapital Project 2005

Principal Interest Total Principal & Interest6,676,098.00$ 480,000.00$ 136,661.00$ 616,661.00$

12,495,420.00$ 950,000.00$ 282,606.00$ 1,232,606.00$ 394,000.00$ 30,000.00$ 6,885.00$ 36,885.00$

New Serial Bond- Bus Purchase 2011-12485,330.00$ 85,330.00$ 15,047.00$ 100,377.00$

Total 20,050,848.00$ 1,545,330.00$ 441,199.00$ 1,986,529.00$ Less: State Building Aid (1,676,473.00)$

State Transportation Aid (90,339.30)$

Local Share Capital 219,716.70$

Tax Levy Cap Worksheet (per Chapter 97 of the Laws of 2011)

Tax Levy Cap Worksheet

A. Total Real Property Tax Levy for base year 4,313,320$ B. Excess Levy in Reserve (NA in 2012/13) -$ C. Tax Levy subtotal (A - B) 4,313,320$ D. Tax Base Growth Factor (min of 1.0) 1.0025E. Adjusted Tax Levy subtotal (C x D) 4,324,103$ F. Base Year PILOTS -$ G. Base Year Levy plus PILOTS 4,324,103$

H. Base year Torts and Judgements > 5% -$ I. Base year Capital Exp. Net of aid 206,568$ J. Total base year Torts and Capital exp. 206,568$

K. Levy less base year Torts and Capital (G - J) 4,117,535$ L. Allowable Levy Growth Factor based on CPI (2% for 2012/13) 1.02M. Levy including levy Growth Factor 4,199,886$ N. Budget year PILOT receivables -$ O. Levy less budget year PILOTS (M - N) 4,199,886$ P. Eligible Carry Over from base year budget (NA 2012/13) -$ Q. Tax Levy Limit - before Exclusions (O + P) 4,199,886$

Budget Year ExclusionsR. Capital Expenditures net of aid 219,717$ S. Pension Expenditures above 2% 6,428 T. Court orders/Judgements in > 5% base year levy -$ U. Total Exclusions (R + S + T) 226,145$

Total Tax Levy including Exclusions (Q + U) 4,426,031$

Dollar increase of Levy from Prior Year 112,711$ Percentage Increase of Levy from Prior Year 2.61%

Summary

• Brocton’s Tax Levy Limit before exclusions= $4,199,886

• Plus Exclusions= 226,145

• Total Allowable Tax Levy 2012-13 $4,426,031

• Dollar Increase from prior yr. levy…………….. $112,711

• Percentage increase from prior yr. levy…………… 2.61%

• Available carry-over (limited to 1.5% of levy limit)….. $62,998.29• Lesser of actual available c/o or 1.5%

Override –School Districts

School districts must put the override to their budget voters

Requires budget to pass by 60%

Budget that does not exceed cap must pass with simple majority (>50%)

If no budget approved, contingency budget may not include a levy higher than prior year’s levy

Questions?