On November 5th, voters in the Saline Area Schools district will be asked to vote on a renewal of our operating millage. The last time the operating millage was approved by voters was 20 years ago in 1994 after the passage of Proposal A, which fundamentally changed the way public schools were funded in Michigan. This renewal will allow the district to continue to collect 18 mills for an additional 10 years and it will have NO COST IMPACT ON HOMEOWNERS, as the millage is not levied on an individual’s principal residence.
The renewal of the millage will continue and not change the rate currently levied on non-homestead property, such as commercial/industrial property, apartment buildings, rental homes, vacation properties and vacant land. No more than 18.0000 mills will ever be levied and will only be levied on the various types of Non-Homestead properties.
If the millage is not renewed, the District will lose approximately $7.9 million in revenue each year, roughly 15.75% of our budget. To give that figure some perspective, $7.9 million is equivalent to the entire cost to operate two elementary buildings (all teaching, administrative, custodial and other support staff, utilities, supplies, etc.)
Brief History of School Funding
Prior to 1994, schools were primarily funded at the local level and the millage rate levied on properties was determined at the local level. Funding for districts varied considerably, ranging from a low of $3,398 per student to a high of $10,000 per student. Over a 30 year period, more than 12 ballot proposals were presented to Michigan voters to change the way that schools were funded, but none passed until 1994. With the passage of “Proposal A”, schools would receive a “Foundation Allowance” determined by the State each year. The foundation allowance is funded by both local and State funds and was intended to provide more stable funding for districts throughout the State.
Local sources
A property tax of 18 mills collected on Non-Homestead properties (commercial, industrial, development and personal property) with funds paid directly to the District. Taxpayers do NOT pay this tax on their primary residence. For Saline Area Schools, this now accounts for approximately $7.9 million of our funding. (This is the funding that is on the ballot proposal.)
State Sources
A property tax of 6 mills collected on all but a few exempted properties in the State, this State Education Property Tax is the primary source of revenue for the School Aid Fund. This tax IS paid on each primary residence and can be seen on property tax bills as “State Education Tax”. These funds are sent to the State and are earmarked for the State School Aid Fund.
Ballot Language
You will notice that the ballot language states:
“This proposal will allow the school district to continue to levy the statutory rate of 18 mills on all property, except principal residence and other property exempted by law, required for the school district to receive its revenue per pupil foundation allowance.”
It also states:
“Shall the limitation on the amount of taxes which may be assessed against all property, except principal residence and other property exempted by law, in Saline Area Schools, Washtenaw County, Michigan, be increased by 22.2867 mills ($22.2867 on each $1,000 of taxable valuation) for a period of 10 years, 2014 to 2023, inclusive, to provide funds for operating purposes.”
The reason we are asking for 22.2867 mills instead of just 18.0000 mills is because of the Headlee Rollback, which was passed in 1978. When annual growth on existing property tax values is GREATER than the rate of inflation, the millage must be reduced – or rolled back – to keep taxes from increasing more than the rate of inflaction. Any rollback in millage is permanent. For Saline Area Schools, our millage has been rolled back several times over the last 20 years and currently is at 17.3357 mills.
In 2000, Saline Area School voters approved a “Headlee Override” millage of 5.0000 mills. Any future rollbacks to the originally authorized millage of 18.0000 mills were covered by this new millage, so we would always receive the full 18.0000 mills.
Saline Area Schools – Headlee Override
The annual growth on existing property tax values was greater than the rate of inflation in various years so our original millage has been permanently reduced to 17.3357 mills. We make up the difference from the Headlee Override millage approved in 2000.
Original Millage – 18.0000 mills rolled back to 17.3357 mills
Headlee Override – 5.000 mills but only use .6643 mills
Total Millage collected 18.0000 mills
The full 22.2867 mills called for in the renewal proposal is equal to what we had available on the expiring millage and it gives the district a cushion of 4.2867 mills to make up any difference from the Headlee Rollback. However, no more than 18.0000 mills will ever be levied on non-homestead property.
This operating millage is not unique to Saline Area Schools. Every public school district in Michigan receives funding in the same way and to the best of our knowledge, every district is currently collecting this millage.
Actual Ballot Language
OPERATING MILLAGE RENEWAL PROPOSAL
This proposal will allow the school district to continue to levy the statutory rate of 18 mills on all property, except principal residence and other property exempted by law, required for the school district to receive its revenue per pupil foundation allowance.
Shall the limitation on the amount of taxes which may be assessed against all property, except principal residence and other property exempted by law, in Saline Area Schools, Washtenaw County, Michigan, be increased by 22.2867 mills ($22.2867 on each $1,000 of taxable valuation) for a period of 10 years, 2014 to 2023, inclusive, to provide funds for operating purposes; the estimate of the revenue the school district will collect if the millage is approved and levied in 2014 is approximately $7,972,045 (this is a renewal of millage which expired with the 2013 tax levy)?
Saline Finance Blog 