OULP Property Values & State Funding

Presentation TitleOULP Property Values & State
March 26, 2019
• The Proposed Cupp-Patterson Workgroup Plan
PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS
Where Have Values Been?
Two Ways Values Change!
• New Construction: • New Construction • Destroyed or Demolished • Changes in Exempt Status • Lines: 1, 2, 3, 5, 6, 7, 8, 9, 10, 11
• Inflation / Deflation • Reappraisal Update – Line 12 • Board of Revision – Line 4
PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 4
Historic Residential Values
• ODT publishes the total value of new construction every year published by • Taxing district • School District
• ODT publishes real property values by • Taxing district • School district
• Both data files come from the real property abstracts filed by county auditors
6 PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS
Where Are Values Headed?
Forecasting Residential Values
New Construction
Reappraisal / Update
.STM
• The key column in sales ratio table is the third column from the right, the median market to price ratio
• These are the medians of the ratio of the value for tax purposes (before the 35% assessment rate) of each property that sold to the actual sale price
• During a reappraisal or triennial update, ODT is looking for the ratio to end up in the 92-94 percent range
• The # of Sales column show the valid sales in the jurisdiction
• Valid sales exclude sales of new homes and distress sales
Median Jurisdiction Number Median Sales Market to
County Jurisdiction Name Type Year of Sales Price Price Ratio FRANKLIN GAHANNA City 2005 501 $ 179,900 96.6% FRANKLIN GAHANNA City 2006 422 $ 174,900 96.1% FRANKLIN GAHANNA City 2007 360 $ 170,500 96.4% FRANKLIN GAHANNA City 2008 329 $ 175,000 98.4% FRANKLIN GAHANNA City 2009 322 $ 173,438 103.0% FRANKLIN GAHANNA City 2010 265 $ 183,800 103.4% FRANKLIN GAHANNA City 2011 241 $ 182,000 98.4% FRANKLIN GAHANNA City 2012 308 $ 175,000 97.8% FRANKLIN GAHANNA City 2013 449 $ 185,000 94.3% FRANKLIN GAHANNA City 2014 442 $ 198,500 90.2% FRANKLIN GAHANNA City 2015 468 $ 192,000 86.7% FRANKLIN GAHANNA City 2016 502 $ 202,250 80.2%
Sales Ratios
• A 103.4% ratio indicates a need for a 8-10% decline in values
• An 80.2% ratio indicates a need for a 12-14% increase in values
Sales Ratios
• The weighted average across the city and township is about 81.3% in 2016, suggesting a change of about 11%
Median Jurisdiction Number Median Sales Market to
Jurisdiction Name Type Year of Sales Price Price Ratio GAHANNA City 2014 442 $ 198,500 90.2% GAHANNA City 2015 468 $ 192,000 86.7% GAHANNA City 2016 502 $ 202,250 80.2% JEFFERSON Township 2014 192 $ 199,900 90.7% JEFFERSON Township 2015 225 $ 192,900 87.9% JEFFERSON Township 2016 232 $ 198,000 83.6%
2018 Triennial and Reappraisal Triennial Counties Reappraisal Counties
Recommended Tentative Tentative Increase Change Change
Allen 10.00% 8.89% Belmont 7.63% Coshocton 10.00% 10.18% Brown 12.05% Guernsey 15.00% 15.12% Crawford 10.49% Sandusky 10.00% 6.65% Cuyahoga 10.12% Vinton 10.00% 10.67% Erie 4.31%
Fayette N/A Highland 11.61% Huron 9.34% Jefferson 4.93% Lake 9.24% Lorain 8.85% Lucas 9.83% Morgan 7.27% Muskingum 17.08% Ottawa 7.90% Portage 10.95% Stark 11.58% Warren 13.11% Williams 7.41%
Forecasting Residential Values
Reapp / Update New Construction
Forecasting Agricultural Values
• HB 49, the biennial Budget, made changes that are being phased-in over two triennial cycles
• There will be impacts on districts in their reappraisal/update year(s) between 2017 and 2019 and again between 2020 and 2022
Agricultural Values
2017 Post HB49
Cropland, Average CAUV $ per Acre, 2014-2022
Forecasting Agricultural Values
CAUV Impact – Reapp / Update
Commercial Industrial
Reapp / Update New Construction
• Overview of 2018 preliminary values
• Impact on local tax revenue
• Potential impact on state aid, both currently and down the road
• Planning for potential significant increases in resources
Forecasting Public Utility Values
2018 Preliminary PUPP Values
• Statewide, PUPP values are tentatively increasing by 15.2 percent in TY 2018 from TY 2017
• Not all of this is pipeline • This also includes a number of districts losing and
gaining value from electric companies and gaining value from wind generation
• 98 districts have increases in PUPP values in excess of 20%
• 178 have an increase of at least 10 percent • Again, not all of these increases are due to pipelines
PUPP Local Revenues
• About 38 districts have value from the first phase of the Rover Pipeline
• PUPP values in those 38 districts increased from $1.383 billion in 2017 to a preliminary $2.429 billion in 2018
• There are two primary sources of valuation, the pipeline itself and compressor stations, which serve to keep the gas moving through
• Based on available data, the compressor stations appear to have taxable values between $30 and $40 million
• The pipelines are valued per pipeline mile
Forecasting PUPP Values
NEW CONSTRUCTION ONLY
Impact on Current State Aid
• Increased valuation from the pipeline will generally lead to higher per pupil values (higher wealth) and therefore a reduction in state aid calculations.
• The standard process is that the state funding calculation would recognize the increase in valuation over three years (3-year average).
• If the valuation change is greater than 10% then there is state law to implement the change via an adjustment required under ORC 3317.028.
• The “028” adjustment requires a recalculation of state aid if a district’s valuation changes up or down by 10%.
Bottom Line: Increased property value will likely cause a reduction in the state share index.
State Share Index
• If current practice stays in place, PUPP values in 2018 will have a one-third weight (3-year averaging) in calculating wealth per pupil for the 2020/2021 biennium (the State Share Index would use tax years 2016, 2017, and 2018).
• It will take three or more years for the district’s calculated funding to be fully impacted. (Unless there is a required “028” adjustment)
• The values in place during 2019 will not impact the State Share Index in the next biennium (because of timing), but could come into play under the 028 adjustment
028 Adjustment
• The 028 adjustment downward in state aid occurs if both PUPP values and total valuation grow by more than 10% from the prior year
• For valuation increases in 2018, the State Share Index used for FY 2019 state aid would be recalculated substituting 2018 total valuation for the three-year average of 2014, 2015, and 2016
• In addition to the PUPP change, this will also incorporate any valuation changes from 2017 or 2018 due to reappraisal or real property new construction
Districts at Risk for an 028 Adjustment for FY 2019
• There are 27 districts with increases in both PUPP and total valuation above 10%
• The 6 in the table above are anticipated to get an 028 adjustment because the other 19 were on a funding guarantee for FY 2019 and thus cannot lose state aid
• 14 districts are expected to have positive 028 adjustments because of the loss PUPP valuation
County Name District County Name District FULTON ARCHBOLD AREA LSD FULTON PETTISVILLE LSD LAWRENCE CHESAPEAKE UNION EVSD RICHLAND SHELBY CSD SENECA HOPEWELL-LOUDON LSD PICKAWAY TEAYS VALLEY LSD
Challenges
• Is this new found wealth real? • What should the forecast include? • Where are we now most vulnerable? • Will the state penalize us? • Everyone wants something? • Finding sustainability and stability when there are
unknowns…
Levy Purposes and Reduction Factors
COMMONLY USED SCHOOL LEVIES AND THEIR TREATMENT UNDER TAX REDUCTION FACTORS
Type of Levy Subject to
Reduction Factors Factored in 20-Mill Floor Calculation
Inside Millage (Current Expense) No Yes Inside Millage (Bond) No No Inside Millage (Permanent Improvement) No No Outside Millage (Current Expense) Yes Yes Outside Millage (Bond) No No Outside Millage (Permanent Improvement) Yes No Outside Millage (Emergency) No No
COMMONLY USED SCHOOL LEVIES AND THEIR TREATMENT UNDER TAX REDUCTION FACTORS
Type of Levy
Inside Millage (Current Expense)
Sponsors: State Representatives Bob Cupp & John Patterson
Education is the Key to Ohio’s Future
• Appropriate workforce development is essential for Ohio’s future growth.
• And Ohio needs much higher educational attainment to compete.
• Ohio’s schools and students face real challenges in a changing world.
• But Ohio school funding is a patchwork not based on student needs.
• Ohio needs a new system – fair to students, schools and taxpayers.
Educators (superintendents, treasurers, teachers) know the needs best.
15 months of research on Ohio’s formula, other states’ and experts’ ideas
Bipartisan Cupp & Patterson Plan Built by Leading Educators
Base state school funding on what students actually need to succeed in a rapidly changing world.
Assess every community’s capacity to pay its fair share – transparently!
Treat all Ohio’s school districts and taxpayers as fairly as possible
1.
2.
School Funding Plan
Our Critical Values
• What does it cost to educate every child and operate a district? Define
• All students can achieve their greatest potential, regardless of their economic circumstances or their school district’s property wealth.
Ensure
• Fair and stable funding formula that does not favor one district over another.Provide
• Dollars flow directly to where students are educated. Fund
The Ohio Fair School Funding Workgroup
How does the Ohio Fair School Funding Plan address the woes of the current formula?
4/5 of Districts on Cap or Guarantee
The Formula Doesn’t Work
Making School Funding Fair…. and Getting it Right
Rational, Understandable & Transparent
Reduce the Number of Districts on Artificial “Guarantees”
Respect Local Control
Provide Basic Instructional Resources
Help Special Needs, Gifted, English Learners
Improve Security and School Bus Safety
Invest in Career Tech Education, STEM, Educational Service Centers
Base Cost Different Approach than the Past
Formula built around the local student and the educational experience What it actually costs Allows schools to use state funds according to local needs
Uses research and experience to compute base cost Transparent, rational, stable
Funds the “whole student” Instruction, co-curriculars, social-emotional needs, safety and security, career readiness, counselors, technology, teacher professional development...
Accounts for actual costs to run a district Classroom instruction, instructional supports, English Learners, grade by grade student/teacher ratios and costs, materials...
Maintain local control over how state formula funds are used
Base Cost Breakdown
Base Cost Breakdown
Funding for classroom teachers
Career counseling and readiness
Co-Curriculars
Make more funding available for students living in poverty
Increases for social, mental health and emotional support
Let districts select the support services that best meet their local needs
On an interim basis: Add $150 to the current $272 per student add-on for additional
funding economically disadvantaged students
Long term solution: Establish per-pupil additional funding for high poverty schools
and students pending an in depth study to determine an improved way to identify
students living in poverty
Studies show that many students, especially economically disadvantaged students, gain the most from a high-quality, comprehensive preschool program.
Recommend every economically disadvantaged 4-year-old has access to high-quality preschool.
Make sure enrollment is maximized and all who qualify are identified and recruited.
Study and recommend the best models to fund, deliver and coordinate high-quality preschool and wraparound services to accommodate the needs of various types of communities.
Funding Outside Base Costs Special Education
Special Education Return to funding special education as a multiplier (a percentage)
of the base cost. Conduct an updated comprehensive special education cost study
for the 250,000 Ohio public school students with disabilities (last full study in 2001).
Fund special education at 100% state assumption of local costs established in the study. Set aside the additional 10% for catastrophic aid.
Fund special education preschool based on percentage of time special education students attend.
Funding Outside Base Costs Gifted and English Learners
Gifted Education Fund services for gifted students based on May 2018 cost study.
Establish a workgroup to recommend improvements in reporting expenditures established in the 2018 ODE study.
Offer support to rural districts to create and expand gifted programs.
English Learners Return to funding English Learners as a multiplier (a percentage) of the
base cost.
Direct ODE to conduct a cost study to determine the validity of current funding amounts or recommend new ones for Ohio’s 58,000 English Learners.
A more fair and equitable criteria for including English Learners in Category 2 and Category 3 funding.
Funding Outside Base Costs Open Enrollment, Community Schools and Vouchers
Fund all students where educated. Remove students participating in school choice
programs from K-12 district average daily membership. Eliminates friction associated with outgoing students and local public funds lost. Creates conditions for community school and voucher funding to stand on its own. Maintain fiscal impacts of open enrollment at its present levels.
Funding Outside Base Costs STEM, Career Tech & Educational Service Center
Educational Service Centers: Conduct a study of all ESCs in order to prepare for the crafting of a funding methodology. Implement interim funding increase to $26.50 per student in FY2020 to $27.00 per student in FY2021.
Career Tech Education: Return to base cost weights (multipliers) as the preferred funding method for technical and skills
programming. Career exploration/awareness will be funded for all students within a given Career Technical Planning
District. Create an input method based funding model similar to the recommended K-12 base cost funding
model. STEM Schools: Fund directly in the same manner as charter/community schools.
Enhance the safety of our students by restoring state aid for bus purchases to help lower the average age of a rapidly aging fleet (goal = average under 10 years)
Limit district mandated transportation services to nonpublic, community, and STEM schools located within the public school district boundaries.
Establish grant program to obtain inter-district transportation efficiencies.
Increase funds and make usage rules more flexible for special education buses and vans.
Modify transportation funding to fund all students transported, reward efficiency, make allowances for districts transporting a higher percentage of nontraditional students.
Funding Outside Base Costs Restore Transportation Funds
Fair Base Funding Distribution Principles
The Fair Funding Plan is based on students’ and operating needs as outlined earlier.
Key Question: How much district funding is provided by the state? How much by local taxpayers? Today, that’s a mystery because each district’s funding can change relative to the state’s average. That’s a formula for instability.
With the Fair Funding Plan: State/local shares are calculated using resident’s income and each district’s property value and won’t shift unless that district’s income or property values change--eliminates one district’s change impacting another district’s relative wealth.
Fair Base Funding Distribution
Unlike the current formula, which is too dependent on property values, the new plan uses both property values and resident income to identify each community’s capacity to pay their fair share.
A district’s state and local share will be determined by its capacity to generate local dollars.
Only a change in a district’s resident income, property value or enrollment would cause a change in that district’s local capacity.
DISTRIBUTION
0 to 40% - BASED ON RESIDENT INCOME
The Challenge - Distribution Current Local Share of Funding
18% of Districts
The Formula Doesn’t Work
With New Fair Funding Plan
84% of Districts funded at their calculated formula amounts
New Plan: 84% of Districts on Formula by 2021
SIMULATION RESULTS
An estimated 510 districts would receive additional funding in the upcoming biennium
An estimated 100 districts would receive the same amount of funding as they received in FY 2019
PLEASE REMEMBER THE SIMULATIONS ARE DONE USING ESTIMATED VALUATIONS, INCOMES, AND ENROLLMENTS
SIMULATION RESULTS
There are five general factors that influence funding in this model relative to FY 2019 and the current funding model For districts with offsetting factors, it will vary from
district-to-district as to which factor matters most
SIMULATION RESULTS
Because of minimum allocations within the base cost funding model, small districts will generally do better than under the current model
Districts currently impacted by capped funding also generally have more positive results
When looking at data by capacity quintiles, districts that currently get lower allocations than similar districts in the same capacity quintiles generally do better
SIMULATION RESULTS
Districts whose enrollments are significantly below their current ADM tend to get smaller or no increases relative to those without this condition
Districts that have seen sharp increases in Public Utility Property Values between 2016 and 2018 tend to get smaller or no increases
THERE CAN BE DISTRICTS MEETING ANY OF THESE 5 CRITERIA THAT DO NOT TREND LIKE MOST OTHERS MEETING THE CRITERIA
FY 19 STATE AID FOR STUDENTS BEING EDUCATED IN THE DISTRICT
County District
Aid Per Pupil
Lorain Lorain City SD $67,008 10,124$ Franklin Whitehall City SD $67,711 7,105$ Mahoning Campbell City SD $67,771 12,469$ Lake Painsville City Local SD $67,887 9,289$ Allen Lima City SD $68,042 10,395$ Athens Trimble Local SD $68,496 12,952$ Cuyahoga East Cleveland City SD $69,396 14,597$ Trumbull Warren City SD $70,159 10,294$ Cuyahoga Maple Heights City SD $71,939 5,697$
Third through eleventh districts with the least capacity measured by Targeted Assistance Wealth
SIMULATION RESULTS BY CAPACITY QUINTILE FOR THE FAIR FUNDING PLAN
Capacity Quintile FY 2021 Average Per Pupil Aid
Lowest Capacity $8,821
Quintile 2 $6,784
Quintile 3 $5,835
Quintile 4 $4,646
Highest Capacity $2,593
Per Pupil state funding after all deductions--FY2019 allocations for guarantee and non-guarantee districts under the Fair Funding Formula
Capacity Quintile Guarantee Districts under Fair Funding Plan
Non-Guarantee Districts under Fair Funding Plan
Lowest Capacity $10,366 $7,753
Quintile 2 $6,795 $6,092
Quintile 3 $6,163 $5,196
Quintile 4 $4,576 $4,012
Highest Capacity $3,042 $1,978
Districts on the guarantee under the proposed formula have significantly more current funding than other districts with similar capacity
SIMULATION RESULTS BY CAPACITY QUINTILE
Average per pupil gain per quintile for districts receiving additional revenue under the Fair Funding Plan
Capacity Quintile Estimated Average Increase
Lowest Capacity $648
Quintile 2 $692
Quintile 3 $624
Quintile 4 $663
Highest Capacity $460
Ohio Needs Comprehensive, Fair School Funding Now
Unfortunately, Ohio’s school funding system is not tied to any type of determination of what it takes for students to succeed in the 21st century – diminishing our future workforce and economy.
The Fair School Funding Plan will allocate base costs tied to the actual needs of students, resident’s income, and its property values.
It will help students with special needs and mental health concerns, make all students more safe and secure, update technology, provide essential services for high poverty districts, provide expanded quality preschool, and reflect the real cost of operating public schools.
Fair School Funding will prepare our state and local workforce for the challenges ahead.
We ask our legislators and all Ohioans to consider our plan in its entirety, as an essential roadmap to guide school funding decisions
Together, we strive to ensure that Ohio’s children will have the quality educational opportunities .
And together, we can adopt a comprehensive, fair school funding plan that meets the needs of Ohio’s children, future workforce, and economy.
Fair School Funding
Thank You for Your Interest and Action for Ohio’s Future
BASE COST Ryan Pendleton Treasurer/CFO Akron Public Schools
Tom Hosler Superintendent Perrysburg Exempted Village Schools
DISTRIBUTION Jared Bunting Treasurer Trimble Local Schools
Mike P. Hanlon, Jr., Ph.D. Superintendent Chardon Local Schools
POVERTY & PRESCHOOL Claudia Zaler Treasurer/CFO Waverly Local Schools
Doug Ute Superintendent Newark City Schools
TECHNICAL SUPPORT Jim Betts Coordinator
Mike Sobul Treasurer/Consultant Granville Schools
Howard Fleeter School Finance Consultant
Pete Japikse Ohio School Boards Association
Geoffrey Andrews Executive Director MCOECN
ESC, CTE & STEM Jerome (Jerry) R. Brockway, Ph.D. Superintendent Ashtabula County Career Technical Center
Carrie Herringshaw Treasurer PENTA Career Center, Wood County
TECHNOLOGY Michael Tefs Superintendent Wooster City Schools
Cajon Keeton Treasurer Benton-Carroll-Salem Local Schools
TRANSPORTATION Kevin Lillie Treasurer/CFO Geneva Area City Schools
Dalton Summers Superintendent River View Local Schools
COMMUNICATIONS Ellen McWilliams-Woods, Ph.D. Assistant Superintendent Akron Public Schools
SUBGROUPS Chairs and Co-Chairs
Scot Prebles Superintendent Forest Hills Local Schools
SPED, GIFTED, EL Jenni Logan Treasurer/CFO Lakota Local Schools
Michael J. Barnes, Ed.D Superintendent Lakewood City Schools
WEBSITE
QUESTIONS?
PFR Services to Help
• PFR Tools to Leverage Your Local Expertise • Longer term forecasting and modeling tools. • Experience to help with stability decisions. • Data and knowledge of the data that can help remove
misunderstanding and confusion. • We focus on the information and education that will
help you most.
The Public Finance Resources Team
Matt Bunting, Consultant, has over 30 years of experience in the public finance sector. This includes 20 plus years as a school district treasurer, and 11 years with the Auditor of State where he led financial, legal compliance, and Federal single audits of government entities. Matt has helped develop financial forecasting tools, and providing instruction and training opportunities attended and used by over two hundred of Ohio’s public school treasurers. Matt works with clients to help determine a long-term operating strategy for the organization. He holds a Degree in Accounting from Hocking College, and is a Certified Government Financial Manager.
Ryan Ghizzoni, Consultant, began his career with the Auditor of State’s Office and has served as a school district treasurer for the past 10 years. During his career, he has been the recipient of six Association of School Business Officials International Meritorious Budget Awards and was the recipient of the Ohio Association of School Business Officials 2011 Outstanding Treasurer of the Year Award. Ryan holds a Bachelors of Business Administration from the Youngstown State University, and is a Certified Administrator of School Finance and Operations.
Debra Hoelzle, Chief Operations Officer, provides direct services to clients, and oversees the day-to-day operations of PFR. She brings with her operational experience from both the public and private sectors, including a school district and multiple corporations in the financial services industry. Debra holds her Masters of Business Administration from Ohio University, and her Bachelors of Science in Business Administration from The Ohio State University.
Stacy Overly, Consultant, provides direct financial services to clients. He has over 20 years of experience serving as school district treasurer, including 15 plus years of developing financial forecasting tools, and providing instruction and training opportunities attended and used by over two hundred of Ohio’s public school treasurers. Stacy works with clients to analyze trends and review local economic data to help determine a long-term operating strategy for the organization. He holds his Masters of Business Administration and his Bachelors of Business Administration in Finance from Ohio University.
Mike Sobul, Consultant, brings 30 years of experience in public finance and tax analysis. Currently a school district treasurer, Mike spent nearly 25 years with the Ohio Department of Taxation where he led revenue forecasting efforts and provided analysis , training, and fiscal services to schools and local governments. Mike holds a Masters Degree in Public Policy from the University of Michigan and a Bachelors Degree in Economics and Political Science from Wittenberg University.
Ernie Strawser, Consultant, provides direct services to our public finance clients. He has over 30 years of public finance experience as a CFO, consultant, and developer and instructor of financial forecasting techniques and tools which have been used by over two hundred Ohio school district CFOs. Ernie works with clients to facilitate their understanding of local financial results , trends, and strategies. He holds both a Masters of Science in Administration from Central Michigan University and a Bachelor of Science in Finance from Ohio University.
PFR Contact Information
Public Finance Resources, Inc. PO Box 1822
Columbus, OH 43216 [email protected]
Columbus, OH 43216 [email protected] Phone: 614-732-5948
Overview
State Share Index
Districts at Risk for an 028 Adjustment for FY 2019
Challenges
Levy Purposes and Reduction Factors
Fair School Funding PlanA comprehensive, fairschool funding plan for Ohio
Education is the Key to Ohio’s Future
Slide Number 35
Slide Number 36
4/5 of Districts
Slide Number 40
Slide Number 42
Slide Number 44
Funding Outside Base CostsHigh-Quality Preschool
Funding Outside Base CostsSpecial Education
Funding Outside Base CostsGifted and English Learners
Funding Outside Base CostsOpen Enrollment, Community Schools and Vouchers
Funding Outside Base Costs STEM, Career Tech & Educational Service Center
Funding Outside Base CostsRestore Transportation Funds
Slide Number 52
Fair Base Funding Distribution
SIMULATION RESULTS
SIMULATION RESULTS
SIMULATION RESULTS
SIMULATION RESULTS
FY 19 STATE AID FOR STUDENTS BEING EDUCATED IN THE DISTRICT
SIMULATION RESULTS BY CAPACITY QUINTILE FOR THE FAIR FUNDING PLAN
Slide Number 66
Ohio Needs Comprehensive, Fair School Funding Now
We ask our legislators and all Ohioans to consider our plan in its entirety, as an essential roadmap to guide school funding decisions Together, we strive to ensure that Ohio’s children will have the quality educational opportunities . And together, we can adopt a comprehensive, fair school funding plan that meets the needs of Ohio’s children, future workforce, and economy.
SUBGROUPSChairs and Co-Chairs
Slide Number 74

OULP Property Values & State Funding

Documents

Transcript of OULP Property Values & State Funding