NEW YORK STATE COUNCIL of SCHOOL SUPERINTENDENTS

Analysis of 2012-13 School District

Property Tax
Report Cards

April 30, 2012

WWW.NYSCOSS.ORG
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Highlights

Statewide average proposed tax increases are down from a year ago (from 3.4% to 2.2%). Proposed spending increases are up from a year ago (1.7% vs. 1.3%), but still well-below inflation (2.7% in latest CPI). 51 districts are seeking to over-ride the tax levy limit for their districts. About half of districts are proposing levy increases within 20% of the maximum increase allowed by their limit. Unlike some past years, there do not appear to be clear wealth-related patterns in proposed spending and tax increases, at least looking at the state as a whole. There is widespread concern about the year after next (2013-14). Looking at reserves helps identify why. Some state aid data:

The overall pattern of state aid increases appears somewhat random due to the mix of (1) expense-based aids funded by current law, and (2) new general aid increases directed by the Governor and Legislature. Distribution of new general aid this year is more progressive than in some past years, but additions remain small in comparison to past cuts.

Additional observations and conclusions are presented at the end.

The statewide average proposed tax increase is down more than 1% from 2011-12. The average spending increase is up, but well below inflation (2.7% March CPI).
Percent change in district spending and tax levy 2011-12 vs. 2012-13
2011-12 Percent change over prior year 4% 3.4% 3% 2.2% 2% 1.3% 1% 0%
% Change in proposed tax levy % Change in proposed school spending
SOURCE: Council analysis of NYSED Property Tax Report Card data

2012-13

1.7%

Even prior to tax cap, schools were holding down tax increases
Districts have responded to voters have been holding down spending and taxes
Percent change in district spending, tax levy and state aid, 2003-04 -- 2012-13 Big 5 Cities not included
% Change in proposed tax levy
2003-04 2004-05 2005-06

% Change in School Aid

2006-07 2007-08 2008-09

% Change in proposed school spending

2009-10 2010-11 2011-12 2012-13

10% 8.2% 8%
Percent change over prior year

8.7% 6.9% 4.8% 4.7% 7.5% 7.0% 6.6% 6.1% 6.3% 5.4%

8.7% 6.1% 4.3%

9.4%

6% 4% 2% 0%

5.3% 3.7%

3.2% 2.1% 1.9% 2.3%

3.4% 1.4% 1.3%

3.8% 2.2% 1.7%

-2% -4% -6%

-1.3% Last 2 years: Districts held down tax increases despite state aid cuts (contrast with 2003-04). -3.9% -5.1%

SOURCE: Council analysis of NYSED Property Tax Report Card and School Aid data; federal Education Jobs Fund allocations not included in state aid

The Property Tax Cap How it works:

The law sets a tax levy limit for each district : the lesser of 2% or inflation over the prior calendar year, plus exemptions exemptions can result in a limit higher or lower than 2%.

60% of voters required to approve if proposed tax levy increase is greater than the tax levy limit; 50% + 1 if the proposed levy increase is less than or equal to the tax levy limit. Two votes allowed.

Exemptions from the tax levy limit:

Pension costs attributable to increases in contribution rates greater than 2 percentage points (e.g., ERS rate from 16.3% to 18.9% (+2.6 percentage points), .6 percentage point increase exempt. Physical additions to tax base Certain large legal expenses Local share of capital expenditures Unused levy from a prior year, up to 1.5 % additional levy

If voters reject the proposed tax levy increase, the district is required to adopt a contingency budget with a tax levy no greater than the prior year. Exemptions count only in determining whether or not 60% voter approval is required. If a district is required to adopt a contingency budget, it is limited to no more than the prior year levy and is not allowed to raise levy to cover exempt items.

Trying to over-ride the cap raises the risk of failure and a 0% cap

 51 districts are seeking to over-ride the cap. Districts have incentives to stay close to levy limit.
51 districts (7.6%) are proposing increases above their tax levy limit. 143 districts (21.4%) proposing increases equal to their limit. 127 (19.0%) propose increases within 10% of their maximum increase within the limit. 65 districts propose increases between 10% and 20% of their allowed maximum. 22 districts propose no change in levy. 10 districts are proposing year-to-year reductions in levy. The consequences of failing to get voter approval are severe (no levy increase at all), so districts have incentives to avoid attempting an over-ride (requiring 60% voter approval); and seek tax increases close to their levy limit each year to have a better base for future in case voters do not approve an increase in some year.

Over-ride districts compared to the rest

Key point: there are wide variations among districts in both groups
Over-ride Districts Average tax levy increase Average tax levy limit Average spending increase Average State Aid increase % Change in unrestricted fund balance Unrestricted fund balance per pupil 4.3% 2.3% 2.0% 3.6% -23.0% $486 Other Districts 2.1% 2.9% 1.7% 3.9% -13.2% $800

Summary: Districts proposing over-rides have higher tax increases and lower levy limits, as well as slightly lower state aid increases and slightly higher spending increases.
Also, on average, over-ride districts appear to be in a weaker position with regard to reserves. Looking at the state as a whole, poorer districts do not appear to be over-represented among those proposing over-rides. In fact, poorer districts tend to be proposing increases further below their limits than better-off districts.

Unlike some past years, there do not appear to be stark wealthrelated patterns in proposed spending & tax increases
Percent change in proposed school spending and tax levy, 2011-12 to 2012-13 districts grouped by property wealth per pupil
3.0% 2.5% 2.0%
1.5% 2.4% 2.1% 2.0% 1.4% 1.2% 1.5% 1.4%

% Change in Spending 2.8%

2.5%

% Change in Tax Levy

2.7% 2.5% 1.9% 2.1% 1.9% 2.4% 2.2% 2.0% 1.7%

1.8%

1.5% 1.0% 0.5% 0.0%

1.4%

0.4%

1 (Poorest 10%)

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NYS

SOURCE: Council analysis of NYSED Property Tax Report Card data

In contrast, in 2011-12, the poorest 20% of districts held their spending flat and resource gaps widened (the statewide average spending increase was 1.3%)

There is widespread concern about the year after next (2013-14). Looking at reserves helps to understand why.
Districts grouped by property wealth per pupil
Change in Unrestricted Fund Balance from 2011-12 to 2012-13 Appropriated Fund Balance as % of Tax Levy (i.e., additional tax increase which would be necessary without use of fund balance)

-40%
1 (Proorest 10%) 2 3 4 5 6 7 8 9 10 NYS

-30%
-31%

-20%
-23%

-10%

0%

10%
17%

20%
21%

30%

-9% -18% -22% -10% -9% -12% -7% -14% -4% 3% 3% 7% 5% 8% 6%

11% 10% 11%

SOURCE: Council analysis of NYSED Property Tax Report Card data

Some information on state aid

Overall School Aid increases appear rather random

Random pattern is due to combination of expense-based & other aids funded according to current law plus new general aid directed by the Governor and Legislature. % Change in total School Aid, 2011-12 to 2012-13 -- general vs. other aids, districts grouped by property wealth per pupil
5% 4% 3% 2% 1% 0% 1 (poorest 10%) 2 3
SOURCE: Council analysis of NYSED School Aid data; Big 5 Cities not included (they do not file Property Tax Report Cards.

% change due to expense-based & other aids

% change due to general aid increases

10

NYS

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2012-13 general purpose aid increases more progressive than some past years.
But aid increases are small in comparison to past cuts.
2011-12 Gap Elimination Adjustment vs. 2012-13 general aid increases per pupil Districts grouped by property wealth per pupil
2011-12 GEA
(1,500)

2012-13 Governor's GEA Restoration

(1,200)
(1,115)

Legislature's General Aid Increases

(300) 225
180 141

(900)

(600)

300
116
162 151 119 89

1 (poorest 10%) 2 3 4 5 6
(1,472) (1,487) (1,298)

131 97

(1,185) (1,096) (1,062) (805)

68 79 52 104 30 82

7
8 9 10 NYS

(536)
(401) (1,037)

17 37
5 16 85 93

SOURCE: Council analysis of NYSED School Aid data

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Additional observations and conclusions

Despite an improved fiscal outlook for state government, the position of many

school districts remains grim.

The state aid increase for many districts is offset by the end of federal Education

Jobs Funds.
For the third straight year, proposed school spending increases average under 2% --

probably less than what pensions and health insurance alone would drive, requiring districts to cut other spending on balance.
After three difficult prior state budget cycles, many districts have exhausted easier

budget cutting options.

The tax cap does appear to be pushing down the tax increases which school

districts are proposing.

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NEW YORK STATE COUNCIL OF SCHOOL SUPERINTENDENTS 7 Elk Street, 3rd Floor Albany, NY 12207 (518)449-1063

www.nyscoss.org

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