Revenue Limits

Debra TownsAssistant Director

School Financial ServicesDepartment of Public

InstructionJanuary 21,2016

Objectives

Understand the data that are used in the

revenue limit calculation Learn how the computation works Recognize the role of exemptions Discover a bit about your own district

DefinitionIn 1993-94, the State enacted revenue limits to control the revenue a school district can collect from: General Aid (Equalization Aid, for most

districts)

Select Local Levies & Computer Aid General Fund (Fund 10) Non-Referendum Debt Service (Fund 38) Capital Projects (Fund 41)

It is not an expenditure control or spending limit.

Revenues NOT ControlledThere are many revenues not controlled

under the limit. School Fees Categorical Aids (Library Aid, Transportation Aid,

etc.) State and Federal Grants Gate Receipts Donations Local Levies

Referendum Debt Service (Fund 39) Community Service Fund (Fund 80) Levy Chargeback (Fund 10)

State Totals - School District Revenues

LOCAL PROPERTY

TAXES 43%

STATE GEN-ERAL AID 39%

StateCategorical

Aid 5%

FederalAid 9%

Misc. Local Revenue 4%

NOT Subject

to Revenue

Limits

CONTROLLEDAlthough the mix of aid and taxes may be different across districts,

the Revenue Limit can control 70-

90% of the General Fund budget.

Prior-Year Controlled Revenue (base)Membership Changes (3-year

averages)Increment (inflationary increase)Exemptions - additional revenue

limit authority based on specific approvals that are happening at the district (referendum, BOE action)

Data Used in the Revenue Limit

Let’s review each.

+ October 15 General Aid Cert

2014-15Data(Prior-Year)

+ Computer Aid Received+ General Fund Levy + Non-Referendum Debt Levy + Capital Projects Levy - Non-Recurring Exemptions

2015-16Revenue Limit Base

Start With Prior Year Controlled Revenue

- Revenue Limit Penalty - Unspent Amounts from PY

Energy Efficiency Exemption

Forms the Base (starting point) for 2015-16

MembershipA 3-year average is used to minimize the

financial impact of a sharp increase or decrease in membership.

Base Average: 1,397

Sept 2012

Sept 2013

Sept 2014

Sept 2015

Summer FTE 42 46 43 3640% Summer FTE

17 18 17 14

Sept FTE 1,360 1,385 1,393 1,402Total FTE 1,377 1,403 1,410 1,416

Current Average: 1,410

Per Member IncreaseThe legislature has the authority to set the

per member increase. Originally, they based it on the annual percentage change

in the consumer price index (CPI) for all urban consumers, US city average. Recent years have been flat dollar amounts, zero,

& even reductions.The per member increase range was a

low of -$562.00 in 2011-12high of $274.68 in 2008-09

For 2015-16, the increment is $0.00.For 2016-17, the increment will remain at

$0.00.

Visualizing the Big Picture

÷ Base Average Membership = Per-Member

BaseTotal Revenue Limit

Base

+ Per Member Increase = New

Maximum Per-Member

Per-Member Base

X =New Maximum

Per-Member

New Revenue

Limit

Current AverageMembership

Another Way to Visualize the Math

Fairly Normal School DistrictRevenue Limit Base (2014-15 data)

$14,789,788

Base Average Membership 1,397Per-Member Base $10,586.8

2Per Member Increase $0.00New Maximum Per-Member $10,586.8

2Current Average Membership

1,410

New Revenue Limit $14,927,417

Membership Change: 1,410 – 1,397 = 13 FTE increase

In the current environment created by the legislature & administration there is no Per Member Increase .

So how will all this affect my district in 2015-16 and 2016-17????

A Per Member Increase is likely to return some time but ------

The Impact of Membership Changes

1.) Increasing Membership2.) Stable Membership3.) Declining Membership4.) Severely Declining

Membership

4 Districts

Your district will likely fall into one of these categories.

Barron (CESA 11)Base Revenue (Line 1) $15,039,452Max Rev Lim (Line 7) $15,135,451

2014-15 Membership Average = 14102015-16 Membership Average = 1419

+ 9 Change

No Per Member Increase $0 X 1419 = $0.00Change from Membership

+9 X $10,666.28 = +$95,997

Total Increase $95,997

$95,999 Increase

Difference is rounding.

Randolph (CESA 5)Base Revenue (Line 1) $5,359,640Max Rev Lim (Line 7) $5,359,640

2014-15 Membership Average = 5282015-16 Membership Average = 528No change in Membership Average

No Per Member Increase $0 X 528 = $0.00Change from Membership

0 X $10,150.83 = 0

Total Increase $0.00

Zero $ Increase

Difference is rounding.

Glendale – River Hills (CESA 1)

Base Revenue (Line 1) $11,119,979Max Rev Lim (Line 7) $11,119,9792014-15 Membership Average = 9202015-16 Membership Average = 917

-3 ChangeNo Per Member Increase $0 X 917 = $0.00Change from Membership

-3 X $12,088 = -$36,264

Hold Harmless (Line 7B) +36,264Total Decrease $0.00

Zero $ Increase

Difference is rounding.

Tri-County Area(CESA 5)Base Revenue (Line 1) $6,319,602Max Rev Lim (Line 7) $6,319,6022014-15 Membership Average = 6732015-16 Membership Average = 655

-18 ChangeNo Per Member Increase $0 X 655 = 0.00Change from Membership

-18 X $9390.20 = -$169,022

Hold Harmless (Line 7B) +169,022Total Decrease $0

Zero $ Increase

Difference is rounding

Base Revenue Held Harmless

The Prior Year Base Revenue Hold Harmless adjustment was created by the Legislature in 2007.

It functions in every way like a non-recurring exemption but appears on the Revenue Limit worksheet on Line 7B (up in the initial establishment of the new year Revenue Limit base).

Base Revenue Held HarmlessIt is intended to ‘Hold Harmless’

any district calculating a new base that is less than the previous year’s base.

Worksheet automatically inserts the loss difference so that the district begins the new year with the same base as prior year.

  2016-2017 Revenue Limit Worksheet1. 2015-16 Base Revenue (Funds 10, 38, 41) (from left) 02. Base Sept Membership Avg (13+.4ss, 14+.4ss, 15+.4ss/3) (from left) 03. 2015-16 Base Revenue Per Member (Ln 1 / Ln2) (with cents) #DIV/0!4. 2016-17 Per Member Change (A+B+C) #DIV/0!

A.Allowed Per-Member Change 0.00 B.Low Rev Incr ((9,100 - (3 + 4A))-4C) Not < 0 #DIV/0! C.Low Rev Dist in CCDEB (Enter DPI Adjustment)   

5. 2016-17 Maximum Revenue / Member (Ln 3 + Ln 4) #DIV/0!6. Current Membership Avg (14+.4ss, 15+.4ss, 16+.4ss/3) (from left) 07. 2016-17 Rev Limit, No Exemptions (Ln7A + Ln 7B) (rounded) #DIV/0!

A.Max Rev/Memb x Cur Memb Avg (Ln 5 x Ln 6) #DIV/0!  B.Hold Harmless Non-Recurring Exemption #DIV/0!  

So, now we have established the foundation (Base) for the new year’s Revenue Limit.

Let’s talk about exemptions to the Limit.

Revenue Limit ExemptionsExemptions to the revenue limit allow districts to increase the tax levy above & beyond the amount generated by membership changes

and any inflationary increase.Recurring Exemptions

(Are “permanently” in your base. Builds the base.)

Ex. Transfer of Service, Recurring ReferendumNon-Recurring Exemptions

(Authority is available for a limited time – usually 1 year.)

Ex. Declining Enrollment, Non-Recurring Referendum

Once a district levies for a Recurring Exemption, that amount stays permanently in the base going

forward.

Recurring Exemptions

Base

Prior Year CarryoverTransfer of Service

Recurring ReferendumNew Year

Base IncludesAll $$$ Recurring

Exemptions Levied in Prior Year

2015-16 Revenue

Limit

2016-17 Revenue

Limit

Aid+

Levy Base

Recurring Referendao Requires approval of the voters

Carryovero eligible prior year unused authority

Other Recurring Exemptions (DPI approves amount)o Transfer of Serviceo Transfer of Territoryo Loss of Federal Impact Aid

Types of Recurring Exemptions

Generally, for operational purposes. No dollar limit on referendum; rather,

needs of district balance with effect on taxes.

Recurring Referendum can be:- Single Year – e.g., “$500,000 in 2015-16” (adds $500,000 to base)- Multiple Year – e.g., “$500,000 in each of the years 2014-15, 2015-16, 2016-17 for a total of $1,500,000”

Recurring Referendum

If a district under-levies in a given year, can they ever get that revenue authority

back? It depends …

Unused levy authority in one year will become “carry-over” authority into the

following year, but only the amount that exceeds the non-recurring exemptions

claimed by the district.

Prior Year Carryover

Transfer of Service: an adjustment for additional costs/responsibility for programs or services transferred from another unit of government – usually for special education services from another district.

Transfer of Territory: an adjustment to account for territory and pupils becoming part of, or detaching from a district. (rare occurrence)

Federal Impact Aid Loss: to adjust for loss in Federal Aid from one year to the next for districts that receive Federal Impact Aid (25 districts with non-taxable, federal properties).

Other Recurring Exemptions

Just remember: Recurring exemptions stay in the Base.

Base

Prior Year CarryoverTransfer of Service

Recurring ReferendumNew Year

Base IncludesAll $$$ Recurring

Exemptions Levied in Prior Year

2015-16 Revenue

Limit

2016-17 Revenue

Limit

Aid+

Levy Base

The exemption is only valid for a limited period of time – usually one Revenue

Limit cycle.

Non-Recurring Exemptions

Base

Adjustment for new Choice Students

Declining Enrollment

Non-Recurring Referendum

Base Will Include OnlyLevied

Recurring Authorityfrom the Prior Year

2015-16 Revenue

Limit

2016-17 Revenue

Limit

Aid+

LevyBase

Energy Efficiency

Requires approval by Electors or Boardo Non-Recurring Referendumo Energy Efficiency Project Debt

Auto-determined in Revenue Limit CalculationoDeclining Enrollment

Other (DPI-determined amount)o Prior Year Uncounted Open Enrollment Pupilso Refunded/Rescinded Taxes

Types of Non-Recurring Exemptions

Often for operating costs. No dollar limit on referendum. Non-Recurring Referendum can be:

- Single Year – e.g., “$500,000 in 2013-14” (1x only – does NOT add to the base)- Multiple Year – e.g., “$500,000 for each year of 2013-14 to 2017-18” (e.g., 5 years of additional revenue authority, but DOES NOT add to the district’s base)

Non-Recurring Referendum

This exemption provides districts with additional revenue authority to make up for

declining enrollment.

Declining Enrollment

Sept 2012

Sept 2013

Sept 2014

Sept 2015

Summer FTE 68 67 73 7340% Summer FTE

27 27 29 29

Sept FTE 1,062 1,048 1,023 1,046Total FTE 1,089 1,075 1,052 1,075

Current Average: 1,067

Base Average: 1,072

A district may add additional revenue limit authority to pay the costs of a project that results in the avoidance of, or reduction in energy costs or operational costs. Enter into a properly executed

performance contract. Approved in a resolution of the

District Board (not a vote of electors). Could be for one-time costs or to pay

debt service if the district borrows for the project.

Energy Efficiency

A district must expend the full amount of the exemption on valid project costs by the following June 30th. Any unspent levy will be a negative adjustment on the following year’s revenue limit calculation.

An exemption for debt service is reduced by annual utility savings.

http://dpi.wi.gov/sfs/limits/exemptions/overview

Energy Efficiency

Uncounted Prior-Year Open Enrollment Pupils: an adjustment for open enrollment pupils if, for some reason, they did not get counted in the previous year.

Refunded or Rescinded Taxes: an adjustment that allows a district to re-capture revenue that was paid back to a property owner when property valuation is adjusted (per notification from DOR).

Other Non-Recurring Exemptions

Just remember: Non-recurring exemptions come out of the

Base each year.

Base

Adjustment for new Choice Students

Declining Enrollment

Non-Recurring Referendum

Base Will Include OnlyLevied

Recurring Authorityfrom the Prior Year

2015-16 Revenue

Limit

2016-17 Revenue

Limit

Aid+

LevyBase

Energy Efficiency

36Almost finished!

Setting the Tax Levy

On October 15 of each year, the DPI provides school districts with an estimate of their general school aid payment for the current fiscal year.

The calculated Revenue Limit less the General Aid will equal the local property tax levy, including the Computer Aid payment.

Revenue Limit

-General State Aid________________

Tax Levy (including Computer Aid)

The Equation

Setting the Tax LevyDistricts that are more heavily aided will receive less of their dollars from taxes under the Revenue Limit.

Property Taxes, including Computer Aid

General State Aid

Setting the Tax Levy

And, vice versa …..

Property Taxes, including Computer Aid

General State Aid

2015-16 Base

Energy Efficiency

Declining Enrollment

Non-Recurring Referendum

2015-16Maximum Revenue

Limit with Exemptions

Setting the Tax Levy

Adjustment for new Choice Students

ASDFHJKL

October 15 General Aid Cert reduces what you can

levy. Some districts also receive High Poverty Aid

which needs to be included

here.

General State Aid

Non-Ref Debt (38)

Capital Projects

(41)

General Fund (10)

Tax LevyComputer

Aid reduces what you can levy.minu

sequals =

It is called Computer Aid – but it really functions as part of the Tax Levy ….. School Districts receive this ‘aid’

automatically included as part of their property tax payments from the municipalities.

Computer & related business equipment was once subject to a chattel property tax. In 1999, these types of equipment became exempt from property tax and the Legislature now appropriates a dollar amount directly in the state budget to replace what would have been submitted by business owners.

This is distributed by applying a tax rate established using Dept of Revenue values. This tax rate is then applied to the district’s exempt computer value.

It is called Computer Aid – but it really functions as part of the Tax Levy …..

The main thing to remember about Computer Aid is that it REDUCES the tax levy on your citizens.

If you levy the Total Allowable Limited Revenue (Line 13), you will OVER LEVY.

Revenue Limit Takeaways1. The Revenue Limit controls income from general

state aid and local property tax revenues2. Revenue Limits are calculated by multiplying the

Membership X a Per Member dollar amount – and adding on any exemptions.

3. Most districts are not restrained by their initial calculation but are eligible for various exemptions to increase their Revenue Limit. Exemptions result in additional taxation.

4. It is very important to know the difference between recurring and non-recurring exemptions. This is especially true when planning a referendum.

5. Calculating the property tax levy is a direct result of completing the Revenue Limit calculation.

Where Can I Find This Data For My

District?

Both the 2015-16 pre-populated & the 2016-17 executable Revenue Limit

Worksheets

http://dpi.wi.gov/sfs/limits/worksheets/revenue

Where Can I Find This Data For My

District?

Longitudinal data looking at individual district Revenue Limit trends over

recent years.

http://dpi.wi.gov/sfs/statistical/longitudinal-data/revenue-limit

VISIT OUR WEBSITE…… or CALL US (all 608 Area Code):

Bob Soldner, Director …………………….……………... 266-6968Debi Towns, Assistant Director …………………………….267-9209Bruce Anderson, Consultant ………….….…….………….. 267-9707Carey Bradley, Consultant ………….………………………. 267-3752Karen Kucharz Robbe, Consultant ………………………..

266-3464Dan Bush, Special Ed./Consultant ….………………….…. 267-9212Victoria Chung, Accountant……………….…………….….

266-9205 Gene Fornecker, Auditor ……………………….…………..

267-7882Brian Kahl, Auditor …………………….…………..…….…… 266-3862Derek Sliter, Auditor ……………………………..…….……

267-9218

Questions?

Thanks to WASB, WASDA and WASBO for the opportunity to speak to you

today!

***

DPI School Financial Services Homepagehttp://dpi.wi.gov/sfs