Statewide School Tax Levies Up Less Than Inflation

With property tax bills set to be mailed this week, school property taxes are likely to come under scrutiny once again.

Although per pupil revenue limits on school districts meant to hold down property taxes were unchanged by the Legislature, 2017-18 school levies totaled $4.945 billion, a slight  increase of $87.1 million (1.8%) over the previous year, according to Dept. of Public Instruction (DPI) figures, and below the rate of inflation.

That increase in gross school levies will be more or less offset by an $87 million increase in the school levy credit, through which the state directly reduces the net tax due on taxpayers’ bills.

The fact that both the increase in gross levies and property tax credit totaled $87 million appears to be coincidental.  (The 2017-19 state budget (Act 59) increased the distribution amount for the school levy tax credit by $87 million, from $853 million to $940 million, beginning with property taxes levied in December 2017, and payable in 2018.)

School district finances have benefitted from a $200 per pupil increase in Per Pupil Categorical Aid this school year.

Of the various school district fund designations that are generally controlled by revenue limits,  General Fund (Fund 10) levies increased statewide by the biggest amount—$54.8 million—due mainly to exceptions to revenue limits allowed under state law (see below). Fund 38 levies for non-referendum debt service increased by a statewide total of $18.0 million.  Fund 41 levies for capital expansion increased by roughly $100,000 over last year.

The biggest portion of the increase in Fund 10 levies ($25 million) was attributable to the passage by local school district voters of operating referenda, followed by levy increases to offset the aid reductions used to fund the voucher payments under the Statewide and Racine voucher programs ($17.4 million).  Increases due to energy efficiency projects totaled $13 million.  Levies to offset the aid reductions used to fund the payments to private schools for Special Needs vouchers increased to roughly $3.0 million from essentially zero the previous year.  All four of these increases occurred for purposes that are exceptions to revenue limits.

Statewide, General Fund (Fund 10) levies totaled just under $4.158 billion, while levies for Non-Referendum Debt (Fund 38) totaled $132.4 million

Of the fund designations not controlled by revenue limits, the biggest increase ($11.2 million) was in Fund 39 levies for referendum-approved debt service.  This increase was largely attributable to debt-issuance referenda approved in previous years as it generally takes a year or more for such borrowing to affect a district’s levy, depending when interest and principal repayments begin.  The next largest increase ($2.2 million) occurred in levies for Community Service Fund (Fund 80) purposes.  Charge-backs were responsible for about $800,000 in levy increases statewide.

Overall, statewide levies for Referendum Debt (Fund 39) totaled just under $535.3 million, while statewide Community Service Fund (Fund 80) levies totaled just under $85.4 million.

Statewide, school boards  levied about $27 million less than the amount allowed under revenue limits.  Roughly three-quarters of this “underlevy” ($21 million) was attributable to eight school districts.